Does the Postal Service Need to Re-examine Its Delivery Service Standards?
Public policy debates about solving the Postal Service’s financial crisis have largely focused on reducing costs by cutting service such as Saturday delivery, transitioning from brick and mortar post offices to alternative retail sales channels, or limiting other functions performed by the Postal Service. There has been less talk about the costs of meeting delivery service standards, which were reviewed following the passage of the Postal Accountability and Enhancement Act of 2006.
Can the Postal Service relax some of its requirements to save money in transportation or processing costs? Right now, its goals are to deliver First-Class Mail in 1 to 3 days and Standard Mail in 3 to 10 days. A slight adjustment of these standards in particular areas might make it possible to save a great deal of costs. Instead of developing the goal first and trying to reach those levels, no matter how costly it is, maybe the Postal Service should closely analyze its infrastructure and develop goals that allow for reaching the greatest efficiencies.
Loading ...Guest Blog: A Last Mile Strategy
By Robert Cohen
Should the Postal Service pursue a last mile strategy? A strategy that emphasizes delivery and deemphasizes the retail, processing, and transportation functions which are outsourced explicitly or through pricing incentives.
In some ways, the Postal Service is already pursuing a last mile strategy. Historically, the Postal Service has generally set worksharing discounts based on cost avoided. In other words, the discount is set at the amount of money the Postal Service saves if it doesn’t do the activity itself. If a presorter can sort the mail more efficiently than the Postal Service, it will choose to do so. This is good for society as a whole because it provides the lowest overall cost for end-to-end mail service. It also means that the Postal Service receives the same profit per piece whether it is workshared or not. The profit from the 80 percent of the mail that is workshared comes from delivery.
Read MoreThe Changing Change of Address System
Did you know that one in seven people in the United States change their address each year? Naturally, this creates a tremendous challenge for the Postal Service, which strives to maintain a high-quality repository of current addresses.
Change-of-address requests can be made in person at local Post Offices using a hardcopy form (PS 3575), or electronically using the Internet. They can even be made over the telephone. By far, the most popular way to change one’s official address is still using the hardcopy form, but those contemplating a move should consider their options carefully.
Read MoreDisappearing Collection Boxes
News about disappearing collection boxes is everywhere these days. Even BBC News ran a story on the decline of the blue collection box in the United States.
The Postal Service argues that picking up mail from collection boxes is expensive. Removing underused boxes is a cost savings move and a reasonable response to the economic crisis. The Postal Service is removing boxes with less than 25 stamped mail pieces per day.
Critics wonder if there is adequate analysis to support the 25-piece minimum and whether one reason for removing collection boxes — in addition to the minimal cost savings — is that the Postal Service does not want to be criticized for poor service. Fewer boxes mean fewer opportunities to miss a collection or to pick up mail too early.
Read MoreAre There Other Viable Alternatives for 6-Day Delivery Operations?
In these challenging times, reducing the cost of delivery operations — one of the Postal Service’s largest expenses — could save millions. One option the Postal Service is considering is to discontinue Saturday city and rural delivery and collection services.
Saturday is said to be one of the lowest mail volume days. It’s also a day when many businesses are closed. The September/October 2009 digital issue of Mailing Systems Technology included a survey of managers working in the mailing industry. Of those surveyed, 98 percent said changing to 5-day delivery would not require a change in staffing. The survey results also indicated that most managers surveyed (81 percent) preferred Saturday as the day of the week that the Postal Service would stop delivering mail. An additional 62 percent of the managers surveyed felt that once implemented, there should be no exceptions to 5-day deliveries such as for holiday weeks or high-volume mailing periods.
Read MoreModes of Delivery
Providing mail delivery is central to the Postal Service’s mission. Delivery is the Postal Service’s largest operational function and accounted for approximately one-third of its nearly $78 billion in total expenses during 2008. Postal Service management is working hard to reduce delivery costs while continuing to deliver to 149 million[1] addresses in the most efficient manner possible. Despite declining mail volumes, the Postal Service is challenged to provide cost efficient and effective service to a delivery network growing by more than 1 million addresses each year.
The mode of delivery plays an important role in determining the cost and efficiency of delivery. The Postal Service provides three modes of delivery for existing delivery points — to the door, to a mailbox on the curb, and to a centralized point that serves several addresses. Door-to-door delivery is the most costly mode and is no longer available for new delivery points. When new developments are established, curbside and centralized deliveries are the only options. Since centralized delivery is the cheapest mode, the Postal Service favors installing centralized delivery. However, the decision on mode of delivery is sometimes left to the developer.
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