Ch. 6-implications for Postal Rates, Service Levels, and Labor Requirements .63
However, USPS could choose to reduce serv
ice levels and labor requirements rather than
increase rates in the face of declining USPS
delivered mail volume.
Based on projected mail volumes for the
baseline high Generation II growth alter
native, it appears that USPS might have to
reduce current service levels significantly after
1995 in order to avoid real rate increases. After
that time, the shortfall in the first class mail
contribution to USPS fixed costs could be
come large enough to warrant consideration
of service cutbacks rather than rate increases,
particularly if rate increases would further
reduce USPS mail volume. On the other hand,
if the alternative revenue/cost assumption held
up, and if Generation II EMS could contribute
significantly more per piece to USPS fixed
costs than could conventional mail, then major
real rate increases (net of inflation) or service
cutbacks could be forestalled until past 2000.
This would also be the case if the underlying
mainstream growth was 3 percent rather than
Present USPS service levels are summarized
in table 11. Since the USPS commenced opera
tions on July 1, 1971, the number of days of
delivery per week has remained the same. The
number of post offices, branches, and stations
has declined at a very slow rate. For example,
over the last 5 years, the number of post of-
fices declined at a rate of 1.4 percent per year.
In contrast, the number of city delivery points
has increased by about 21 percent since 1971,
and the number of rural delivery points by
about 50 percent.4 Since USPS is obligated by
law to provide mail service to all business and
residential addresses in the United States, the
number of delivery points has expanded along
with growth in population and in populated
areas. USPS has instituted some measures,
such as the use of cluster mailboxes, to limit
the increase of delivery points in newly popu
'Annual Report of the Postmaster General fiscal 1980, p. 31
and Annual Report of the Postmaster GeneraL fiscal 1979, p. 31.
Annual Report of the Postmaster General fiscal 1980, p, 10.
Table 11.- USPS Service Levels, Fiscal Year 1980
Days of delivery per week .........
Number of post offices ...........
Number of branches and stations . .
Number of city delivery points .....
Number of rural delivery points ....
Overnight delivery of local area
m a il . . . . . . . . . . . . . . . . . . . . . .. . .
2-day delivery of 600-mile radius
3-day delivery of cross-country
m ail .......... .. .............
Level of service
95 percent on time
86 percent on time
87 percent on time
SOURCE Annual Reportof the Postmaster Genera, F'sea/ 198, pp 10, 11
lated areas such as suburban or exurban resi
While OTA did not study USPS service lev
els in detail, there is some evidence to suggest
that the mail system is nearing capacity. In
other words, there may be limits to the volume
of conventional mail that can be handled
without sacrificing quality of service. For ex
ample, a USPS task force concluded that 5 day
delivery "would have a negative impact on
service, including overtime, inconsistent
delivery, delayed deliveries, equipment short
ages, inadequate space to store accumulated
mail, and inadequate vehicle capacity." Also,
since 1977 when total mail volume reached
about 92 billion pieces, first class mail delivery
performance has declined for all but local area
mail. Ontime (overnight) delivery for local area
mail has remained quite stable at about 95 per
cent, but ontime delivery (2 day) for 600 mile
radius mail has decreased from 90 to 86 per
cent since 1977. Ontime (3 day) delivery for
cross country mail has dropped from about 91
to 87 percent.6The long term performance
trends since 1973, the year when comparable
'U.S. General Accounting Office, Implications of Electronic
Mail for the Postal Services Work Force, Feb. 6, 1981, pp.
Annual Report of the Postmaster General fiscal 1980, p. 11.
United States. Congress. Office of Technology Assessment. Implications of Electronic Mail and Message Systems for the U.S. Postal Service. UNT Digital Library. http://digital.library.unt.edu/ark:/67531/metadc39480/. Accessed January 29, 2015.