on Feb 10th, 2014 in Strategy & Public Policy | 30 comments
 

Hold everything, folks. That’s the recent message from the U.S. Postal Service on phase two of its network consolidation plan and associated changes to service standards. The Postal Service has delayed the second phase, which was set to take effect this month.

The Postal Service launched its consolidation plan – the Mail Processing Network Rationalization Initiative – in 2011 as part of a larger $20 billion cost-reduction strategy that seeks to realign the size of the postal network and workforce with reduced mail volumes. In phase one, the Postal Service targeted 178 consolidations. It also adjusted service standards for certain types of mail. For example, the Postal Service significantly reduced the overnight delivery area for First-Class Mail and cut in half the geographic reach of 2-day delivery.

Phase two planned to eliminate overnight delivery of First-Class Mail and consolidate another 89 facilities. Current processing operations were designed primarily around providing overnight delivery of First Class Mail, the product line that is in steepest decline. So at some times in the day, mail processing machines sit idle. Without the constraint of overnight standards, the Postal Service would have a more flexible operating schedule, allowing for higher efficiency and lower costs.     

Customers have mixed feelings about network consolidation. On one hand, mailers support reducing costs and eliminating excess capacity. It makes no sense to pay for unused capacity. They also understand the need for the Postal Service to have greater operational flexibility. On the other hand, a reduction in service standards acts as something of a de facto price increase: Customers are paying the same for reduced service.

Further, some mailers are suspicious that these kinds of efforts, such as the latest proposal to add a day of service to some drop-shipped Standard Mail and Periodicals, are merely shifting postal costs onto their backs. They support approaches that reduce total combined costs. Other stakeholders, such as the American Postal Workers Union, have raised outright objections to changes in service standards.

We want your thoughts:

  •  Should the Postal Service continue with phase two as originally outlined or does it need to make adjustments?
  •  Are changes to service standards a reasonable trade-off for lowering overall postal costs?
  •  Can the Postal Service afford premium service standards in a time of declining volume and revenue?
  • How do the changes to service standards affect you or your business?
  • Have you seen an increase in mail delays or service problems due to network consolidation?

30 Comments

I will no longer use the Postal Service if they're going to lower the service standards and go to 5 day delivery.. My mail is late to begin with. Besides, It is a service and not a business! The public should not have to suffer!

It's all a scam to get Congress to pass the legislation it wants, hello!!!

They need to better redraw lines where mail get sent for processing. They closed a processing plant which used to handle mail for my city. Instead of mail going to the next nearest town, which is 40 minutes away, my mail now goes to a city 3 hours away to get processed then sent back for delivery. Efficiency right?

When I first became a contract instructor at the University of Oklahoma in 2005, there were more than 700 Mail Processing facilities. A student told me in 2010, I believe that the Postal Service was going to go from 700 MP facilities to around 250 by 2013. I was a bit shocked to say the least. At that time mail volume had started to drop. However, delivery points continue to grow. Last year they added over 700, 000 new deliver points meaning the carriers were going to have a difficult time delivering to 153 million delivery points each day. The PO office hired more than 30, 000 City Carrier Assistants (CSA) last year to help with this nightmare situation. Also, the PO had more than 28,000 Postal Support Employees (PSEs) to assist the plants. Once the consolidation started service took a hit. In the past all local mail was supposed to be at our Plant by 19:50 PM and the rest in by 20:50 PM. Which meant we could hit out target to be done with outgoing mail by 2300. With Consolidation you have mail hitting the acceptance docks at 10 PM or later as some mail is trucked in over 100 miles away. Another issue is the PO began to hold most management type training on-line replacing classroom instructions. This lead to Managers/Supervisors being promoted without any formal training on mail flow and other techniques.

And small towns and surround cities with in 20-40 minutes from my P&DC, had their P&DC consolidated, now have their mail sent to another facility down south (4 hours away), up the mountains to get processed and back up the mountains to get back to these towns. And the freeway going up these mountain frequently get closed due to snow during the winter months. I guess they have to keep their mail with in their district. Makes no sense.

I don't understand why your complaining! I have not received Mail for 9 Years now! USPS Refuses to Install a mail Box @ my address! All my close neighbors, & Businesses have Mail Boxes, and All receive Their Daily Deliveries! I might as well live in a Third World Country! Then Maybe I'll get USPS Service there! My Mail is 9 Years Late! So Stop Complaining!

That's on you; if you want mail YOU have to put up the mail box instead of trying to freeload off the Postal Service;

USPS told me Any Mailbox has to be installed by USPS, and by their Codes! They Will Not Deliver My Mail, regardless of what "I Do" with installing a Mailbox!
I do not understand your comment about Me, "FREELOADING" off USPS! I have never considered Not Purchasing a Stamp, and Utilizing USPS's (SERVICES) to have this,
a Necessary Requirement for Legal Transport of Government Business "To and From US Citizens!"
Please DEFINE; "FREELOAD", in a ("Proper Sentence"), with regards to "My" Plight with USPS, and "Their" Mail System! You just sound Angry with NO Legitimate Reason, and Lashing Out at Anyone you Please! Who Are YOU? Use Your REAL Name! DTEE is not something you can Hide Behind! Gather your Facts FIRST, before making Socially Unacceptable Comments, about people, and their experiences, of which you don't Know "NOTHING" about! The days of putting a Box on a Stick with a name on it, and receiving ANY "Mail", are Long Gone, at least by USPS Rules, Regulations and Standards! So, make your reply A Legitimate, Intelligent Response! Or, keep your unsolicited, Uneducated, Uninformed Comments to YOURSELF! OK, DTEE?

Well, I'm not quite certain that's entirely accurate. My mailbox got run over on my suburban neighborhood street RR.
I didn't fix it because I was away. Further, the ROW property that my box occupied was under dispute by the property owner.
The PO held my mail. They told me I had to put the mail box back up. I wanted to put up one of those GIANT Billy BASS mailboxes that sing when you open the door.
This is because part of my life's work is to annoy my a-HOLE neighbor. Evidently a singing mail box is not official, so I couldn't put it up.
The PM told me to move it up the ROW away from my Psycho neighbor's mailbox. I asked him if I could simply not put one back up?, and he explained it would complicate things if I didn't. So, I complied, and put a standard MB on a standard pole, moved up the ROW, away from Mr. Psycho.
The point is, there appears no reason to actually have a mailbox if you don't need one.
Further, because the usefulness of a single mailbox has dramatically diminished, it appears logical to implement the deployment of cluster boxes nationwide.
The post office is the nations primary communications network, however, it's still utilizing smoke signals to execute this task.
Be advised, the millennial generation will not use your service. If I, an old man, could end your service I would do so. Quite simply, it's outlived it's technological life.
I'm very sorry. I just do things electronically, and am very much aware that some people either choose not to, or can't, by virtue of their capabilities.
Your business model is kaput!

The postal service does not install mailboxes. It's the responsibility of the home owner. You do however need to discuss the "mailing address" to go with the box.

Postal regulations state you must either receive delivery or a free post office box but they are not required to install boxes. Correct me if I'm wrong but I think another one of your posts stated you lived in an apartment complex. Maybe the apartment owner is the one holding out on the correct type of mail receptacles that is hindering your delivery.

Yes, but the Apt owner has been trying to have boxes installed but has been thwarted by USPS! My local postal employees do not understand what is The real problem is.
Apparently some individual in another state has jurisdiction over who, does or does Not get Delivery Service, Offered buy USPS! There are 20+ tenants in my complex are
wondering this same thing. I am the only individual suffering enough to pursue this Insane Objective! Complacency seems to be AMOK every where! Don't get me started with our Health Care System! I am doing the best I can Just to get Mail Delivered to My Legal Residence! You would think this would be a 24hr. event! But NO!!! 9 YEARS, and going Strong! What is Wrong with This PICTURE?

Anything FREE, PO Box or whatever it is, is Worthless if You Cannot Access/Drive/Get to this FREE PO Box! taxi's are $20.+ each way, Public Transport is Unavailable for their location! What Would YOU DO?
My Apt owner Has Been trying to work with USPS, to NO Avail! Where in the USPS Bi Laws or any LAWs say "Harassment by Refusal of Advertised/Guaranteed Services is LEGAL/Ethical/Warranted?" When Will This End?

If First Class would mean 2-3 days then drop the price of postage down to what it is; Standard Mail and the saving claims are bogus given the fact of no lay off policy. The closed plants literally have employees hanging out in lunch rooms waiting for assignments. No assignment they continue to hang. The whole thing is a Network Operations shame.
Sad!

Regarding the workhour savings....while it is true that the Posatl Service doesnt lay-off employees, the workhours are eliminated through attrition and filling vacant positions elsewhwere. So the savings are legitimate. The Postal Service OIG has conducted numerous reviews of facility consolidations and found them to be justified based on their cost savings

I understand your logic. But using attrition and not filling positions is not savings as a result of consolidation. It's a result of an aging workforce. The savings are also claimed starting in the FY that the consolation took place. You still have people in place doing no work. Productivity = 0. Plus plant is still occupied with related overhead costs. It's really just a three card monte type of accounting. You need to use Total Operating Expense to measure savings. If you want Congress to treat you like a real company you have to act like one.

Actually analysis has shown that productivity also increases after a consolidation. Decreasing workhours while mailpiece volume increases results in a productivity increase. Regarding the workhour savings, eliminating workhours and not refilling vacated positions either thru attrition or reassignment to an unfilled position does create a savings to the Postal Service both in year one and future years.

The Productivity increase may be true for the gaining site but not the losing site. This entire consolidation project was launched with very loose oversight. The only true savings is getting people off the rolls and buildings shut down. Your automation equipment is woefully underutilized but acquisitions continue for materal handling and sort equipment. Flats sorters were bought, deployed, underutilized and continue to operate well below projected ROIs. Letter sorting equipment operates at less then 50 percent efficiency. You need independent audits with accountability. USPS management comments to your findings are absurd with no action.

Reduce standards & increase rates??? Sound way to operate a business, huh??? Face it, the P.O. is not a business, never was & never will be. What kind of business operates with no profit incentive??? The P.O.'s mission statement is to BREAK EVEN. I.E. maintain the status quo and be self sufficient. But pressures from private enterprise to privatize which are motivated by GREED to adopt a BUSINESS MODEL which mirrors that of UPS.... (a part time work force offering no benefits or which maintains a decent standard of living, is anti-union, anti-labor & ANTI AMERICAN) The P.O. is not supported by tax payers DONATIONS. So why does congress feel it needs to regulate it and set up a doomsday scenario??? How could any 'BUSINESS' survive having to PRE- FUND its' retirees ad infinitum??? POLITICS, POLITICS, POLITICS

Mr. / Ms. Clerk,?
I am not a homeowner, I rent! I have inquired about Delivery to Owner, USPS employees and No One seems to Know/Understand WHY my apt complex , STILL 9 years later, USPS will not deliver to my APT. address! Mail Box or Not!
And the search goes On!?????? (Legal, more than 2 occupant/tenants at residential address, not off the mail route, etc..?

Mr. Halley, Please file a complaint with our hotline at http://www.uspsoig.gov/form/new-complaint-form or 1-888-USPS-OIG so we can look into this matter further.

OIG,
Thank you so much! I have been, emailing, calling, asking everybody I can! The best I got was; "I'll Look in to it for you"! Nothing yet!
But I will try "again", as it is VITAL I am able to get/keep in touch with Veterans Administration! I am a "Disabled American, Vietnam Era Veteran! All I ask, is for what Everyone else takes for granted; Home Delivery! At this point, I'd welcome junk mail from PCH! lol, (not really, but you know what I mean)?
Happy Valentine's day!
Danny

I called 1-888-USPS-OIG!An Automated "DEAD END"! Just as Expected! I filled, yet another complaint form! Talk about "Beating a Dead Horse"!
Got any other "Suggestions"? By the way, I'm 59 years old! I am running short on Time, so, could you help, quickly?
Thanks,
Daniel

Such a dramatic cut in service standards to achieve savings that amount to less than 2% of expenses is not a reasonable trade off. Especially when expanding package volumes are going to require future network expansions.
The USPS should be looking at ways to use or modify the existing processing network to save on local office processing costs by automating the processing of the ever expanding package volume to a finer level of sortation. Package sorting by hand at local post offices is a very inefficient way to handle these ever growing volumes.

If consolidation is on hold, why?
Is it like you found in delivery unit optimization that often the savings are not there?
is it that someone realized that cutting plants and cutting service also means large customer dissatisfaction?
is it that someone finally looked at the "workshare discounts" and realized that usps could make a profit by bringing that work back in house?

It is because of the existing overnight service requirement for certain mail ZIP Codes. As a result, some mail continues to be processed at the losing facility. By not moving all of the mail processing to the gaining facilites as stated in the AMPs; savings, mainly in transportation, is not fully realized. In addition, it is adding significant cost to customer service including carrier return by 5:00.

Work share discounts are definitely the biggest reason for the decline in the efficiency of the network. They have created the imbalance in workload over the 24 hour day. Most of the work that the plants performed in the daytime and evening has been work shared away. While practically none of the work plants performed after midnight has.
This had decreased utilization rates because most of the equipment is needed from midnight to 6 am to meet deadlines but is no longer needed at other hours of the day. I doubt the increased cost per letter of this utilization rate decline was ever used when deciding what is a good work share discount.

It appears that the PMG in his latest video gives some reasons why the door was shut on consolidations.....There were some "unforseen" snowballs which rolled downhill.
You close a local plant, send the mail to a farther away plant and don't forsee that the mail will get to the actual delivering post offices later? PPPPPP...I hope you know what that stands for. The PMG must have gotten his ears burned because carriers have been out late into the night trying to deliver mail. This is dangerous and there were fatalities. Monkeying around with one part of the delivery chain whithout a thought of repercussions to those actions further down the chain is downright embarrasing, frustrating and totally unneccessary for the folks down the chain. It appears that a "team" effort was not given. An after action report by OIG which starts at the bottom and works up the chain could be very enlightening.

Consolidation will work perfectly fine IF service standards are lowered. The one and ONLY problem are the remote offices that lie too far from the newly assigned mail processing facilities that are receiving mail too late to get carriers onto and back from the street safely. The ideal cost saving approach that would utilize transportation and equipment would be to transport available outgoing mail in the afternoon to the mail processing centers to the SAME plants while dropping off the next days mail for delivery while the truck is already at the delivery office, then repeat the process the next afternoon. This would eliminate the need for multiple trucks each morning, idle machines during the day at the processing facilities, and double trips by the transportation networks. After the first day, I promise you, no one would notice the relaxed service standards. The cost savings would be enormous. The public has no idea how much is spent on transportation to try to get a false sense of "service standards". I have documented as much as $120 for one cable bill to be transported and delivered, and this doesn't include the cost of the auditors to check to see if this was delivered. Personally I wouldn't mind getting my cable bill the next day if costs were controlled.

What if every Post Office ran a Ripple server? Bills and payments are all automated, junk mail and spam is controlled through fees, money orders are now free and USPS can re-implement Postal Savings Accounts to serve the under banked as the OIG explored in their recent study http://tinyurl.com/uspsbank With all the computers they have in all their branches they could use excess computing power and donate to World Computing Grid while building a reserve of XRP or simply purchase in bulk from Ripple Labs

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