Monday, October 1, 2012

Five-Day Delivery and Reduced USPS Service Standards Could Face Legal Barrier

The U.S. Postal Service’s plans to eliminate Saturday delivery and to lower its delivery standards could face a significant legal obstacle, according to the Postal Regulatory Commission.

In its advisory opinion last week on USPS’s plan to close nearly half of its mail-processing centers, the commission seemed to side with witnesses who said reducing service standards could run afoul of the Congressionally-imposed price cap on postal rates.

“Two expert witnesses . . . presented persuasive testimony that a relationship exists between price and quality, and that lowering quality is equivalent to raising the price,” wrote Chairman Ruth Goldway in an addendum to the PRC’s document.

Under USPS’s Network Rationalization plan, “Eighty percent of all First-Class Mail . . . will be delayed by at least one day,” Goldway wrote. “Much of 2-day mail will become 3-day mail. Rural and remote communities that already receive slower delivery may be impacted even further when weekend and holiday delays are factored in.”

“If the Postal Service eliminates Saturday delivery, actual days to delivery would increase even more,” Goldway added. Her comment suggests that eliminating Saturday delivery would require Congress to change the price-cap law rather than merely excluding the usual ban on five-day delivery from annual appropriations bills.

Service standards and the price cap are two sides of the same coin. In the words of the PRC, “the price cap sets the ceiling on prices, whereas service standards set a floor on quality of service.”

“The Postal Service addresses the price/quality issue by contending that mailers place little value on speed of delivery,” the PRC wrote. [Tell that to publishers who send daily newspapers through the mail.] “The Postal Service asserts that customers value reliability in terms of predictability and consistency of delivery, and other attributes such as ease of use, convenience, and affordability.” But the commission didn’t seem to buy that argument.

The advisory opinion makes no definitive statement on the legal implications of reducing service because, as Goldway stated, the law governing USPS’s rates “does not provide the Commission explicit guidance to link the price cap directly to service quality.” But the PRC seems inclined to explore the issue further. 

Related articles:

16 comments:

Anonymous said...

You currently spend 80% of all your revenue on labor cost and insist on making zero cutbacks in the total number of payees on that payroll? The USPS is a lost cause and must be replaced as soon as possible by a fiscally responsible alternative. You expect us the public to stand by and watch your little pre funding drama scheme and do nothing. We are spreading the truth. You refuse to be saved, you refuse to make sacrifices like the rest of us. You insist on shoving an unwanted, unneeded and fiscally irresponsible day of delivery down our throats. We are exposing you and all your Fiscall waste.

Anonymous said...

"zero cutbacks in the total number of payees on that payroll" Tell that to the tens of thousands of employees who have left the USPS the past couple years.

Anonymous said...

"You expect us the public to stand by and watch your little pre funding drama scheme and do nothing."

Obviously you've heard but haven't been listening! We did not ask for this prefunding! Congress did that. We want you to do something; that is call your Congressman and tell them to stop the prefunding!

Anonymous said...

The postal workforce has, in fact, shrunk from nearly 800,000 in 1999 to 550,000 career employees today. Most of those job cuts had to do with increased automation, but many have come at the price of service – despite the post office's original constitutional mandate.

Anonymous said...

"Tell that to the tens of thousands of employees who have left the USPS the past couple years"

Or the 200,000ish we've lost over 4yrs.

Anonymous said...

There are plenty of independent reviews and reports that have all come to the same conclusion: USPS would have been profitable every single year if not for the congressionally imposed mandate to prefunding future retirees benefits. No other company in our history has ever had such a mandate. Please do some research before you spout your ignorant beliefs

Anonymous said...

AnonymousOctober 2, 2012 6:49 AM is stupid

Anonymous said...

Of course 80% goes to labor. At UPS and FedEx, 60% goes to labor and 20% goes to profit...What's the difference?

Anonymous said...

I still can not believe they are holding back elimination of Saturday delivery. This is beyond shocking. Elimination of Saturday delivery and walk ups should have been gone 6-7 yrs ago. What about the fuel and energy waste? Not a peep about that. The whole thing is a joke. By the way as wrong as prefunding for 7 yrs is, it is still only about 1/3 of USPS loss. There is blame to go around on every side of the political aisle.

oops said...

we need a fact checker! idiots.

Anonymous said...

Prefunding is the entire loss knuckle head. 5.5 billion x 3 years = 16.5 billion about what we are in debt. You must be thinking of the 5.5 billion we owe this year.

lsw said...

UPS and FedEx contract with USPS for residential delivery. In effect the USPS is a contractor supplying labor to those companies. If they added those labor hours to their own, their labor costs would be in the 80% range also.

Anonymous said...

What's really sad is the Post Office is suffering with Pre-funding 75 Billion dollars while the Obama Administration spends "Trillions" adding to the deficit, but nothing for the Post Offfice...

diversker said...

Every year we have a count of all the Rural Routes in the United States. This count determines the salary of each Rural Carrier. For the pat 4 or 5 years time has dropped on nearly every Rural Route in the US. This means a pay cut. This year I was lucky I only lost $2,000. Over the past 4 years it comes to a total of $6,000. This is the norm not the exception.

Anonymous said...

Kudos to Ruth Goldway. Hopefully it is not too little too late! She's right one by illuminating the essense of rationalship of price of product and service quality (which is speed). The USPS can not argue otherwise. There own rate structure is bases on that premise. Thus, third class / bulk mail has less price and less speed of delivery. You go girl!!!

Rick said...

I feel bad for USPS, the other day I didn't receive a package from them I checked their website and it said delivered. They are getting worse.


fuel delivery