Chapter VIII describes the qualitative and quantitative research used for estimating volume loss, and the Commission’s unsuccessful attempts to replicate these estimates. The Postal Service’s revenue loss estimates that are based upon the volume loss estimates are also discussed. Chapter IX reviews the applicable statutory requirements, including intervenor consideration of a price/quality and rate-cap link.
evidence that viable alternatives exist, and that network rationalization can occur while preserving the current level of service for much of First-Class Mail has been presented. In fact, the Postal Service’s modified implementation plan undertakes considerable network rationalization while preserving most First-Class Mail service at least through January 31, 2014. In evaluating the Postal Service’s presentation, the Commission assesses what forms of network rationalization may occur while preserving existing service to a reasonable extent. Although the Postal Service did not consider alternative options, the Commission looked at participants’ testimony and its own analysis to address this issue. The Commission concludes that it is possible for the Postal Service to undertake significant network rationalization and realize substantial cost savings while preserving most current service levels. Under ideal circumstances, the Commission would encourage the Postal Service to proceed with network rationalization to the extent that existing service levels could be preserved. However, the Postal Service has already instituted some changes (Phase 1 implementation). For First-Class Mail, approximately 20 percent of mail previously subject to overnight service will be changed to 2-day service. Depending on the specifics of network rationalization, this may also require a portion of 2-day mail to move to 3-day. Phase 1 implementation is consistent with the Commission’s position of preserving service levels whenever feasible, similar to the proposals put forth by intervenors in this docket. The Commission’s analysis indicates that the Postal Service underestimates the extent that network rationalization can occur without further reducing service in Phase 2. The Commission cannot conclude that the benefits of eliminating most overnight delivery of First-Class Mail, and deferring a substantial amount of current 2-day mail an additional day, outweigh the risks of exacerbating declining volume trends or harm to the Postal Service brand based on the evidence provided in this docket (Phase 2 implementation). The Commission encourages the Postal Service to consider the advice in this opinion and study the effects of the service standard changes
Commission’s Analysis of Final MPNR (Phase 2) Impact on First-Class Mail The following discussion attempts to describe the impact full implementation of MPNR will have on mailers; not in terms of technical service standards and business rules, but rather in terms of how many days longer it will take for First-Class Mail to be delivered. Full implementation of MPNR would result in substantial elimination of next day delivery, and defer a significant portion of 2-day mail to 3-day, such that approximately 80 percent of First-Class Mail will be delivered one day later than it is now. A comparison of actual delivery days for single-piece First-Class Mail subject to the current versus the proposed 1-, 2- and 3-day service standards is presented in Table V-5. The table includes a two-week time period to provide examples of both a week with no federal holiday and a week with a Monday federal holiday. Note the table only provides examples of 3 origination/destination ZIP Code pairs. Table V-5 Example of Actual Days to Delivery for Single-Piece First-Class Mail Assuming Precise Compliance with Service Standard Dates Dispatch Location Delivery Locations United States Postal Service blue collection box located in Wethersfield, CT 06109 Hartford, CT 06106 Columbia, MD 21045 Venice, CA 90291 Day single-piece, 0.9 ounce, First-Class Mail letter dropped into collection box Current (days to delivery) MPNR (days to delivery) Current (days to delivery) MPNR (days to delivery) Current (days to delivery) MPNR (days to delivery) Thursday 1 2 2 4 3 4 Friday 1 3 3 3 3 3 Saturday 2 2 2 3 3 3 Sunday 2 3 3 4 4 4 Monday 1 2 2 3 3 3 Tuesday 1 2 2 3 3 3 Wednesday 1 2 2 3 3 3 Thursday 1 2 2 5 5 5 Friday 1 4 4 4 4 4
of market dominant measurement systems, and asserts that those systems are not at issue in this docket (§ 3691(b)(1)(D)). Id. Service standard factors. The PAEA requires service standards to take the following factors into account: (1) the actual level of service that Postal Service customers receive under previous and current service standards; (2) the degree of customer satisfaction with Postal Service performance in the acceptance, processing and delivery of mail; (3) the needs of Postal Service customers, including those with physical impairments; (4) mail volume and revenues projected for future years; (5) the projected growth in the number of addresses the Postal Service will be required to serve in future years; (6) the current and projected future cost of serving Postal Service customers; (7) the effect of changes in technology, demographics, and population distribution on the efficient and reliable operation of the postal delivery system; and (8) the policies of title 39 generally and such other factors as the Postal Service determines appropriate. 39 U.S.C. § 3691(c). The Postal Service states that it has Commission approved measurement systems in place for measuring both level of service and customer satisfaction. Tr. 7/2437-38. It has also considered the information gathered from market research when developing the proposed rules, citing to USPS-T-11, USPS-T-12, and USPS-T-13 at 4 (§ 3691(c)(1-3)). The Postal Service asserts it has considered future declining mail volumes which contribute to revenue declines that currently outpace cost reductions (§ 3691(c)(4,6)). Id. at 2438. It also comments on the growth in the number of delivery points that impact overall costs (§ 3691(c)(5)). Id. at 2439 The Postal Service states that the current processing network was established in response to many decades of mail growth, but because volumes have since declined, the Postal Service now has