USPS examines five-day service

With mail volumes down 20 percent nationwide since a peak in 2006, the time for the U.S. Postal Service to make tough choices is here.

On Sept. 21, Postmaster General and USPS CEO Patrick Donahue said the organization would need to cut $20 billion in expenses to turn a profit by 2015. Already the USPS has cut $12 billion and 110,000 jobs in the past four years.

Congress is reviewing measures to make the mail service solvent, including a Republican-led effort that would create a five-member board to take over USPS finances if it misses a $5.5 billion advance payment for retiree health benefits scheduled Sept. 30.

In the meantime, Donahue is assessing 252 mail processing centers – including Springfield’s Chestnut Expressway center – for consolidation, reviewing 3,600 low-activity post offices for closure, and modifying delivery routes and service standards.

Richard Watkins, a postal service spokesman for the Mid-America District office in Kansas City, said it was too soon to say what changes would be made, but it is clear that something needs to be done.

“Unfortunately, the postal service’s business model, which remained relatively unchanged between 1971 and 2006, was predicated on an ever-increasing volume of mail, which would provide revenue for an ever-increasing delivery network,” Watkins said.

He said the postal service peaked at 213 billion pieces of mail handled in 2006, and saw its first decline ever in volume the following year.

The Postal Accountability and Enhancement Act of 2006 required the USPS to pay $5.5 billion per year for 10 years in future retiree health benefits, and administrators are asking that that requirement be lifted as part of any reform package.

“That pre-funding requirement was ambitious even in the best of times when mail volume peaked in 2006. Now looking back, we’ve seen the significant drop in mail volumes, including first-class mail,” Watkins said.

He said USPS’ most profitable product, first-class mail, has decreased by more than 25 percent since 2006.

“We simply have to find a way to match our work force – and the number of facilities we maintain – with a declining work load,” Watkins said.

He said USPS administrators would like to move to a five-day delivery cycle, eliminating deliveries on Saturdays, the lightest day of the week in terms of mail volume.

Should Congress approve such a measure, Watkins said post offices would still remain open and PO box holders would still receive mail on Saturdays.

Watkins said Midwest District processing centers in Springfield and Cape Girardeau are being considered for consolidation with the Kansas City center. He said the Springfield center, 500 W. Chestnut Expressway, employs 253.

David Mitchell, director of the Bureau of Economic Research at Missouri State University, said the proposed short-term fixes might only lead to more problems down the road.

“That could drive people even more toward, ‘It’s not worth mailing my bills in; I’ll just go ahead and sign up for auto-pay on my bills or I’ll mail the package through UPS or Fed Ex,’” Mitchell said.

As Christmas approaches, Mitchell said companies that ship gifts might think twice about using the USPS if it delivers only five days a week.

In addition, he said in the absence of a Springfield processing center, letters sent within Springfield might go to Kansas City to be processed only to return here, further delaying delivery and potentially costing more money for USPS.

Troy Hellerud, O’Reilly Automotive’s central support manager, handles the corporate office’s ingoing and outgoing mail. He said up to 400 mail pieces are sent out daily, with several hundred pieces coming into Springfield on the busiest days.

He said mail volumes have been on the increase in recent years, but that’s not surprising considering the company’s growth. With the purchase of CSK Auto in 2008, the company added more than 1,300 stores across the country. O’Reilly currently operates more than 3,600 stores, according to OreillyAuto.com.

With corporate offices only open Monday–Friday, he said a switch to a five-day delivery schedule really wouldn’t affect the company.

If the processing center is consolidated, however, that could have an impact.

“It could take longer to receive some of the mail items,” Hellerud said. “Vendors get those bills to us and sometimes they want them paid by a certain time. We have our processes to go through, so anytime you add a day to that, everybody has to adjust.”

He said he believed efforts are being made to reduce mail volumes, and though he wasn’t aware of any specific programs, he said corporate administrators are always looking at ways to save money. Mail service, however, isn’t going anywhere anytime soon, he said.

“There is still a great need to send mail out through the postal service,” Hellerud said. “A lot of the companies we deal with, they still prefer to get that check in the mail.”

Michael Gandy, marketing director for Arvest Bank in Springfield, said a five-day delivery schedule could be a nuisance to the bank’s customers who depend on mailed statements or other correspondence.

Gandy said the bank’s Springfield branches easily send out thousands of pieces of mail each month, but more customers are banking online.

“There is an increasing amount of our customers who are choosing to use things such as e-statements, online bill pay, or other forms of electronic notices,” Gandy said.

“If the postal service does start making changes and it goes to a five-day delivery, I would expect things like e-statements and online bill pay … to increase,” he added. “Of course, we see those things increasing already.”

Gandy said it has been the bank’s policy for some time to encourage its customers to take advantage of e-services because those choices reduce the cost of doing business and are environmentally friendly.

He said Arvest provides 300,000 e-statements for its deposit and savings accounts, up 33 percent from a year ago and up 566 percent since 2008.[[In-content Ad]]