The United States Postal Service (USPS) contracts with independent trucking firms to move mail between postal facilities. In late 1986, the USPS initiated a time series analysis of two specific contract forms: the inter-BMC contract, which moves mail over long distances between bulk mail facilities, and the inter-SCF contract, which moves mail over much shorter distances between sectional center facilities. The time series study collected quarterly data on cubic-foot miles (CFM) of mail transported by these contracts, and on the associated transportation costs, for a sample of contracts over the period 1981-1986. These data were used to estimate regression equations defining costs as functions of CFM. Since CFM is viewed as a proxy for total pieces of mail transported under the different contracts, the coefficients for the CFM variable in the regressions provided estimates of the elasticity of cost with respect to volume. These elasticity estimates were subsequently presented to the Postal Rate Commission (PRC) during the 1987 rate hearing in support of the Postal Service's cross-sectional analysis of volume variabilities for inter-BMC and inter-SCF highway costs. These variabilities helped to determine the percentages of highway costs that the PRC decided were variable, and which therefore had to be attributed to the different mail classes for purposes of rate setting. Section 1 of this paper is an introduction, Section 2 describes the regression analysis, and Section 3 presents an alternative strategy.

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  • Accession Number: 00490234
  • Record Type: Publication
  • Report/Paper Numbers: HS-041 044
  • Files: TRIS
  • Created Date: Dec 31 1989 12:00AM