• on Mar 23rd, 2015 in Post Offices & Retail Network | 31 comments

    Reshaping a postal network doesn’t happen overnight. Especially one built to handle mainly letters and flats and not the tremendous anticipated growth in parcels. The Postal Service is attempting to tackle realignment in two phases, playing out over 4 years.

    Phase one was completed in 2013 and resulted in 141 consolidations for an expected cost savings of about $865 million. To achieve full cost savings, however, the Postal Service also had to reduce service standards for First-Class Mail. Phase two, which started in January and will run through late summer, calls for consolidating 82 mail processing facilities and eliminating most overnight delivery of First-Class Mail. It will also change service standards for Periodicals Mail. All other products will stay the same.

    The Postal Service launched its overall consolidation plan in 2012 to adjust the size of the network and workforce to the reduced demand. The plan calls for fewer processing facilities and for machinery to operate longer and more efficiently. Total mail volume has declined 27 percent since its peak in 2006, and single-piece First-Class Mail – primarily correspondence, bill payments, and greeting cards – has been hit even harder. It has declined by more than half in the past decade.

    Speaking at the February Mailers’ Technical Advisory Committee meeting, postal officials said they are confident consumers will not notice the service standard changes. Surveys suggest most people don’t know what the service standards are, but they do care when their mail arrives in their mailbox. So the Postal Service is working to ensure consumers receive their mail at the same time each day. They also reminded people that consolidation doesn’t necessarily mean closing. Some facilities could be repurposed for other services.

    Business mailers have generally supported efforts to eliminate excess capacity and reduce costs, with the exception of those whose business model depends on overnight service. But mailers also worry that some costs could be shifted to them. Unions have opposed the consolidation plan, arguing it downgrades service and delays mail at a time when the Postal Service should be stepping up its efforts to compete with digital communications. As for consumers, the Postal Service may be right that they won’t really care – unless they notice a change in delivery performance. It’s also worth noting that service standards are not changing for Priority Mail or Package Services, so the Postal Service should be able to satisfy customers’ growing demand for packages.

    Are you concerned that network consolidation has resulted or could result in mail delays? Or do you think network rationalization is necessary to reduce costs? If you oppose consolidation, how do you recommend the Postal Service better match its capacity to demand?

  • on Mar 16th, 2015 in Mail Processing & Transportation | 0 comments

    This is the second blog in our two-part series on sustainability. Last week’s blog, Green Scene, focused on recycling efforts.

    When do growth and reduction go hand-in-hand? When the world’s posts are trying to grow their business but reduce their carbon footprint.

    The 25 national postal operators that make up the International Post Corporation (IPC) have made great strides toward achieving their carbon dioxide emission reduction goals, but they hit a bump in 2013 and 2014. A coalition of the world’s industrialized posts, the IPC is aiming to cut carbon dioxide emissions by 20 percent by 2020. Half of the IPC members have already reached the target. But last year marked the first increase in emissions from the use of heating and transport fuel for the group as a whole since the IPC environmental measurement program began in 2009.

    One reason for the backsliding is actually a good problem. The global growth in e-commerce, which has boosted the posts’ number of parcel deliveries, is making emission reduction targets more challenging. Especially harsh winters in some countries and a big increase in size in one of the operator’s delivery networks have also contributed to the posts’ higher fuel consumption.

    IPC officials are stressing the importance of switching to renewable energy, either self-generated or purchased, wherever possible.

    The U.S. Postal Service is one of the 25 posts taking part in the IPC Environmental Measurement and Monitoring Program. It’s also one of the posts that saw its transportation fuel use increase. In its 2014 Sustainability Report, the Postal Service notes that “an aging [postal vehicle] fleet and the need to service more delivery points are pushing our fuel demand upward.” Still, the Postal Service must continue its efforts to manage its fuel resources as efficiently as possible, for both its own fleet and its contracting vehicles. (Our 2014 audit report offered recommendations on encouraging fuel efficient practices in highway contract routes.) This should get easier in the next couple of years as the Postal Service replaces its long-life vehicle fleet. This summer the Postal Service will select vendors to build new vehicle prototypes and it will award a contract of up to $6.3 billion over several years beginning in 2017.

    With continued parcel growth expected, how can the world’s posts meet the demands of customers while reducing their carbon footprints? What technologies might benefit the Postal Service specifically? 

  • on Mar 9th, 2015 in Strategy & Public Policy | 0 comments

    It’s safe to say that sustainability has gone mainstream. It’s not just that “going green” is the responsible thing to do; it’s also good business.

    Take a look at Walmart’s website, or do a quick search on “corporate sustainability” and you’ll find another dozen or more well-known brands touting environmental sustainability is essential to doing business responsibly and successfully.

    The U.S. Postal Service, too, is trying to do its part, particularly with recycling. Since 2008, the Postal Service has recycled an average of about 220,000 tons of wastepaper, cardboard, cans, plastics, and other reusable materials. In fiscal year (FY) 2013, the Postal Service diverted about 40 percent of its solid waste to recycling, and the target is to divert 50 percent by the end of this fiscal year. The Postal Service also created the USPS BlueEarth federal recycling program to make it easy for federal agencies to recycle inkjet cartridges and unwanted electronic devices. Federal agencies simply send eligible items through the mail at no charge to a certified recycler that cleans data from the devices. A similar service is offered to Postal Service customers through the Return For Good program, which allows you to recycle eligible small electronics through participating third-party vendors and even get cash back for certain items.

    For business mailers, the Postal Service recently launched Secure Destruction, an optional service that lets First-Class Mail customers direct postal employees to shred and trash their undeliverable First Class letters rather than return them.

    Still, sustainability practices are constantly evolving and there’s always more to do. Indeed, our audit work identified some immediate opportunities for the Postal Service to increase recycling revenue by improving collection methods and recycling plastics.

    We welcome your input. What more could the Postal Service do around sustainability programs? What programs should it consider for individual customers? For business customers? For suppliers?

    Next week, our blog will look at the progress the Postal Service and other posts have made toward achieving their goal of cutting carbon dioxide emissions 20 percent by 2020. 

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