Editor's note: Updated to add comment from U.S. Sen. John Boozman, R-Ark., and comments from Sylvester Smith, Arkansas director of the National Federation of Independent Business.
Wednesday’s announcement by the United States Postal Service to end regular Saturday mail delivery beginning Aug. 5 barely raised the eyebrows of two business owners who do business in the Northwest Arkansas and Fort Smith areas.
However, the USPS announcement did spur political commentary with two members of Arkansas’ Congressional Delegation.
The new USPS proposal would continue delivery of packages on Saturday, but all other mail would only be delivered Monday through Friday. USPS officials say the delivery change will save $2 billion once the plan is fully implemented. The plan will require Congressional approval.
“The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America’s changing mailing habits,” Patrick Donahoe, Postmaster General and CEO, said in the statement. “We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings.”
Because of recent 14% growth since 2010 in package volume, the USPS decided to keep Saturday package delivery.
“Our customers see strong value in the national delivery platform we provide and maintaining a six-day delivery schedule for packages is an important part of that platform,” said Donahoe. “As consumers increasingly use and rely on delivery services — especially due to the rise of e-commerce — we can play an increasingly vital role as a delivery provider of choice, and as a driver of growth opportunities for America’s businesses.”
The USPS has proposed and implemented several cuts in nationwide service during the past few years. On Sept. 15, 2011, the USPS announced a national plan that would include the study of about 250 processing facilities for possible consolidation or closure, reducing mail processing equipment by as much as 50%, decreasing the nationwide transportation network, cutting up to 35,000 jobs, and revising service standards for first-class mail and periodicals.
In Arkansas, the plan would have essentially moved all mail processing in Arkansas to Little Rock and created lengthier mail delivery times and the loss of more than 200 jobs in Northwest Arkansas and Fort Smith.
BUSINESS RESPONSE
But that broad plan was put on hold. However, mail processing operations in Fort Smith have been consolidated with the mail processing operation in Fayetteville.
“The regular mail is already delayed about a day because of that (move to Fayetteville),” said Arthur Green, owner of Bandwagon Merchandise.
Green, who through his company provides a broad range of marketing and promotional materials and services, has clients in Northwest Arkansas and Fort Smith. With a warehousing and production operation in Kansas City, Mo., Green is wholly dependent on delivery services.
“I don’t see it as having an impact on us,” Green said of the August change in service. “If I need something that has to be somewhere on a Saturday, then I go with UPS or use second-day air.”
Jeff Carter, who is an owner and co-owner of Jeff Carter Productions and Carters’s AV, respectively, also depends on delivery services for shipment of cables, speakers, and other audio-visual supplies to customers in and out of Arkansas. The USPS announcement is no big deal for his businesses, which are based in Fort Smith but have clients all over the state and region.
“Not having that (regular mail service) won’t be a problem for us. ... With our packages, we use FedEx, UPS or the Post Office. Whatever our suppliers use, that’s who we go with,” Carter said.
Sylvester Smith, Arkansas director of the National Federation of Independent Business, said the proposed service change will present a hardship to businesses.
“The new developments at the postal service will certainly impact small business owners. First, because retailers and people in the service industry are often at work on Saturday. They need to receive both letters and more importantly checks in a timely manner,” Smith said in a statement to The City Wire.
Smith also said the USPS business model “is hopelessly broken,” saying that the USPS spends more for labor than private-sector competitors.
“A prime example is FedEx, which only invests 43% of its expenses in labor. The Postal Service spends an obscene amount, 80%, of its expenses on labor,” Smith said.
He blamed the high labor costs on union contracts.
“The solution is simple. The postal worker's unions must accept concessions, or the Postal Service should be allowed to utilize non-union labor,” Smith explained.
POLITICAL RESPONSE
U.S. Sen. Mark Pryor, D-Ark., blamed inaction by the GOP-controlled U.S. House of Representatives for the financial problems that caused the USPS to have to cut Saturday service.
“Last year, the Senate passed — and I supported — a bipartisan postal reform bill to put the U.S. Postal Service back on the road to financial stability. Unfortunately, the House refused to bring our bill to the floor, or offer a bill of their own. Due to the House’s inaction, the Postal Service is now facing crippling deficits,” Pryor said in a statement.
Pryor said other cuts should be considered before a reduction in regular mail service.
“They need to consider alternative measures, such as capping the salaries of their top executives or eliminating bonuses, before making changes that would hurt rural communities who depend on the Postal Service for commerce, news, and necessary goods,” Pryor said.
U.S. Sen. John Boozman, R-Ark., also expressed displeasure about the House not passing a Senate bill designed to alleviate USPS financial problems. He said in a statement that the the “21st Century Postal Act” would have provided “the postal service with greater flexibility to continue serving its customers.”
“While I am disappointed the postal service had to resort to changing its delivery service, the financial strain of losing nearly $16 billion last year should not come at the expense of the needs of Arkansans,” Boozman noted in his statement. “We will work to limit the ramifications this decision will have on businesses and families who rely on the postal service.”
U.S. Rep. Steve Womack, R-Rogers, supported the USPS decision, and attempted to connect USPS financial problems to the U.S. deficit.
“Much like the federal government, the United States Postal Service has been hemorrhaging money for years. I commend USPS for making tough – but necessary – decisions to ensure a sustainable future and hope that Congress and the Administration will share USPS’s resolve to getting its fiscal house in order as we work for real reforms to address our debt and deficit,” Womack said in a statement.
ANNOUNCEMENT DETAILS
Following are key points in the USPS statement.
• Market research conducted by the Postal Service and independent research by major news organizations indicate that nearly seven out of ten Americans (70%) supported the switch to five-day delivery as a way for the Postal Service to reduce costs in its effort to return the organization to financial stability.
• The Postal Service is making the announcement today, more than six months in advance of implementing five-day mail delivery schedule, to give residential and business customers time to plan and adjust.
• Since 2006, the Postal Service has reduced its annual cost base by approximately $15 billion, reduced the size of its workforce by 193,000 or 28%, and has consolidated more than 200 mail processing locations.
• While the change in the delivery schedule announced today is one of the actions needed to restore the financial health of the Postal Service, legislative change is urgently needed to address matters outside the Postal Service’s control. The Postal Service continues to seek legislation to provide it with greater flexibility to control costs and generate new revenue and encourages the 113th Congress to make postal reform legislation an urgent priority.