Wendy R. Ginsberg
Analyst in Government Organization and Management
After running modest profits from FY2004 through FY2006, the U.S. Postal Service (USPS) lost $5.3 billion in FY2007, $2.8 billion in FY2008, and $3.8 billion in FY2009. In FY2010, the USPS had an operating deficit of $8.5 billion. Were the USPS to run quarterly deficits in FY2011 similar to those experienced in FY2010 (averaging $2.1 billion per quarter), it would exhaust its cash by mid-FY2011.The bleak economic forecast for USPS prompted its leaders, Congress, and the public to suggest methods that may increase revenue or reduce expenses. Among these costsaving suggestions is reducing the number of days per week that USPS delivers mail.
At a 2009 congressional hearing former Postmaster General John E. Potter stated that six-day delivery “may simply prove to be unaffordable.” He then “reluctantly” requested that Congress eliminate the six-day delivery requirement that is placed annually in appropriations laws. Some lawmakers criticized Mr. Potter’s request, stating that reducing service days could cause even greater reductions in mail volume and lead to a “death spiral” for USPS. Other lawmakers argued that USPS should have the flexibility to eliminate six-day delivery if they decide it is necessary.
At a U.S. Postal Service symposium on March 2, 2010, former Postmaster General John Potter announced that USPS would seek to eliminate the statutory requirement that the Postal Service deliver mail six days per week. In addition, he said USPS would submit a formal request to the Postal Regulatory Commission (PRC), a USPS oversight body, seeking to move to five-day delivery. The Postal Service is required by statute to request an advisory opinion from the PRC at least 90 days prior to enacting this change. On March 24, 2010, USPS’s Board of Governors approved the Postal Service management’s request to seek a move to five-day delivery and to ask the PRC for its advisory opinion. On March 30, 2010, USPS asked the PRC to issue an advisory opinion on the move to five-day delivery. That opinion has not been issued.
In 2008, two studies were conducted on the possible economic effects of reducing USPS delivery services. One study, conducted by USPS, estimated the financial savings of a five-day delivery week at $3.5 billion annually, with no anticipated reduction in sales volume. The other study, conducted by the Postal Regulatory Commission (PRC), estimated the savings at $1.94 billion annually, which includes a significant estimated loss of sales volume. USPS commissioned a third study, released in March 2010, that found USPS could save $3 billion per year if Saturday delivery were eliminated. The new study included an estimated loss in sales volume prompted by the eliminated day of delivery.
Other countries’ mail services vary in their delivery schedules. Australia, Sweden, and Canada offer five-day delivery services. France, Germany, the Netherlands, and the United Kingdom (UK) have six-day delivery. New Zealand offers some customers a six-day delivery option, but charges additional fees for weekend deliveries. Differences among the various global postal services may prevent USPS from borrowing operating techniques that have been successful elsewhere.
The 112th Congress may consider the elimination of a mail delivery day as part of a larger debate over the future of USPS. This report will examine the history of six-day mail delivery and analyze potential effects of reducing USPS delivery from six to five days. It will then examine legislative options, including bills that were introduced in the 111th Congress.
Date of Report: January 25, 2011
Number of Pages: 38
Order Number: R40626
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Analyst in Government Organization and Management
After running modest profits from FY2004 through FY2006, the U.S. Postal Service (USPS) lost $5.3 billion in FY2007, $2.8 billion in FY2008, and $3.8 billion in FY2009. In FY2010, the USPS had an operating deficit of $8.5 billion. Were the USPS to run quarterly deficits in FY2011 similar to those experienced in FY2010 (averaging $2.1 billion per quarter), it would exhaust its cash by mid-FY2011.The bleak economic forecast for USPS prompted its leaders, Congress, and the public to suggest methods that may increase revenue or reduce expenses. Among these costsaving suggestions is reducing the number of days per week that USPS delivers mail.
At a 2009 congressional hearing former Postmaster General John E. Potter stated that six-day delivery “may simply prove to be unaffordable.” He then “reluctantly” requested that Congress eliminate the six-day delivery requirement that is placed annually in appropriations laws. Some lawmakers criticized Mr. Potter’s request, stating that reducing service days could cause even greater reductions in mail volume and lead to a “death spiral” for USPS. Other lawmakers argued that USPS should have the flexibility to eliminate six-day delivery if they decide it is necessary.
At a U.S. Postal Service symposium on March 2, 2010, former Postmaster General John Potter announced that USPS would seek to eliminate the statutory requirement that the Postal Service deliver mail six days per week. In addition, he said USPS would submit a formal request to the Postal Regulatory Commission (PRC), a USPS oversight body, seeking to move to five-day delivery. The Postal Service is required by statute to request an advisory opinion from the PRC at least 90 days prior to enacting this change. On March 24, 2010, USPS’s Board of Governors approved the Postal Service management’s request to seek a move to five-day delivery and to ask the PRC for its advisory opinion. On March 30, 2010, USPS asked the PRC to issue an advisory opinion on the move to five-day delivery. That opinion has not been issued.
In 2008, two studies were conducted on the possible economic effects of reducing USPS delivery services. One study, conducted by USPS, estimated the financial savings of a five-day delivery week at $3.5 billion annually, with no anticipated reduction in sales volume. The other study, conducted by the Postal Regulatory Commission (PRC), estimated the savings at $1.94 billion annually, which includes a significant estimated loss of sales volume. USPS commissioned a third study, released in March 2010, that found USPS could save $3 billion per year if Saturday delivery were eliminated. The new study included an estimated loss in sales volume prompted by the eliminated day of delivery.
Other countries’ mail services vary in their delivery schedules. Australia, Sweden, and Canada offer five-day delivery services. France, Germany, the Netherlands, and the United Kingdom (UK) have six-day delivery. New Zealand offers some customers a six-day delivery option, but charges additional fees for weekend deliveries. Differences among the various global postal services may prevent USPS from borrowing operating techniques that have been successful elsewhere.
The 112th Congress may consider the elimination of a mail delivery day as part of a larger debate over the future of USPS. This report will examine the history of six-day mail delivery and analyze potential effects of reducing USPS delivery from six to five days. It will then examine legislative options, including bills that were introduced in the 111th Congress.
Date of Report: January 25, 2011
Number of Pages: 38
Order Number: R40626
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
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