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USPS Network Rationalization: The Facts According to Each Side

USPS mailbox network rationalization
Credit: Teresa Boardman http://bit.ly/1rk4sH7

Fifty senators, mostly democrats, recently signed a letter requesting that Phase 2 of the USPS Network Rationalization plan, due to occur in January of 2015, be delayed for one year. This facility consolidation effort consists of the closure of 82 mail-processing facilities across the United States and was already postponed a year, originally scheduled for January 2014. The USPS, as well as many colleagues of these senators, however, remain in strong opposition to this proposed moratorium.

Let’s take a look at what both sides have to say.

The Letter Senders

A recent article from the Wall Street Journal quotes the aforementioned letter as saying: “…it has been more difficult for the American public and small businesses to receive mail in a timely manner,” in reference to the conditions that followed a change in USPS service standards over 2 years ago.

The general sentiment of the letter articulates a concern for the loss of 15,000 “good-paying postal service jobs,” a direct impact on 37 U.S. states and damage to local communities, mail service efficiency and the overall economy.  They feel that since the first phase of network rationalization, closing 141 facilities, service standards have suffered, and the additional closures will only lead to continued failure.

“This one-year moratorium will give Congress the time it needs to enact the comprehensive postal reforms that are necessary for the postal sService to function effectively into the future,” they conclude.

Furthermore, slowed mail arrival time resulting from plant consolidation has led some to express mail-carrier safety concerns. One Government Executive article indicates that nighttime deliveries have become more common in one region, citing “mail not arriving to its penultimate locations on time” from “the consolidation of two distribution centers into one” as the root cause.

The Other Side

In contrast to the pleas of many senators to suspend the intended consolidation, many others are in favor of the upcoming facility closures. Possibly the most compelling argument promoting the closing of these reportedly underused post offices appears in an article from the Washington Examiner providing data that states: “…office visits are down 19 percent since 2004 and millions of customers now only access USPS online.”

Additionally, the USPS makes a similar point arguing that “the changes are necessary as it adjusts its business model to compete with the Internet.” With increasing financial troubles in recent years, they are concerned that “a moratorium could threaten the progress it has made in regaining stability,” and are asking that legislation “allow it more financial flexibility.”

From the mouth of the USPS

When asked to comment on the senators’ appeal, the Postal Service provided this written statement:

“In 2012 and 2013 the Postal Service consolidated 141 mail processing facilities. This rationalization of our network was highly successful, resulted in negligible service impact, required no employee layoffs, and generates annual cost savings of approximately $865 million. The Postal Service expects the completion of network rationalization will generate an additional $750 million in annual savings.”

What’s next?

With both houses of Congress on recess through early September, there has been no conclusion as of yet.  However, with so much riding on both ends, it will be interesting to see how this dilemma plays out.

For more information on the current state of postal affairs along with relevant news and issues, check out our most recent Postology Report.

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Postal Reform: USPS Reactivates Facility Consolidation

USPS mail bins: postal reformSeveral months ago the USPS announced that they were putting their facility consolidation process on hold due to Congressional activity around potential postal reform. Part of the proposed Senate bill required facility levels as of October 1, 2013.

Well, it doesn’t look like there will be postal reform this year, and the USPS still needs to “right-size” the organization to the current level of mail volumes. In other words, they need to get costs in line with their revenue.

Moving Postal Reform Forward

According to a recent announcement by the USPS, the Postal Service consolidated 141 mail processing facilities in 2012 and 2013. This network rationalization appeared to be highly successful for the USPS, resulting in negligible service impact, generating annualized cost savings of $865 million and requiring no employee layoffs.

The Postal Service expects the completion of Phase II of network rationalization will generate an additional $750 million in annual savings: “We believe strongly that this phase of network rationalization will establish the low-cost, technology-centric delivery platform necessary to serve the mailing and shipping industry for decades to come.”

Sounding Alarm?

Much alarm has been expressed recently in regard to the restart of the consolidation effort. These 82 sites were part of the original network rationalization effort and were simply placed on hold to see if the Senate bill gained any real traction in Congress. Even if it had, the USPS would have still pushed for the finalization of the consolidation effort in order to get costs more in line with revenues. So, the surprise seems out of place.

The 82 facilities to be consolidated in 2015 consist of two from Phase I and 80 from Phase II. Generally speaking, for Harte Hanks, the 2012 and 2013 consolidations were a “non-event.” We were able to prepare drop ship entry planning well in advance and manage any issues that arose. There were seven issues, and they did not affect the mail we entered for our clients. We realize that the 82 facilities yet to be consolidated may have a bigger impact, as they will involve the movement of more processing equipment. Still, we know which postal facilities are to be consolidated, and we will be well prepared.

Some mailers were more affected by Phase I than others, and I suppose that is where their concerns stem from. We feel rather confident that the USPS will complete Phase II without undue stress on their delivery performance.

Stay in the Know

For a deeper look into Phase II of the USPS network rationalization effort, as well as additional information on current postal news and issues, please visit our latest Postology Report.

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