• on Apr 6th, 2009 in Mail Processing & Transportation | 14 comments

    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?

  • on Mar 30th, 2009 in Finances: Cost & Revenue | 15 comments
    As Pushing the Envelope noted 8 weeks ago, the Postal Service is facing a severe financial challenge. There are concerns the Postal Service could end this year without enough cash to pay all of its bills. The Postal Service attributes its problems to two major factors: (1) the long-term erosion of high-margin First-Class Mail volume because of electronic diversion and (2) drastic volume losses due to the current recession. The Postal Service has asked Congress to
    • Allow for a slower rate of funding of its retiree health benefits.
    • Give the Board of Governors the flexibility to move from 6-day to 5-day delivery.

    Other options for the Postal Service include

    • Raising the Postal Service’s debt limits — The law currently prevents the Postal Service from ending the year with more than $3 billion in additional debt. Moreover, the Postal Service’s total borrowing is limited to $15 billion. These debt limits were last raised in the early 1990s. If they were raised, the Postal Service could borrow additional money at very low interest rates from the Federal Financing Bank. If volumes continue to fall, however, would the Postal Service be able to pay back its debt in the future?
    • Raising rates — The Postal Accountability and Enhancement Act capped rates for most mail classes at inflation as measured by the Consumer Price Index. The Postal Service could file a special “exigency” rate case at the Postal Regulatory Commission to permit additional rate increases beyond the cap. Can the Postal Service raise sufficient additional revenue by raising rates or would higher rates simply accelerate volume loss and cause total revenue to decline even further?
    • Cutting costs — The Postal Service has undertaken to cut $5.9 billion in costs in FY 2009, yet some cost cutting measures such as closing post offices or consolidating facilities face political opposition. To what degree can the Postal Service cut costs without reducing service? Some private sector companies have started laying off workers, but many Postal Service employees are protected from layoffs under collective bargaining agreements.
    • Appropriations — Congress could provide the Postal Service with additional revenue to carry it through this difficult period, yet the federal budget deficit is rapidly expanding. There may be limited public appetite for providing the Postal Service with additional funds.

    What do you think? What are the best options for the Postal Service to meet its current financial challenge?

  • on Mar 23rd, 2009 in Delivery & Collection | 37 comments

    Mail volume plummeted 4.5 percent — or 9.5 billion pieces — in fiscal year (FY) 2008. Reduced mail volume allows the Postal Service to combine delivery routes to maximize efficiency and reduce workhours, overtime, and other expenses. The Postal Service is seizing this opportunity by consolidating more than 87,000 city delivery routes — which could affect as many as 50 million addresses nationwide. Consolidating routes means some customers will receive their mail at a different time — earlier or later in the day. It also means the customer could have a different letter carrier who will have to become familiar with a new delivery route.

    There were more than 211,000 city carriers delivering mail to 87 million residential and business city delivery points at the end of FY 2008. On average, each carrier’s route has 500 to 700 delivery points. A carrier’s day involves two types of work: sorting mail in the office and delivering mail on the street. In the past, carriers typically spent several hours each day at the post office sorting mail for their route into delivery order. Now, machines sort most letter mail into delivery order automatically, and fewer pieces of mail means it takes less time for carriers to sort mail at the post office. This leaves carriers more time “on the street” allowing them to reach more delivery points.

    On the street, the length of time a carrier takes to deliver mail on a route depends on factors such as the number of delivery points and the distance between them as well as mail volume. For instance, a carrier can deliver 10 letters to an address almost as quickly as 1 letter. More than 400,000 new city delivery points were added in FY 2008. When adjusting routes, the Postal Service must consider both mail volume and delivery points — including new delivery points — to build a route with 8 hours of work.

    bar chart showing city delivery points FY 2005: 85,804,626; FY 2006: 86,292,173; FY 2007: 86,882,476; FY 2008: 87,285,380

    The Postal Service also relies on carriers to help ensure addresses on their routes are accurate by reporting vacant and abandoned buildings. If a carrier has 30 delivery points on her route and a 20-delivery-point apartment complex is torn down, it will reduce the route to 10 delivery points. Approximately 20 delivery points could be added to the carrier’s route.

    Do you think consolidating city delivery routes will have a positive effect on the Postal Service’s bottom line? Why or why not? Will it be difficult for carriers — particularly those who walk their routes — to spend more time on the street?