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Big mailers oppose 5-day delivery

If the U.S. Postal Service gets its wish, there will be no Saturday mail delivery at this time next year — but the agency needs to sell the plan to its biggest customers, many of whom are skeptical about the switch.

The Postal Service unveiled its official plan for five-day delivery last week — more than a year after Postmaster General John Potter first suggested the idea. Post offices would remain open on Saturdays, and postal workers would collect mail from designated drop-off points, but the Postal Service would stop door-to-door mail delivery and blue box collection. Managers say the plan would save about $3 billion annually; Potter last week described it as an essential step toward keeping the Postal Service viable.

The proposal has gone to the Postal Regulatory Commission — the independent agency that regulates the Postal Service — which must issue an advisory opinion by June 30.

"Our process will provide multiple opportunities for the public to be heard," said Ruth Goldway, commission chairwoman. "The ball is in our court now. There will be no final decision until the record is complete."

Congress would also have to approve legislation allowing the switch; current law requires the Postal Service to deliver mail six days per week. And Congress members so far have offered little if any support.

Labor unions have opposed the plan since the day it was announced, largely because of its expected impact on the postal workforce.

Mailers, too, have joined in the criticism — though many also think less frequent delivery is inevitable.

"It's a bit of an unfortunate choice," said Jim O'Brien, chairman of the Mailers Council, an industry group. "On one side sits five-day, which will impact people's business. And on the other, if we don't go along, we're looking at significantly higher rates."

The least bad option?

Many of the Postal Service's largest customers are reluctant to comment on the proposal. Netflix, which ships roughly 2 million DVDs every day, declined to comment on five-day delivery. But postal analysts say the switch would complicate the company's business model, which depends on a quick turnaround. And dozens of customers have posted messages on the company's Web site urging it to oppose the five-day delivery proposal.

"This is going to have a significant impact on my Netflix deliveries," one customer wrote. "If we're not going to get Saturday service anymore, I think I'm going to have a lot of days without movies."

Newspaper publishers — particularly those that print weekly newspapers — are also concerned about the proposed changes, according to Sen. Susan Collins, R-Maine.

"I've heard from weekly publishers in my state who generally mail their papers on Friday, for delivery on Saturday," Collins said at a Senate Appropriations Committee hearing last month. "But if there's no delivery on Saturday … they might start to look for other alternatives."

The Mailers Council warns that the switch will also hurt mail service providers — companies that handle addressing and pre-sorting of mail for other firms.

"The businesses that are going to be most affected are mail service providers," O'Brien said. "If everyone is trying to get their products delivered before the weekend … they're all going to push to schedule time in the middle of the week."

All of this will almost certainly hurt the Postal Service's mail volume. The regulatory filing estimates five-day delivery will reduce volume by 0.7 percent — roughly 1.2 billion pieces of mail annually — at a cost of $197 million each year.

"It will make the mail less reliable," Gene del Polito, president of the Association of Postal Commerce, said in an interview last month. "It's going to cause some postal customers to reconsider whether they want to keep using the mail."

But del Polito acknowledged that some mailers have no alternatives. The Postal Service's main competitors, FedEx and UPS, are far more expensive; neither, for example, could offer Netflix anything near the 78 cents per DVD it currently pays in shipping costs. Nor do the major private delivery companies provide nationwide Saturday delivery service.

Some mailers say they'll grudgingly go along with the five-day delivery plan because it's better than the alternative: substantially higher rates. The Postal Service is already planning an "exigent" rate increase in 2011, which allows it to raise prices faster than the rate of inflation; some mailers say they'll back the five-day plan if it heads off future hikes.

40,000 fewer jobs

The regulatory filing sent to the Postal Regulatory Commission (PRC) last week also estimates the impact on the postal workforce — the first time the Postal Service has attached staffing numbers to the five-day delivery proposal. The filing estimates that five-day delivery would reduce the full-time workforce by roughly 40,000 people — 25,000 city letter carriers and 15,000 rural carriers.

Managers say they can achieve those cuts without layoffs: 300,000 people, fully half the postal workforce, will be eligible for retirement by 2013.

Labor unions worry about the impact on their members, and also warn that the switch to five-day service would undermine the Postal Service's business model.

The National Association of Letter Carriers, which represents city carriers, launched a Web site last week that warns that five-day delivery will "drive customers away" and encourage private businesses to start Saturday delivery.

Postal managers also face the difficult task of selling the five-day proposal on Capitol Hill, where few lawmakers have shown any interest. Sen. Dick Durbin, D-Ill., said last month he'd support pilot programs, which would allow the Postal Service to test five-day delivery in limited areas. But no member of Congress has endorsed a nationwide switch.

Analysts say opposition to the plan — first announced in a congressional hearing in January 2009 — has built over the last year.

"There's been a sense that people have been waiting for this for 15 months. It's been a long time coming," said Phil Herr, a director of physical infrastructure issues at the Government Accountability Office. "I think they're not sure what to make of this."

But while stakeholders oppose the proposal, five-day delivery does enjoy wide public backing: Recent polls by USA Today and The Washington Post found majority support for the switch.

The Postal Service announced last month that it faces $238 billion in deficits over the next 10 years. Potter and other postal officials have outlined aggressive cost-cutting measures, which include the switch to five-day delivery, closing thousands of post offices, and changing the way the agency funds health care for its retirees.

Potter says all of those changes are needed to adapt to declining mail volume, expected to plummet between 15 percent and 34 percent over the next decade.

One indication of the Postal Service's long-term challenges: The five-day delivery proposal was delivered to the PRC last week via e-mail.

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Many of the Postal Service's biggest customers are skeptical about a switch to five-day delivery.

Many of the Postal Service's biggest customers are skeptical about a switch to five-day delivery. (File photo / Getty Images)

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