Practical Ecommerce

Is Five-Day USPS Delivery Coming?

Many online retailers depend on the U.S. Postal Service (USPS) to reliably deliver merchandise to customers, since the service is often less expensive than UPS (United Parcel Service) and delivers six days a week, something that UPS charges a significant premium for.

But the USPS lost $2.8 billion last fiscal year. And, for the fiscal first quarter that ended on December 31, 2008, USPS reported a massive $384 million dollar loss—potentially putting the Postal Service on track for yet another multi-billion dollar loss over the next fiscal year.

“We are taking bold steps to cut costs immediately. At the same time, we are examining, realigning and streamlining our business to address longer-term financial pressures while continuing to provide high levels of service to the America public,” said Postmaster General John Potter in testimony to the Postal Service governors.

“First, it is possible that the cost of six-day delivery may simply prove to be unaffordable” Potter continued. “If that should occur, it could become necessary to temporarily reduce mail delivery to only five days a week. We would do this by suspending delivery on the lightest volume days. Toward this end, I reluctantly request that Congress remove the annual appropriation bill rider, first added in 1983, that requires the Postal Service to deliver mail six days each week.”

While congress must still act on Potter’s request, a reduced USPS delivery schedule would not be good news for ecommerce merchants, especially since, as Potter put it, “The Postal Service is a vital economic engine in our national economy.”

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Armando Roggio

Armando Roggio

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  1. Nate Gilmore February 13, 2009 Reply

    Shipwire has been watching this with a lot of interest and we were getting comments on our Blog as well. When I was doing some research for our blog post, a few points came up that I think worth mentioning.

    * Some analysts are saying the USPS would save millions on gas alone; but, that was really a big justification when gas prices were soaring this summer. Less so today; but, gas prices fluctuate pretty quick these days.

    * in 1980 there was an analysis that the USPS would save $1B cutting Sat delivery ($2.5 B in inflation adjusted dollars).

    When I was looking at this for the Shipwire blog a lot of the background chatter seemed to be more focused on the USPS’s pension fund, recently restructured at the top of the market, being a MASSIVE liability on the balance sheets that the current economy is leaving seriously underfunded. It is hard to save your way out of a hole in the Pension plan. We may want to keep an eye out for them to restructure that with workers; but, it will take time for sure. Might this move, be step one to bargain with the employees? If so, interesting move.

    My other thought is that Saturday delivery is a real competitive differences that the USPS has. There is a reason that FedEx and UPS charge more for residential verse commercial delivery; it is hard to reach recipients at home, it cost more and there are a lot more delivery attempts going to a home that is getting smaller package volume per drop. The USPS making Sat deliveries helps people get residential packages when they are home. Without this they may not be as competitive and we’ll start to see a lot more online buyers delivering to business during the week where UPS and FedEx are more competitive.

    Might they explore some options rather than a wholesale chop of Sat Delivery to help them innovate their way out of this budget hole? Maybe trialing a cut of Sat delivery in a couple markets and make a push for longer Saturday Post Office hours to make pickup easier. If somebody has to pick it up, maybe cross-promote another product when they come to the post office. "Sorry it was a hassle for you come to the office on Sat rather than getting this on your doorstep..here are 3-5 stamps."

    Necessity is the mother of innovation.

    Nate Gilmore
    Shipwire ecommerce order fulfillment
    Warehouses in the U.S., Canada and the UK
    Store-Sell-Ship(tm)
    http://www.shipwire.com/trial

  2. Audio51 September 4, 2009 Reply

    Why is Saturday automatically the day that would be dropped. That would mean if you didn’t get what you were waiting for by Friday, you would have to wait 3 days for the next shot at delivery. Why not suspend delivery for, say….Wednesday? Then the longest recipients would have to go without the ability to get deliveries would 2 days.

  3. thefactsrhere September 26, 2011 Reply

    One thing I don’t understand is how someone that has no idea how the postal service operates can even comment on what the postal service needs to do to fix its budget woes? Now with that said take it from someone who knows what they are talking about.

    Why would you want to stop mail delivery for 1 day per week when this is what it will do for the postal service> All of the offices would continue to be open on the days that just the delivery personal will be off> This would mean that most if not all of the substitute carriers would loose their jobs which could add a profit to the budget, but then that means that since the delivery or mail carrier which gets paid by the amount of work he carriers(not an hourly wage base) with the offices remaining open and the mail trucks/plants and such still running.

    The mail delivery person would be delivering the mail that was supposed to be delivered on the day he or she was forced to be off on the next day along with the mail for that day also, which means he or she will be delivering two days or being forced to do two days of work in the next day he is allowed to work. And I am quite sure he or she will be expected to do this double day of work with the same pay as one. Now with that said if you pay that delivery person by the work he or she is doing (which is how they are suppose to be paid) You will have to pay them for the extra days worth of mail which will wouldn’t be much of a saving at all (maybe a little for equipment allowance would be all you would save).

    Also lets say that you stop a day of delivery and keep the offices open which is what the postal service is wanting to do and you force the delivery person to do this extra day of work for free> then that would mean the budget for each office would save quite a bit> then as you probably don’t know is that the supervisors/managements pay and bonuses are based on the profit margin for that office so then most of the saved money would go to extra pay for the supervisors/managers and such since the profit for that office would increase. So where is the savings?

    This proposal just want work unless you put a pay lock on the overhead at the same time you stop mail delivery and also you should close all operations on that day. Now with all that said why should just the delivery personal be the ones to take the majority of the cut in salary for the entire postal service and the rest of the employees pay continue as normal or even at an increase? And might I add that as the mail volume has decreased over the past years the mail delivery personal pay has already been cut with the decrease in mail volume (they get paid by the work they do not an hourly rate) and be rest assured as the mail has decreased so has their pay been adjusted already.

    And that is probably something else you don’t know the postal service has and is continuing to adjust the pay for their delivery personal as the mail volume changes. So now I ask you this question where or what is the postal service savings going to be by stopping mail/parcel delivery on any day of the week? Also what has the postal service done with the pay they have already taken from the mail delivery personal over the past years as the mail volume has decreased? I know the answer; let’s see if you can figure it out?

  4. n2u2doll October 12, 2011 Reply

    USPS has had two audits one audit declaring that the Postal Service’s pension was over funded by 75 billion a separate audit which stated the Postal Service was over funded by 50 billion Latest numbers reflect an 85 billion over funding. Since 2006 USPS is directed by law to pre-fund their CSFS & FERS retirement pensions. USPS was allowed by Congress to make a late payment of 5.5 billion in November instead of the due date at end of fiscal year September 30th 2011.

    No business government or civil business is required to pre-fund their pensions. Congress has directed that 70 billion be returned to the Postal Service as some refer to as a bail out, but how can your own funds be considered a bail out? The Postal Service is an entity that was built as a service to the American people It was never intended to be a for profit business. The Postal Service needs to tighten up their upper management & get the Postal reform bill H.R. 1351 passed to eliminate the pre-funding.