Today the PMG announced the implementation of five day delivery by August of this year. This move has been lauded by those legislators who are either too shortsighted to see the big picture, or motivated by the potential profits they could make if the Postal Service were eventually privatized.
Other legislators and labor leaders have denounced this move by the PMG, realizing that there is a bigger picture, and that five day delivery is a temporary and ineffective stopgap measure.
Why exactly do so many people oppose five day delivery? Sure, it sounds good at first blush, but there are far reaching implications to this action.
1. It’s penny-wise and pound-foolish.
Saturday delivery is the Postal Service’s key strategic advantage over its private competitors, UPS and FedEx. Giving away our most important comparative advantage in the one area of the postal market that is likely to grow when the economy recovers—e-commerce package delivery—would be very risky. And there has been measurable growth: USPS package delivery has increased 14% since 2010. Over time, the loss of this growing revenue would outweigh the short-term savings. Dismantling the Postal Service is NOT the way to save it. It will lead to a death spiral that will harm rural Americans while doing very little to improve the condition of the Postal Service.
2. It will drive customers away.
Slower service—letters mailed on Friday nights would not be picked up until Monday morning or Monday afternoon—and less frequent delivery is likely to accelerate the shift to electronic invoicing and electronic bill paying. Booming businesses like mail order prescriptions would be threatened. Reduced service would also threaten one of the fastest growing segments of the mail—Parcel Select—as UPS, FedEx and other consolidators would reconsider their use of last-mile delivery services by USPS letter carriers. Consider that 30.4% of FedEx ground shipments are delivered by the Postal Service. Slowing mail service and degrading our unmatchable last mile delivery network are not the answers to the Postal Service's problems. Providing fewer services and less quality will prompt customers to seek other shipping options, dooming the USPS to ultimate failure, and paving the path to privatization. The USPS has already slashed service by reducing hours at post offices, closing hundreds of processing facilities, and closing 13000 post offices nationwide. Services have been downgraded and are being felt everywhere.
Just yesterday, a friend of mine in South Dakota posted on my Facebook page:
3. It would prompt the emergence of new competitors.
If the Postal Service doesn’t deliver on Saturdays, other companies will step in to fill the void. Executives from niche delivery firms welcome the news of five day delivery. Many companies view the Postal Service’s exit from Saturday delivery as a business opportunity. Once established, competitors will demand a “level playing field” and ask Congress to open the nation’s mailboxes to their services, making it impossible to enforce the monopoly and maintain affordable universal service, even in areas where it is not profitable. The move to five day delivery is misguided and counterproductive. Postmaster General Patrick Donohoe needs to come up with an effective business plan to tap the full potential of the Postal Service. The Postal Service is an essential American institution, mandated by the US Constitution. In fact, the PMG has yet to receive congressional approval to implement this change, which is mandated by law. Mr. Donohoe needs to realize that he is not above the law.
4. It would set a bad precedent. If the language requiring six-day delivery were repealed, there would be no legal barrier to prevent the Postal Service from reducing delivery days further, from 5-day to 4- or 3-day delivery. Indeed, Business Week magazine called on the Postal Service to shift immediately to 3-day delivery within days of the Postal Service’s announcement of its action plan. That would not only destroy half our jobs, but also likely lead to a death spiral for the Postal Service—less service leading to less mail volume leading to less service, and so on. If the Postmaster General is unwilling or unable to develop a smart growth strategy that serves the nearly 50% of business mailers that want to keep six day service, and if he arrogantly thinks he is above the law or has the right to decide policy matters that should be left to Congress, it is time for him to resign. Benjamin Franklin must be rolling in his grave! The Postal Service needs to pursue avenues of revenue that will enable it to stay viable and competitive in the digital era, not pave the path to privatization.
5. It’s not necessary.
The Postal Service has hidden financial strengths, with fully funded pension plans and, if the accounting is done properly, fully funded retiree health benefits. If we can convince Congress and the administration to fairly allocate pension costs and correct the $75 billion error made by the OPM when it established our retiree health fund, eliminating Saturday delivery would not be necessary.
The Postmaster General acknowledged as much at a March 18 hearing before a Senate Appropriations subcommittee. “If that [recovering the $75 billion and applying it to future retiree health care] were to happen,” he said, “we wouldn’t have to go to six-, to five-day delivery.” Five day delivery is projected to save the postal service about $2 billion a year, far short of what is needed.
The financial woes of the postal service are a direct result of an unsustainable congressional mandate that was imposed in 2006, the Postal Accountability and Enhancement Act. This federal law forces the USPS to prefund healthcare benefits for future retirees and to do so in the unrealistic period of ten years. Since the act was implemented in 2007, the USPS has been required to pay about $5.5 billion a year in pre-funding, but the same law prohibits the USPS from raising rates to cover those costs. The USPS is being massively overcharged for these pre-funding requirements, and there are excess postal pension assets in the civil service retirement fund that could be used to cover retiree health costs in the future. Five day delivery is projected to save the postal service about $2 billion a year, far less than the $5.5 billion that would be saved by Congress repealing this law. Congress manufactured this crisis; Congress must act to save the USPS.
And, for the record, the USPS receives not one penny of taxpayer money.
What can you do to help? Visit www.saveourpostoffice.us, the website for a private, grassroots organization founded in August 2012. They began a letter writing campaign, urging Americans to mail postcards to them, which they will then present to President Obama and Congress. They also have an online petition that already has over 14,000 signatures to maintain the postal service in its current form, without cuts to service, whether it be five day delivery, plant closures, or reduction or elimination of local post offices. And contact your legislators and tell them to Save Our Post Office.