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Highlights of the Postal Regulatory Commission's Dallas Field Hearing on Five-Day Delivery

By Tom Wakefield, PostalMag.com, 5/17/2010

The hearing was held in a basement/lower level auditorium at Dallas City Hall on May 17th, 2010 at 1:00 PM. There were 56 people in attendance, not including the commissioners, panelists and a few reporters who left after about 10 minutes into the hearing.

There were no protestors waving banners, signs, etc., although there were a few presidents and other officials of local and state postal labor unions. Everyone sat quietly as the panelists read their statements and the commissioners questioned the panelists.

Roy G. Robinson, current chairman of the board of the Texas Press Association, and Phil Major, publisher of the Wise County Messenger, gave similar testimony about the negative impact ending Saturday mail delivery would have on Texas newspapers, especially for those in outlying areas. Mr. Major, for example, talked about how Friday night high school football is big in Texas, and such news which is now delivered on Saturday  would be regarded as history by Monday. Both men had good points about how the Internet has less of an impact in outlying areas, where in fact there is less Internet access (and less high-speed Internet), making newspapers and mail delivery perhaps a more important medium than in urban areas. Mr. Major acknowledged that 70% of his mailings are via Standard Mail.

Both Robinson and Major noted they would seek to hire a private carrier workforce to deliver their newspapers on Saturday if the USPS were to end Saturday delivery. In fact, this wouldn't just be a workforce to deliver the Saturday newspaper, but for six-days so as to justify 40 hours worth of work for the private workforce, Mr. Robinson stated. Postal Regulatory Commissioner Mark Acton asked the obvious question concerning the affordability of their private carrier plan and both newspapermen acknowledged they had not looked at the affordability aspect. Postal Regulatory Commissioner Dan Blair asked the other obvious question concerning the Postal Service's monopoly on the mailbox. Mr. Major stated the private carriers could just throw the newspaper in the front yard, as Major did when he was delivering papers when he was thirteen. Robinson added that perhaps a plastic sleeve (attached somewhere on a property) could be used for delivery of the newspapers.

Should the USPS be worried about their private carrier workforce proposal? Perhaps. Major's Wise County Messenger spent $283,000 last year on postage. Quick math will tell you they could potentially hire seven full-time people earning $40,000 each per year to deliver their newspapers. (But that's not considering fuel and other related costs, such as benefits, employee taxes, injury compensation costs, etc.) Or many more could be hired using a contractor-based business model. However, it's not clear if $283,000 will be enough to provide delivery service to 22,000 stops, especially in this rural area, unless... they join with other businesses to deliver their products also, which would undercut the USPS further.

Next up was Bruce Sherbert, Election Administrator for Dallas County, and then Suzanne Henderson, County Clerk for Tarrant County. Their testimony touched on voting by mail and the implications ending Saturday delivery would have on voting by mail. I generally ignored this testimony as it really has no implications. Just make the deadline Friday, instead of Saturday, for mailed ballots, if it comes to that.

The next panel started with the well-spoken gentleman USPS Southwest Area Vice President Ellis Burgoyne. Mr. Burgoyne stated the Dallas District has experienced a 15 percent cumulative increase in total operating revenue over the five-year period from quarter 1 of fiscal year 2005 to  the same quarter in 2010. The commissioners seemed intrigued by this fact. There was some talk about how the economic downturn has been less severe in the Southwest, perhaps because of the area's population growth. Personally, I see this as a potential indicator that mail volumes and revenue will return to a higher level than expected if an economic recovery takes hold in other parts of the country. After some questioning, Mr. Burgoyne stated that some of the questions should be deferred to the field hearings in Washington, since most of the planning for five-day delivery at this point is focused at USPS HQ. Mr. Burgoyne stated that his main efforts at this time are managing the Southwest Area's day-to-day operations in a challenging economic environment. Interestingly, upon questioning, Mr. Burgoyne briefly described how he mainly reports to his boss Deputy PMG Donahoe and less to PMG Potter. Overall, the commissioners seemed impressed with Mr. Burgoyne's testimony and the ray of sunshine he gave (about the revenue increase) in an otherwise dark cloud.

Later, the "two Carols" gave their testimony, Carol Kliewer, Director, Distribution & Logistics, Order Fulfillment, Harland Clarke, and Carol Bald, Postal Operations Manager, Strategic Fulfillment Group. I believe that both stated, if given a choice, they would rather have five-day delivery than a postal rate increase beyond CPI. After their testimony, Postal Rate Commission Chairman Ruth Goldway delivered some bad news to the Carols. She told them they may not have a choice anyway as the USPS is contemplating/planning both a rate increase and reduction to five-day delivery during the same time frame in 2011.

After the testimony, Commissioner Goldway invited public comments. About ten people lined up and each gave a two to three minute statement.

Overall, I was impressed with the entire hearing. It was accomplished in a professional manner and all viewpoints were respectfully noted. The commissioners, far from being just political appointees, seemed to have a firm grasp on all aspects of the discussion at hand. In fact, their non-postal experiences appeared to provide some useful insights. Goldway for example, former mayor of Santa Monica, California, fully understood perhaps better than anyone in the room the testimony of the county administrators, as evidenced by her questioning of the administrators.

Newspaper Publisher Responds, Makes Case for Private Carrier Workforce if USPS Ends Saturday Delivery

Phil Major, Wise County Messenger, 5/18/2010 (Received via email at PostalMag.com in response to above article.)

I would like to attempt to further illuminate a couple of items from your report, and I welcome your response and input.

Since 1984 the eight post offices in Wise County have delivered our "Sunday" paper on Saturday to all the in-county subscribers, which is about 60 percent of our readership. The rest buy it in stores and from news racks. We print overnight on Friday and have the papers at the USPS docks in time for Saturday home delivery countywide.

They have done the same thing on Wednesday for our "Thursday" paper for many years as well.

Our standard mail product, which goes out ahead of the Thursday paper, is primarily an advertising vehicle with "free" countywide distribution and is not the main newspaper. If USPS loses that business, it will be losing the most profitable component of our mail, which I'm guessing they have not fully considered. Indeed that seemed to come as somewhat of a surprise to the chairman.

If the postal service ceases Saturday delivery, we will be forced to seek another method of delivery. One of the primary points we wanted to make with the PRC is that in rural communities, the newspaper remains a vital information link and will not likely be replaced with the Internet in our lifetime. (Although cessation of Saturday mail may indeed give us an unexpected opportunity to further explore just how willing subscribers would be to get the entire paper online - only a small percentage do that now.)

On the point of establishing a private carrier force, we are well-acquainted with the costs and challenges in doing so, since we have many colleagues in the industry who have already done that. I have not yet attacked this issue with a sharp pencil, however, and won't until it becomes evident that Saturday delivery is definitely going away. I do know that the cost is somewhat comparable, and if it does prove to be substantially higher, consumers would unfortunately pick up at least some of that added cost.

I will not, however, employ a carrier force five or six days a week. My newspaper is printed twice a week, and my standard mail product is weekly, so at most we would be looking at three days for carriers. (Mr. Robinson's twice weekly papers print on a similar schedule, but since his group includes several other weekly papers, he might be looking at a longer work week for carriers.)

Commissioner Acton pointed out that the USPS is essentially creating the prospect of additional competition for itself by halting Saturday mail, and looking down the road, perhaps dropping one other day.

We would strongly prefer not to establish a private carrier force, but it's not too much of a stretch either, since daily papers have continued to do that seven days a week (like the one I get in my yard every morning), and one avenue we could explore would be to partner with them.

The bottom line is that USPS would put us in the position of making a major change to our business model if it ceases Saturday delivery, and changing press days is not a viable option. Part of our role yesterday was to help the PRC understand what other alternatives we do have available should this come to pass, and how it could negatively impact USPS's bottom line.

Phil Major
Wise County Messenger
Decatur, Texas
More photos...

Hot recording secretary.

Mark Hendrickson, Rural Carrier in Houston, Texas.

The public was invited to give their statements.
Hi-res photos available for download:


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