Implications of Electronic Mail and Message Systems for the U.S. Postal Service

64 .Implications of Electronic Mail and Message Systems for the U.S. Postal Service

delivery data first were collected, indicate that
possibly USPS has reached its peak in terms
of improvement in national delivery perform
ance with the current mail system.' While per
formance is dropping off (for other than local
area first class mail), delivery work hours are
creeping up again after declining for many
years. More specifically, delivery work hours
decreased by about 8 percent from 1970 to
1978 while total USPS delivery points in
creased by 20 percent during that period. But
since 1978, delivery work hours have increased
by about 4 percent while delivery points rose
by 6 or 7 percent.'
.EMS have several implications for USPS
service levels. On the one hand, the projected
reductions in USPS delivered first class mail
for the baseline high Generation II EMS
growth alternative would reduce the year 2000
first class contribution to USPS fixed costs by
about $1.5 billion and, in turn, could translate
into $1.5 billion worth of service reductions in
order to avoid rate increases. OTA did not
analyze in detail what kinds of service cuts
would save $1.5 billion. However, USPS of
ficials have estimated that delivery 5 days a
week would save about $650 million (1980
dollars). A 1975 General Accounting Office
study estimated that closing 12,000 small and
rural post offices would save $100 million
(1975 dollars),'and a 1976 congressional study
projected a saving of $1.1 billion (1977 dollars)
for delivery 3 days a week. Any of these serv-
ice changes undoubtedly would be contro
versial.
'Ibid.
'Ibid., p. 12.
Comptroller General of the United States, $100Million Could
Be Saved Annually in Postal Operations in Rural America,
Washington, D. C., U.S. General Accounting Office, 1975.
"U. S., Congress, House Committee on Post Office and Civil
Service, The Necessity for Change,94th Cong., 2d sess., Dec.
10, 1976, p.40.

On the other hand, Generation II EMS serv-
ice could help to improve USPS performance.
To the extent that excessive mail delays now
occur in processing and sorting the large
volumes of conventional mail, Generation II
EMS could help to relieve these strains since
Generation II would bypass many of the proc
essing and sorting steps now required. Pre
sumably, Generation II EMS would also speed
up delivery of mail sent outside the local area
since electronic transmission would be much
faster than physical transport. A fully
deployed nationwide Generation II EMS serv-
ice could reasonably be expected to provide
1 day delivery nationwide 95 percent of the
time. Cost savings associated with the reduced
sorting, processing, and transportation re
quirements of Generation II EMS were re
flected in the 5C/piece cost displacement (com-rn
pared to conventional mail) assumed in the
revenue/cost analysis (ch. 5).
Finally, if Generation II EMS volume was
higher than the baseline and/or if Generation
II EMS made a greater per piece contribution
to USPS fixed costs than conventional mail,
then Generation II EMS could generate
enough revenue to offset the need for service
cutbacks and would contribute to improved
USPS performance at current service levels.
Even if service cutbacks became necessary,
Generation II EMS could help USPS maintain
service to particular geographic areas or types
of customers where full service conventional
mail might be considered too expensive or no
longer cost effective. For example, location of
Generation II EMS terminals in smaller or
more remote post offices could reduce or
eliminate long distance transportation costs
that might become prohibitively high, forcing
the closure of such offices.

Labor Requirements

USPS is a labor intensive organization. As
noted earlier, labor represents about 85 per
cent of total USPS costs. Labor requirements

are primarily determined by three factors
USPS service levels, labor productivity, and
mail volumes. By making assumptions about

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 July 25, 2014.