DVD Envelopes Cost Postal Service Millions

WASHINGTON—DVD rental services from companies such as Netflix are costing the U.S. Postal Service more than $20 million per year in labor costs because of manual sorting, according to a report in The Washington Times.

In a recent report issued by Tammy L. Whitcomb, deputy assistant inspector general for revenue and systems, auditors said that sorting machines at the Postal Service are unable to process the millions of return envelopes required. The rental mailings have a “floppy edge” that can jam sorting machines and cause “missorts,” the report stated.

The inspectors recommended that the Postal Service revise the manual that explains which mail can be sorted automatically and which requires manual handling. There is an extra $0.17 charge for mail that can’t be sorted automatically.

Costs are expected to total as much as $30 million annually by 2009, the report stated.

Netflix spokesman Steve Swasey said the company ships and receives about 1.6 million DVDs each business day. The company stated in a recent U.S. Securities and Exchange Commission filing that changes in “size, weight or machinability qualifications” of its DVD envelopes could increase shipping costs or product damage, which could then negatively affect Nextflix’s bottom line.

The Postal Service has not yet agreed to any price adjustments, according to the newspaper report.

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