USPS introduces new standards and projects $36 billion in cost reductions
The United States Postal Service has announced refined service standards for certain market-dominant services. This includes service standard adjustments for First-Class Mail, Periodicals, Marketing Mail, and Package Services (Bound Printed Matter, Media Mail, and Library Mail).
The changes will maintain service at existing levels for most volume and upgrade standards for more market-dominant volume than is downgraded. The changes will enhance service reliability nationwide while maintaining the existing five-day service standard day range for First-Class Mail, whereas the day ranges for end-to-end Marketing Mail, Periodicals and Package Services will be shortened. Similar changes will be made with respect to the Postal Service’s competitive products.
As a result of these refined service standards, the Postal Service projects at least $36 billion in savings over 10 years from transportation, mail processing, and real estate cost reductions. As part of the ongoing “Delivering for America” plan, the Postal Service has to date lowered $1.8 billion in annual transportation costs by eliminating redundant networks and rationalizing the use of air and surface options, and reduced 45 million workhours, or $2.3 billion annually, by improving plant productivity, and eliminating unnecessary facilities. In addition, the Postal Service has increased revenue by $3.5 billion annually while transitioning its product offerings in the face of significant declines in mail volume.
“The Postal Service has been historically burdened by service standard regulations and onerous business rules that have not been appropriately adjusted to account for volume and mail mix changes, forcing costly and ineffective operations,” said Postmaster General Louis DeJoy. “For decades – and most specifically during the last three years – Congress has actively resisted operational solutions and meaningful change. By implementing the new standards and the operational initiatives to which they are aligned, we will be better able to achieve the goals of our modernization plans and create a high-performing, financially sustainable organization, which is necessary to achieve the statutory policies and objectives established for the Postal Service by law.”
The relative impact on service standards, leaving more than 80 % of market dominant volume unchanged, demonstrates the Postal Service’s efforts to maintain high quality service and mitigate any customer impacts to the extent possible while also implementing operational changes necessary to improve postal operations and achieve the critical — and significant — cost savings that are necessary for financial sustainability as required by law.
Implementation will be in two phases to facilitate effective operational execution: the first phase will begin on April 1 and the second on July 1. The Postal Service will share information at its retail locations and with commercial customers to ensure mailers are aware of the changes. USPS will have multiple, user-friendly tools available so customers understand how long it should take for mail they are sending to reach its destination. There are no impacts to services at retail locations as retail access will not change.
