WASHINGTON — As federal regulators consider a proposal to cut most Saturday postal deliveries, the business community is sharply divided about the consequences of switching to five-day service.
Some, like Donald J. Hall Jr., chief executive of Hallmark Cards, said that eliminating Saturday delivery and raising prices even incrementally would drive more business away from the U.S. Postal Service, resulting in a “slippery slope.”
But others, like Andrew Rendich, the chief service and DVD operations officer at Netflix, said five-day delivery would be a better alternative to significantly higher postal rates.
“Big rate increases will absolutely squash business and will absolutely slow growth for a company like Netflix,” Rendich said.
The Postal Service estimates that cutting Saturday delivery would result in savings of $3 billion a year, though the Postal Regulatory Commission, which will make a recommendation to the Postal Service on its proposal, estimates smaller savings, about $2 billion a year.
The commission begins hearings on the service changes Monday.
In addition to eliminating most Saturday deliveries, the Postal Service has proposed cutting its work force through attrition and wants the option to raise prices above the rate of inflation for some classes of mail.
Ruth Goldway, chairwoman of the regulatory commission, said part of the agency’s goal was to determine whether moving to five-day delivery would ultimately harm the service even if it would be helpful in the short term.
“The real communication networks have to be 24/7,” Goldway said. “The Postal Service in fact should be expanding its accessibility and delivery capability to meet those needs. The long-term future of the Postal Service may be limited by their interest in reducing service today.”
A recent joint hearing of Senate and House committees offered a preview of the debate expected to play out before the commission.
Executives from several businesses that make heavy use of the Postal Service, including Hall of Hallmark and Rendich of Netflix, disagreed on the long-term viability of a five-day delivery plan.
Small businesses, large corporations, private citizens and trade associations of all sizes also have weighed in at hearings conducted by the regulatory commission around the country. The volume of first-class mail, used by businesses for invoices, account statements and advertisements, fell 15 percent from 2006 to 2009, according to the Postal Service. The volume of packages, driven by online purchases, has increased, and the service estimates it will continue to grow about 3 percent a year.
Still, officials estimate that the service will lose $7 billion this year.
“The reality that folks need to come to grips with is there simply is not enough mail in the system any longer for us to sustain a six-day network,” said Sam Pulcrano, vice president for sustainability at the Postal Service.
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