There are many ways to cut costs. Ask any company that has tried to reduce costs. Or even look at your own household situation. You can cut down on take-out dinners, cancel a vacation, or drop a gym membership you aren’t using anyway. But at a certain point, you realize some costs are just not in your control. You can’t do much about what the utility company charges you or what it costs to fix your car when it breaks down.

The same is true for the U.S. Postal Service.

Our recent white paper, Examining Changes in Postal Product Costs, found that over a 10-year period, the Postal Service has made good progress in cutting product costs, even though the number of delivery points increased. That is, when the main cost factors over which the Postal Service has no real control are accounted for, unit costs were lower in fiscal year (FY) 2015 than in FY 2006 for three of the four products studied — First-Class Mail, Standard Mail, and Package Services. Only Periodicals’ unit costs increased.

Unit costs are the costs of handling, processing, and delivering a mailpiece within a given mail category (without adjusting for weight, drop-shipping, or other specifics).  

We found that the main external factors driving unit cost changes from FY 2006 – FY 2015 were inflation, product mix, individual product volume change, and overall volume decline. The report attributes the remaining change in unit cost to other factors, some of which are at least partially within the Postal Service’s control. These include productivity improvements, service modifications, and wage reductions.

This raises some interesting questions for the Postal Service and its stakeholders about which strategies might best help keep costs in check going forward. What strategies would you recommend? 

Comments (5)

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  • anon

    what does it cost to produce a new stamp in the US, and how many new stamps are developed annually?

    Apr 14, 2017
  • anon

    greate information for your company cost........

    Mar 16, 2017
  • anon

    How does a company go about acquiring apprenticeships for military veterans officers with college degrees? CASY: Corporate America Supports You is actively looking for apprenticeships. Specifically in IT.

    Mar 15, 2017
  • anon

    We have to come back almost daily for late arriving packages in Glendale AZ. This can waste between 30 to 45 minutes a day per carrier! Why can't we get our packages on time?

    Mar 14, 2017
  • anon

    I know this sounds a little odd, but if you add more personnel to your delivery routes, you may see a great decrease in overtime and hiring part time personnel. Increasing your delivery personnel would mean: 1. less over time. 2. a decrease in fuel due to personnel having to drive so far to deliver on their now existing routes and less chance of them being involved in accident from being to tired. Raise the postal rate for first class mail to .50 cents.

    Mar 13, 2017

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