USPS files for service changes linked to network cutbacks

The US Postal Service filed its proposals today with US regulators, seeking to adjust key service standards as it cuts the size of its mail processing network by more than half. The headline change will be fore First Class Mail to lose its ability to deliver mail from blue mailboxes to the doorstep overnight.

Previously a one-to-three day service, First Class Mail will become a two-to-three day service for the continental United States. The changes could also have impacts on periodicals, and some shipping services including express and priority mail.

USPS executives told the press today that slowing down First Class Mail would allow the Postal Service to consolidate its operations from the current 461 processing plants across America into 200 or less, to respond to the loss of 30% of First Class Mail in the last decade, and the expectation of a further 47% decline in volume by 2020.

The whole USPS network has been set up around the priority of ensuring First Class Mail is delivered overnight, which currently means processing equipment spending most of the day unused, waiting for the evening’s First Class Mail to arrive.

Getting rid of half the network would see processing plants reorganised so that remaining processing equipment operates 16-18 hours a day, rather than the current six. The consolidation, which takes into account a possible move from six-day to five-day delivery weeks, should mean around half of the existing processing machines are no longer needed, and 28,000 jobs will be lost.

The efficiency improvement would save $2.1bn a year in operating costs for USPS, executives believe, as they look for ways to cut $20bn from the annual Postal Service budget before 2015.

“Our network is too big to handle this level of volumes, it’s too big to deliver what the future will bring,” said USPS vice president of network operations Dave Williams this morning in a press conference at USPS headquarters. “We have to deal with the excess capacity, and so we can’t base our network on overnight First Class Mail.”

Filing with the Postal Regulatory Commission today, USPS is merely seeking an advisory opinion on its revision to service standards. The Commission is powerless to overturn USPS policy on this matter, but the regulatory process does mean that any operational changes cannot be implemented for 90 days as of today.

Service changes

Williams explained today that for First Class Mail, as well as losing overnight deliveries for end-to-end mail, amendments would be made to the geographic reach of two-day and three day deliveries.

The two-day service for First Class Mail would be for items mailed within a four-hour driving distance of destination, rather than for those mailed within a 12-hour driving distance. Other items will be delivered in three days, but those items previously delivered in three days will remain so.

Elsewhere, periodicals mailed end-to-end will no longer be overnight, but Williams said 85% of periodicals were currently dropped at destination entry points, and would therefore be unaffected by the changes.

As with first class mail, major mailers that can sufficiently pre-sort their mailings and enter directly at USPS processing plants or delivery units will be able to maintain overnight services.

With 252 mail processing plants now being studied for possible closure, Williams said the remaining 200 plants would each take a responsibility for more zip code areas, and as a result there could be impacts “to some degree” on service levels in Express Mail and Priority Mail services, as well as some Standard Mail and package services, though not those dropped at a processing facility.

“Around 70% to 75% of our advertising mail is drop shipped today,” he said, “so most standard and advertising mail will not be affected by these changes.”

Postmaster General Patrick Donahoe said this morning that he was confident the changes would be made to the USPS processing network successfully, without the kinds of problems that have plagued flats processing in recent months following the accelerated Flats Sequencing System implementation.

Donahoe told Post&Parcel: “FSS has been an implementation of new technology, it’s been a technological issue. We’ve learned from that process, but we’ve probably already consolidated over 100 buildings already, it is our commitment that we get these changes right and get the service consistently reliable.”

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