Stephen Kearney is senior vice president of customer relations and
is responsible for the communication, pricing and relationship activities
of the U.S. Postal Service (;;;;;;;;;;;;).
JULY DEBATE RESULTS:
Should the U.S. develop
high-speed rail lines?
POSTMASTER GENERAL Jack Potter’s request to Congress that the
Postal Service be relieved of the statutory responsibility to deliver mail
six days a week is based on economic realities.
The Postal Service does not receive taxpayer dollars and, like any other
business, relies on the sale of goods and services for its livelihood. Many of
our customers, particularly high-volume users of the mail, such as the financial industry and the
housing sector, have been battered by the recession, and we continue to feel the effects of their losses.
Recently the Postal Service reported its financial results for quarter 2, which ended March
31. Total mail volume fell by 14. 7 percent, with an accompanying revenue decline of 10. 5 percent compared to the same period last year. We anticipate similar losses for the next two quarters, and even with the price changes that went into effect March 11, we are projecting a loss of
more than $6 billion for this fiscal year.
We continue to effect cost reductions at every level, but the time has come to look at frequency of delivery. The facts are clear. In fiscal year 2000 our carriers delivered an average
of 5. 9 pieces of mail per day to every address they served. This year that has fallen to 4. 7 pieces,
a 20 percent decline. Over the same period, our delivery base has expanded by more than 11
In sum, we are delivering less mail to more addresses, resulting in less revenue per address
served. In addition, the ratio of higher-contribution first-class Mail to lower-contribution standard (or advertising) mail has declined, further eroding revenue per delivery.
Reducing the frequency of delivery would be an important step in helping to close the gap
between costs and revenue, a goal that is unachievable in today’s environment. It’s imperative
that we return to sound financial footing, and five-day delivery will help us get there.
We understand that this change will require some of our customers to change their mailing
habits, but we’ll be there for them to make certain the transition is as smooth as possible. As we
go forward, we must examine every option so as to ensure a viable Postal Service of the future.
Flexibility on six-day delivery will help us get there. C
Percentage reflects votes
received by July 10, 2009.
JUNE DEBATE RESULTS:
Do timesaving devices
really save time?
YES: 46% NO: 54%
Percentage reflects votes received by
June 30, 2009. Results may reflect
Debate being picked up by blogs.
from an expert in the field:
EVERY FEW YEARS the Postal Service floats ideas for alternatives to rate
increases. One idea that frequently crops up is to cut one day of delivery
service; most recently, the days proposed were Saturday or Tuesday.
The National Federation of Independent Business Research
Foundation asked small-business owners what they thought the impact
of a one-day cut in delivery would be on their businesses (in this case, the
survey only asked about losing Saturday delivery).
Thirty-eight percent said losing a delivery day would have at least some negative impact
on their business; 14 percent thought the negative impact would be large.
The most frequent reason cited for negative impact is the loss of a day on check deposits.
The result could be a minor amount of lost interest, but more important is the delay in accessing funds. Even small businesses have a lot of money coming in and going out. So, when money
comes in more slowly due to late-paying customers or a lost day of mail delivery, the business
owner is forced to pay his or her bills more slowly. That can result in financial penalties and
a lot of heartburn.
In addition, losing a day of mail delivery would have an effect on customer service. Any
delay in the mail means one less day to respond to customers’ orders or other issues that a
customer has raised via the mail. It could also cause downtime or interruption of work flow
as there would be one less day to work on that mail. Further, potentially important business
information would arrive at least one day later, potentially slowing decision-making.
It may seem that the rise of Internet use would lessen the problems that could arise from
cutting to a five-day delivery schedule. And it may. But gaps remain, often leaving small firms
with higher potential costs. For example, legal documents may need to be promptly returned,
but mail delivery cuts could force the sender to use more expensive overnight service. Having
to do this once is annoying; more frequently and it becomes an important new business cost.
There is no doubt the Postal Service needs to make very serious changes in its operations.
But let’s be sure the changes are most appropriate, and cost-effective, before doing them. C
William J. Dennis leads the National Federation of Independent Business Research Foundation, located in Washington, D.C. (;;;;;;;;;;;;).
Opinions expressed are those of the
individuals or organizations represented
and are presented to foster discussion.
Costco and The Costco Connection take
no position on any Debate topic.