The Postal Service’s delivery cuts spare e-commerce packages

February 7, 2013 02:23 PM

Facing a nearly $16 billion budget shortfall, the U.S. Postal Service said this week that it plans to cut expenses by ending Saturday delivery in August of at least some forms of mail. But enjoying growth in shipments by online retailers, the agency said it will continue delivering packages six days a week.

The Postal Service said it was still working out which forms of mail, including letters and larger mail pieces, would be included in the termination of Saturday deliveries. “There are a few areas that we have not yet defined as either mail or packages at this point,” a postal service spokeswoman said yesterday. “We will have more specifics in a few weeks.”

She added, however, that among items that the USPS will cease to deliver on Saturdays are catalogs and DVD mailers. Netflix Inc., which mails DVDs to customers and is No. 9 in the Internet Retailer Top 500, declined to comment.

The Postal Service expects the cutback in service, due to begin Aug. 5, to save about $2 billion annually in operating expenses, helping it to slice into a budget shortfall that reached $15.906 billion for the fiscal year ended Sept. 30, 2012. ($11.1 billion of the shortfall is in payouts of retirement benefits.)

The Postal Service reports that its mail volume has dropped steadily in recent years, declining 5% year over year to 159.9 billion pieces for the year ended Sept. 30, 2012. Online package deliveries, meanwhile, increased 7.5% over the same period, the agency says, declining to break out numbers for those delivered pieces.

Dave Hodess, CEO of GameFly Inc., which ships computer game discs in first-class mail flats, says he doesn’t expect the loss of Saturday delivery to be a problem. “We recognize that the USPS has been under financial pressure and understand this move in that context,” he says. “Cutting Saturday delivery should not impact our business,” he adds. GameFly is No. 150 in the Internet Retailer Top 500.

Aiming to build on its strength in e-commerce deliveries, the Postal Service says it is working on new services designed to appeal to online shoppers and merchants. It’s testing a service called  “gopost” that lets consumers ship packages to USPS lockers in public places like transportation hubs and grocery stores that are open all day, every day.

The service, which charges standard shipping fees, is intended as an alternative to waiting at home for delivery or worrying about a delivered package left outside. Consumers register for an account at, then receive an access card and personal identification number in the mail. After requesting delivery to a gopost location, the consumer receives a confirmation e-mail or text message when the package arrives. She then enters her access card and personal identification number into a computer screen at her chosen gopost locker location, which identifies the locker and automatically opens it.

The Postal Service is testing 13 gopost locations in the Washington area and two in New York, a spokeswoman says.

Meanwhile, the Direct Marketing Association, which represents retailers and others involved in direct-mail and online marketing, says the drop in Saturday mail delivery would mostly affect merchants advertising a weekend sale through direct mail, requiring them to adjust marketing schedules. “The efficacy of the weekend sale advertisement received on Thursday and Friday rather than Friday and Saturday may change significantly,” says Jerry Cerasale, senior vice president of government affairs.

Cerasale adds that the DMA is also concerned about uncertainty in the legality of the USPS plan to cut Saturday mail delivery, as raised by members of Congress. “That uncertainty will create confusion for mailers as they plan for post-Aug. 5 mailings,” he says.

The Postal Service contends that it is not bound by federal law to provide six-day mail delivery. “We believe we have authority under current law to make this change,” a spokeswoman says.

But some members of Congress disagree.

U.S. Rep. Jose Serrano (D-NY), a member of the House Appropriations Committee and the Subcommittee on Financial Services and General Government, which oversees the Postal Service, says the agency is “acting outside of its legal authority” as stipulated in legislation on appropriations, and that the subcommittee will work on a financial reform package that would allow the agency to maintain services such as Saturday delivery. Sen. Tom Carper (D—DE), chairman of the Homeland Security and Government Affairs Committee, which also oversees the Postal Service, says he’s “disappointed” in the plans for five-day mail delivery and plans to introduce early this year legislation on reforming the agency. He said he would like to keep Saturday deliveries as long as possible.




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