• ## Fuel Economy and the Postal Service: A Quiz

on Apr 6th, 2009

Two families trade in their vehicles for more fuel-efficient ones. If both travel the same amount each year, which will save more fuel by making the change?

• Family 1 decides to trade in their 4-wheel drive Jeep Patriot (25.5 avg. MPG) for a Civic Hybrid (42.5 avg. MPG).
• Family 2 decides to trade in their 4-wheel drive Chevy Trailblazer (14 avg. MPG) for a 4-wheel drive Jeep Patriot (25.5 avg. MPG).

Please vote before continuing if you don’t want to cheat.

Did most of you think Family 1?

Well . . . that is wrong by a long shot. In fact, Family 2 will save more than twice as much fuel as Family 1! The problem here, however, is not you – it is the poor metric of MPG (miles per gallon).

If you don’t believe us, let’s do the math. Assume both families drive 10,000 miles per year.

Family 1 goes from buying 392 gallons of gas per year (10,000 miles / 25.5 MPG) to buying 235 gallons of gas per year (10,000 miles / 42.5 MPG) — resulting in an annual fuel savings of 157 gallons.

Family 2 goes from buying 714 gallons of gas per year (10,000 miles / 14 MPG) to buying 392 gallons of gas per year (10,000 miles / 25.5 MPG) — resulting in annual fuel savings of 322 gallons – or more than twice as many gallons as Family 1.

What does this mean to the Postal Service? The best way the Postal Service (or any organization for that matter) can save fuel is to find the least efficient vehicles and replace them with modestly fuel efficient vehicles. Small changes can mean incredible savings. Use the math above to prove to yourself that raising a truck from 5 to 6 MPG will save more fuel than raising a car from 20 to 50 MPG! Also, prove to yourself that raising that truck from 5 to 10 MPG will save more than twice as much fuel as making a 20 MPG vehicle use no fuel whatsoever!!!

Do you have any ideas about how the Postal Service can use fuel more efficiently?

• ## Mail Volume: What Goes Up…?

on Dec 12th, 2008

In 1970, the Postal Service delivered fewer than 85 billion pieces of mail. Thirty years later, mail volume had more than doubled to nearly 208 billion pieces of mail — average growth of about 3 percent per year. The Postal Service relied upon this dependable growth in mail volume to finance the expansion of its network. The traditional business model worked.

Then, mail volume entered the new century. Each year from 2000 through 2003, total mail volume decreased. In 2005, the volume of Standard Mail surpassed the volume of the Postal Service’s flagship product First-Class Mail for the first time, with First-Class Mail volume actually falling below its 1995 level. Total mail volume growth averaged an anemic 0.3 percent per year from 2000 through 2007, and when the Postal Service’s 2008 fiscal year ended on September 30, volume had declined in nearly all categories. The total decline in 2008 was 4.5 percent to 202.7 billion pieces.  The Postal Service is forecasting continued volume decline to 194.5 billion pieces in 2009.

Do these recent trends portend a fundamental change to mail volumes? Or are they mostly a symptom of the current adverse economic conditions? What are the long-term consequences of electronic substitution? How have other factors such as value of competitors’ products, new technologies, and complementary services affected mail volumes?

The Postal Service touches everyone, everywhere, nearly every day and is the cornerstone of the \$1.2 trillion mailing industry. The Postal Service’s traditional business model is threatened. But, with every threat, comes opportunity. Which products and services may rebound and grow?

• ## Moving Less Mail

on Dec 12th, 2008

The Postal Service moves mail using planes, trains, trucks, cars, boats, ferries, helicopters, bicycles, hovercrafts, subways and even mules.  It operates the largest civilian vehicle fleet in the world with more than 219,000 vehicles.  Its fleet of trucks drives nearly 4.1 million miles and uses more than 400,000 gallons of fuel daily.  To put this in perspective, when fuel costs increase by one penny, the cost to the Postal Service increases by more than \$8 million annually.

The expense of providing this transportation infrastructure is staggering.  In 2007, it cost the Postal Service \$6.5 billion — mostly for air and highway transportation.  This was an increase of 7.6 percent compared to 2006.  Yet mail volume has recently suffered a sharp decline.  If volume declines continue, the Postal Service could find itself operating and funding a transportation network that cannot be efficiently sustained.

How can the Postal Service’s transportation network make the best of mail volume declines?  What are the most promising opportunities to reduce transportation costs?  For example, should the Postal Service

• Develop partnerships with other businesses that transport goods?
• Reduce highway transportation routes that overlap?
• Continue to eliminate underutilized trips?
• Make more use of other, less costly forms of transportation such as rail or maritime?
• Reduce its reliance on air transportation or shift volumes among carriers to ensure the lowest cost is obtained for responsive service?
• Relax the delivery timeframe standards?

What do you think?

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