By Rob Stapleton
Alaska Journal of Commerce

Changes in the bypass mail system have increased food costs, is the cause of more food spoilage and has impacted North Slope Borough school nutrition programs, according to a new report.

The report, called “Impacts of the Barrow Bypass Mail Change” was released May 10, just four days before the U.S. Postal Service mail rate was set to increase. The review looked at the impacts of bypass mail to the communities of Fairbanks and Barrow.

“With the new mail rate changes, and this bypass mail change, this is raising the cost to those families living on the North Slope 40 percent,” said North Slope Borough spokesman David Harding.

The 60-page report took five months to produce, and was prepared by Information Insights Inc. The report was paid for by the North Slope and the Fairbanks North Star boroughs, which shared the $28,000 price tag.

The report cites many economic factors connected to the bypass change in the Postal Service's attempt to reduce costs to its $100 million-a-year program in Alaska. USPS officials indicated that this portion of the modal change would save it $1.3 million a year.

Bypass mail is shipped directly from urban merchants to rural customers through air carriers, bypassing the post office. The program dates back to 1985 and was designed to reduce the cost of living in rural Alaska. Until last June, all bypass mail to Barrow was air-shipped from Fairbanks. It is now first trucked to Deadhorse along the Dalton Highway, stored at the Carlile warehouse and then flown to Barrow.

The North Slope Borough, the Fairbanks Northstar Borough and the air carriers opposed the move. Alaska Airlines, Northern Air Cargo and Everts Air Cargo participate in moving the mail.

Despite testimony and political pressure, the Postal Service decided to go ahead with its plan.

Postal Service officials did not return several calls from the Journal regarding the report.

Air carriers argue that the change will eventually increase the costs to the USPS following the filing of U.S. Department of Transportation reports submitted from the carriers that fly one leg of the Deadhorse to Barrow route empty. That report shows the airlines' costs to the DOT, which sets the mail rate for the airlines that carry bypass mail. This DOT report will not be available until October.

While the bypass modal change has affected airline carriers somewhat negatively, it has added a boost to the trucking industry by adding jobs at incumbent carrier Lynden Transport, according to the report.

The Fairbanks airport alone has experienced a $250,000 loss due to a decrease in aircraft activity, the report stated.

The study also said that the changes have caused some businesses to shift shipments, like some food items, from the mail system to more expensive air freight deliveries.

Under the new rules, food is more apt to spoil because of slower delivery times, and is subject to freeze and thaw damage.

The rules have also caused cost shifting from the Postal Service to air carriers and initially decreased passenger seat availability because of decreased flights, and initially increased seat fares. Alaska Airlines has subsequently increased its flights, and added new Boeing 737-400 combination aircraft.

The report shows a 27 percent drop in passenger seat availability in the third quarter of 2006, compared to the third quarter of 2004.

U.S. Sen. Ted Stevens, R-Alaska, announced May 10 that John Potter, the U.S. Postmaster General, has determined that the “nonmachinable” surcharge levied by the U.S. Postal Service will not apply to Alaska's unique bypass mail system. This nonmachinable surcharge was to take place on May 14. Bypass mail does not pass through the post office. This decision will help mitigate costs for shippers following the mail rate increase that went into effect nationwide May 14, according to Stevens, who worked on getting the cost dropped.

Most bypass mail parcels weigh between 35 and 70 pounds. Without the nonmachinable surcharge, a typical 50-pound package would increase from $10.95 to $12.39 beginning May 14. Had this surcharge been applied, the rate would have jumped to $15.26, even though bypass mail is not directly handled by a post office.

Rob Stapleton can be reached at

rob.stapleton@alaskajournal.com.