evidence that viable alternatives exist, and that network rationalization can occur while preserving the current level of service for much of First-Class Mail has been presented. In fact, the Postal modified implementation plan undertakes considerable Service’s network rationalization while preserving most First-Class Mail service at least through January 31, 2014. In evaluating the Postal presentation, the Commission assesses what Service’s forms of network rationalization may occur while preserving existing service to a reasonable extent. Although the Postal Service did not consider alternative options, the Commission looked at testimony and its own analysis to address this issue. participants’ The Commission concludes that it is possible for the Postal Service to undertake significant network rationalization and realize substantial cost savings while preserving most current service levels. Under ideal circumstances, the Commission would encourage the Postal Service to proceed with network rationalization to the extent that existing service levels could be preserved. However, the Postal Service has already instituted some changes (Phase 1 implementation). For First-Class Mail, approximately 20 percent of mail previously subject to overnight service will be changed to 2-day service. Depending on the specifics of network rationalization, this may also require a portion of 2-day mail to move to 3-day. Phase 1 implementation is consistent with the position of preserving service levels whenever feasible, similar to the Commission’s proposals put forth by intervenors in this docket. The analysis indicates that the Postal Service underestimates the Commission’s extent that network rationalization can occur without further reducing service in Phase 2. The Commission cannot conclude that the benefits of eliminating most overnight delivery of First-Class Mail, and deferring a substantial amount of current 2-day mail an additional day, outweigh the risks of exacerbating declining volume trends or harm to the Postal Service brand based on the evidence provided in this docket (Phase 2 implementation). The Commission encourages the Postal Service to consider the advice in this opinion and study the effects of the service standard changes
evidence that viable alternatives exist, and that network rationalization can occur while preserving the current level of service for much of First-Class Mail has been presented. In fact, the Postal Service’s modified implementation plan undertakes considerable network rationalization while preserving most First-Class Mail service at least through January 31, 2014. In evaluating the Postal Service’s presentation, the Commission assesses what forms of network rationalization may occur while preserving existing service to a reasonable extent. Although the Postal Service did not consider alternative options, the Commission looked at participants’ testimony and its own analysis to address this issue. The Commission concludes that it is possible for the Postal Service to undertake significant network rationalization and realize substantial cost savings while preserving most current service levels. Under ideal circumstances, the Commission would encourage the Postal Service to proceed with network rationalization to the extent that existing service levels could be preserved. However, the Postal Service has already instituted some changes (Phase 1 implementation). For First-Class Mail, approximately 20 percent of mail previously subject to overnight service will be changed to 2-day service. Depending on the specifics of network rationalization, this may also require a portion of 2-day mail to move to 3-day. Phase 1 implementation is consistent with the Commission’s position of preserving service levels whenever feasible, similar to the proposals put forth by intervenors in this docket. The Commission’s analysis indicates that the Postal Service underestimates the extent that network rationalization can occur without further reducing service in Phase 2. The Commission cannot conclude that the benefits of eliminating most overnight delivery of First-Class Mail, and deferring a substantial amount of current 2-day mail an additional day, outweigh the risks of exacerbating declining volume trends or harm to the Postal Service brand based on the evidence provided in this docket (Phase 2 implementation). The Commission encourages the Postal Service to consider the advice in this opinion and study the effects of the service standard changes
Advisory_Opinion_%2009282012.docx