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PRC Advisory Opinion Finds USPS Proposal for Retail Closures Lacks Proper Analysis

December 29, 2011 Comments off

PRC Advisory Opinion Finds USPS Proposal for Retail Closures Lacks Proper Analysis (PDF)
Source: Postal Regulatory Commission

The Postal Regulatory Commission today issued its Advisory Opinion in Docket N2011-1 on the Postal Service’s Retail Access Optimization Initiative (RAOI), a program that identified more than 3,600 post offices and other retail facilities for possible closure this year.

The Postal Service is required to ask the Commission for an Advisory Opinion on any change in nationwide service it proposes. The Commission found that the RAOI is likely to affect access to postal services. The Commission’s primary finding is that the RAOI was not designed to optimize the network. The Commission recommends the use of modern optimization tools and techniques to better maximize net retail revenues while fulfilling statutory service obligations.

Ruth Goldway, Chairman of the PRC explained: “The Commission was unanimous in expressing its concern that the Postal Service’s plan did not and could not, because of lack of data and analysis, determine the facilities most likely to serve the greatest number, reduce the greatest costs, or enhance the potential for growth or stability in the system. We agree that the Postal Service access network should be right-sized but found that the RAOI was not the proper approach to meet that goal.”

The Commission was unable to develop reliable cost savings estimates because the Postal Service does not collect facility-specific revenue and cost data, or separate retail costs from other operational costs. The Commission found that such data should be available for use in comprehensive facility closing plans.

+ Full Document (PDF)

See also: PRC Annual Report 2011

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PRC Issues Advisory Opinion on Postal Service Five-day Delivery Proposal; Lower Savings and Greater Impact on Service are Identified

March 25, 2011 Comments off

PRC Issues Advisory Opinion on Postal Service Five-day Delivery Proposal; Lower Savings and Greater Impact on Service are Identified (PDF)
Source: Postal Regulatory Commission

The Postal Regulatory Commission today issued its Advisory Opinion in Docket N2010-1 on a Postal Service plan to end Saturday mail delivery, collection, and outbound mail processing.

The Postal Service is required to ask the Commission for an Advisory Opinion on any change in nationwide service it proposes. The Postal Service advised the Commission that due to falling mail volumes and revenues it is considering eliminating Saturday mail collection and delivery except for Express Mail and existing post office box service.

“Some of the Commission’s analysis in today’s Advisory Opinion suggests that even lower estimates of savings and higher volume losses are possible. In all cases, we chose the cautious, conservative path. Our estimates, therefore, should be seen as the most likely, middle ground analysis of what could happen under a five-day scenario,” said Chairman Ruth Y. Goldway.

Key findings of the Commission’s Opinion include:

  • The Commission’s annual net savings estimate is $1.7 billion.
    – The Postal Service’s savings estimate is $3.1 billion.

  • Full savings in either case would likely not be achieved until year three after implementation.
  • The Commission’s estimate of net revenue losses due to volume declines caused by the service cuts is $0.6 billion.
    – The Postal Service estimate of net revenue losses is $0.2 billion.

  • The planned changes would cause an average of 25 percent of First-Class and Priority mail to be delayed by two days.
  • The Postal Service did not evaluate the impact of the proposal on customers who reside or conduct business in rural, remote, and non-contiguous areas.
  • Customers in rural, remote, and non-contiguous areas can be particularly affected by the Postal Service’s plans. The Commission received significant input from rural America and traveled to South Dakota and Wyoming to meet directly with rural customers and community leaders.

+ Advisory Opinion (PDF)
+ Transmittal Letter to Congress (PDF)

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