Slow down.
Maybe the speed of Priority Mail delivery shouldn't be such a priority for the financially troubled U.S. Postal Service.
The semi-independent government agency, which is losing billions of dollars a year and looking for ways to save money, could recoup nearly $1.5 billion every year if it relaxed its delivery standards by just one day on Priority Mail, First-Class mail and periodicals, according to the Postal Service's Office of Inspector General.
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The agency spent about $2.5 billion in 2010 on mail processing, transportation and delivery. The Postal Service lost a record $8.5 billion that year, forcing it to consider seeking an increase in its $15 billion debt ceiling or face insolvency.
"Some of the Postal Service's largest business mailers have stated that they value consistency over speed and they would tolerate slightly slower service to save costs," the Inspector General reported in August 2011. "... The Postal Service may want to explore a reasonable relaxation of service standards as one alternative for saving costs."
Top Postal Service executives including Postmaster General Patrick R. Donahoe were reportedly giving the idea consideration.
Why Priority Mail is So Costly
The Postal Service guarantees delivery of Priority Mail packages and envelopes in about 2 days. It promises delivery of of First-Class envelopes and packages such as personal correspondence, bills, and light merchandise weighing up to 13 ounces in just one to three days.
But providing such speedy service is expensive. The Postal Service runs up massive tabs for air transportation and "premium pay" for employees who work nights and Sundays to process Priority Mail. In 2010, for example, the Postal Service shelled out $811 million in overtime premium pay, according to the Office of Inspector General.
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In other words, the Postal Service needs more labor, machines and facility space to meet the demands of a compressed time schedule.
The Postal Service, it found, could save $336 million in premium pay expenses by allowing one extra day for delivery of Priority Mail and First Class mail. "A one‐day extension of service standards could allow premium pay costs to be largely avoided, since that would be sufficient to allow processing windows to occur during day shifts and non‐Sundays," the study found.
Relaxing service standards by one day would allow mail processing to take place during the day, avoiding the bulk of nighttime and Sunday processing costs.
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The Office of Inspect General said allowing an extra day of delivery for Priority Mail and First-Class mail would allow the agency to trim other mail processing costs including air transportation, bring the total annual savings to $1.475 billion.
Cost Saving Measures
The Postal Service has repeatedly blamed the losses on the recession that began in December 2007 and significant declines in mail volume as a result of changes in the way Americans communicate in the age of the Internet.
The Office of Inspector General suggested that, given the projections for continued steep declines in mail volume, the Postal Service not focus so much on the speed of its deliveries.
"The diversion of much of this mail to electronic alternatives raises the question of whether the high speed service that some postal products receive is still worth its cost," its report stated.
In other words, First Class mail currently delivered in one to three days would instead be delivered in two to four days. Standard mail, meantime, would move from delivery in three to 10 days to four to 11 days. Priority Mail would get there in about three days.
The Postal Service was considering a host of cost-saving measures including the closure of as many as 3,700 facilities, the elimination of wasteful spending on travel, the end of Saturday mail and cutting delivery to just three days a week.