Will Proposed Postal Cuts of Saturday Service Hurt Businesses?

Discontinuing Saturday delivery of first-class mail has been discussed as a means to cut postal service costs for years. Now that five-day delivery has been officially announced and scheduled to start this August, what are the implications on businesses?

Not as much as one might think (at first glance at least).

Market research conducted by the Postal Service and independent research by major news organizations indicates that nearly 70% of Americans support the switch to five-day delivery as a way for the Postal Service to reduce its costs.

According to an article that ran in a Pennsylvania paper, the Observer-Reporter, the candy operation and local hospital didn’t foresee problems for their operations with the USPS moving to five-day delivery.

Candy Firm and Hospital Foresee No Problem with Change

Sarris is a midsize firm, with 550 employees at its store and warehouse in Canonsburg, and in the Gardner’s Candies operations it owns in Central Pennsylvania. Sarris Owners say the postal service moves won’t change things for them one way or another.

About 95 percent of Sarris packages are transported by FedEx or UPS, adding that FedEx also delivers on Saturdays and UPS will do so for an additional charge.  As a reminder, the Postal service does plan to continue package delivery on Saturday.

Monongahela Valley Hospital is a much larger operation with 1,235 employees. But Corinne Laboon, vice president of marketing and community relations, said the postal changes should have little — if any — effect on operations at the Carroll Township facility.

“From a patient perspective, I don’t think it’s going to have a significant impact,” said Laboon, whose hospital is the third-largest employer in Washington County.

SOURCE: Businesses Say End of Saturday Service Will Have Minimal Impact, by Rick Shrum of the Observer-Reporter, Feb. 6, 2013.

Businesses with Bigger Beefs Concerning No Saturday Delivery

Netflix, a DVD by mail firm, has six months to rework its movie delivery model for its non-streaming customers. Though Saturday is a huge movie-watching day, Netflix has been encouraging streaming service memberships and therefore has seen its DVD memberships decrease quarter by quarter.

SOURCE: Publishers, Ad Mailers Assess No Saturday Delivery by Tim Mullaney of RGI.com, Feb. 7, 2013

Time Magazine has been historically delivered to customer mailboxes on Saturday. The Wall Street Journal, delivers to certain customers on Saturday, but has been decreasing its dependency on the USPS over the years, according to Tim Mullaney of RGI.

SOURCE: Publishers, Ad Mailers Assess No Saturday Delivery by Tim Mullaney of RGI.com, Feb. 7, 2013

Small newspaper publishers might face some obstacles with the reduction in delivery times. Many daily and weekly newspapers had already omitted home delivery contractors because of the rising cost of gas only to return to mailing their papers. Now it appears they’ll need to reinforce quality content over timely content.

The Real Issue                       

It’s important to note that the real issue facing the post office is its inability to be fluid with its business model.  Imagine running a business that required you to PREFUND pensions.  When the Postal Service hires an employee they must estimate the amount of pension that employee will earn from day one to their anticipated retirement.  Then the USPS must prefund that employee’s pension fund. It cannot make annual contributions.  The Postal Service is the only organization, public or private, that has this burden.

It is estimated that the mailing industry is in excess of a trillion dollars.  Congressional reform is needed.