Delivering the Future: a Balanced Approach
Five-Day Delivery is Part of the Solution

Chapter 5 - Financial implications

Estimated implementation costs

Implementation costs identified to date are $110 million. The bulk of this is $91 million for potential liability related to unemployment compensation if non-career city carrier transitional employees, rural carrier associates, and temporary rural carrier employees are released from employment.

While these are the implementation costs identified to date, other implementation costs may arise due to the transition to reduce staffing (relocation costs), or for contract terminations.

Exhibit 4 provides a summary of five-day delivery savings discussed in this chapter.

Exhibit 4. Summary of savings in terms of FY 2009

 

Annual estimated full-up savings
(in billions of $)

Operations savings

City carriers

2.2

Rural carriers

0.5

Total city and rural delivery

2.7

Mail Processing, Post Office Operations (including Maintenance)

0.2

Transportation, vehicle service drivers, contract delivery

0.4

Total Annual Savings

$3.3

Revenue and volume impact

Revenue loss

$(0.4)

Operating cost reduction

0.2

Lost contribution

(0.2)

Net annual financial impact — ongoing savings

3.1

Implementation costs

$0.1

Notes:
Full-up savings will occur with some degree of lag. Approximately 10% of the nearly $2.9 billion in labor savings is for service-wide benefits (including the normal cost of retiree health benefits) – savings that will ultimately be realized, though not necessarily reflected in annual income statements.