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EcommerceBytes-NewsFlash, Number 2565 - June 15, 2011 - ISSN 1539-5065    4 of 8

US Postal Service Challenges PRC over Five-Day Delivery Analysis

By Ina Steiner
June 15, 2011

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The U.S. Postal Service told Congress in a report on Monday that the Postal Regulatory Commission (PRC) was incorrect in its analysis of its proposed five-day delivery schedule. The USPS wants to eliminate mail delivery to street addresses on Saturdays to help save what it estimates would be $3.1 billion annually, but the PRC said moving to five-day delivery would only save $1.7 billion annually.

The USPS said the PRC based its advisory opinion on a "questionable analysis" of the potential cost savings that could be achieved by implementing the five-day delivery schedule. The Postal Service said the $1.4 billion discrepancy between the respective estimates results from:

  • the Commission's unwillingness to recognize about $760 million in savings from increased city carrier productivity and efficiency under a five-day schedule;
  • the Commission's failure to account for more than $260 million in highway transportation and mail processing economies associated with one less day of street delivery; and
  • the Commission's summary dismissal of the unrefuted testimony of market research experts to reach its conclusion that the Postal Service estimate of annual revenue loss resulting from the change was understated by $386 million.

The Postal Service report also disputes the PRC claim that the five-day delivery proposal did not sufficiently take into account the needs of customers in rural and remote areas. The Postal Service contends that its extensive market research considered the views of rural customers and incorporated them into its implementation plan. The Postal Service noted that the same market research methodology for considering the needs of rural customers was accepted by the PRC in its 2009 Universal Service report.

The Postal Service report regarding the March 2011 advisory opinion also criticizes the PRC for its inability to fulfill its core function in the nonbinding advisory process, which is to address whether the proposed service changes would be consistent with governing statutory policies.

The USPS report is available on the USPS website .

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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