USPS redesigning mail processing network based on area hubs

The US Postal Service discussed the potential shape of a redesigned mail processing network yesterday with industry representatives in Washington, DC. USPS is looking to reduce the size of its Area Mail Processing (AMP) plant network from around 461 facilities to under 200 over the next few years, and is expected to complete closure reviews in the next two weeks.

Yesterday at the latest quarterly Mailers’ Technical Advisory Committee meeting at USPS headquarters, executives said that the smaller number of surviving mail processing plants would be supported by hundreds of smaller area “hub” facilities for more localised distribution of processed mail.

These hubs could be set up in existing USPS sites that have other functions like business mail entry and retail facilities, but many are likely to be subcontracted out to distribution partners.

“It’s all being designed around efficient transportation,” said USPS vice president of network operations Dave Williams yesterday.

Details on exact plants to be closed, and which three-digit zip codes will apply to which surviving plant, are to be revealed soon after the AMP reviews are completed.

Hopes are that the overall network restructuring will take around $2.6bn in annual operating costs out of the system, with closures set to begin after the current moratorium runs out on May 15.

Unions are complaining that the closures are potentially set to begin before the Postal Regulatory Commission has reviewed the changes to mail service standards – the Commission could take until August to produce its advisory opinion, after accepting stakeholder testimony until July.

But, USPS is also looking to avoid disruption during the busy run-up to Christmas by suspending major network changes during the fall peak season, leaving limited time for network restructuring this year.

Overall, the closures will see 35,000 jobs lost from the total 151,000 USPS mail processing positions, and will impact on First Class Mail delivery standard by withdrawing overnight service from end-to-end mailings.

Service standards for Priority Mail, Express Mail, Standard Mail and packages will not change according to USPS.

USPS insists the changes will be “imperceptible” to 150 residential customers and also “seamless” for business customers, but among major mailers, there are significant concerns that this will not be the case.

For many the major concern is reliability. Even before the changes, there are some mailers over the recent winter period that saw promotions for pre-Christmas sales arriving in January, causing them brand damage among consumers.

For others, such as periodical publishers, there are fears that their entire business could be at risk.

Periodicals

Periodical publishers have big worries about losing overnight service, particularly for daily, weekend and weekly titles risking publication of out-of-date information, with the sector already facing stiff competition from up-to-the-minute Internet news websites.

Williams told major periodicals associations yesterday that they would keep overnight service, provided that deadlines are met for dropping mail.

These “Critical Entry Times” (CETs) would be 11am in the morning if mail bundles need to be fully sorted, but if mailings are presorted prior to entry at a mail plant, CETs as late as 5pm (for items sorted by carrier route) could be allowed for subsequent overnight delivery.

Under the new network design, pre-sorted local periodicals could also be dropped at the local area hubs being set up for later delivery, potentially with a “hub rate” of postage.

CETs for mail plants that have flats sequencing systems (FSS), which automatically process flats into sequence for mail carriers, are unlikely to change from the current situation.

Periodical publishers tell Post&Parcel that they are not yet informing their editorial teams that they will require changes to their publication deadlines because of the mail service changes, hoping the situation will be resolved by USPS.

Another potential headache for them is the potential for USPS to eliminate Saturday deliveries if Congress allows. If this occurs, a weekend title could have to assemble all news content by Thursday for items to be delivered Friday, leaving content even further out of date compared to digital titles.

Williams said yesterday that his team had not yet calculated the impact of ending Saturday deliveries in the planned changes to CETs. While President Obama is supporting the idea of ending Saturday deliveries, as a way to cut up to $3bn in operating costs a year, a significant portion of Congress is not in favour at present.