Anyone familiar with the Postmaster General’s 10-Year Plan knows that part of the strategy to balance the agency’s books includes not only price increases but cost reductions from improved efficiency in USPS operations. Many readers, particularly noting the changes now underway in the Postal Service’s processing, transportation, and delivery networks, might rightly conclude that some of the forecasted efficiency and savings will be derived from fewer facilities and a smaller workforce.
Yet observation of events provides a confusing, and somewhat contradictory, picture of whether such an outcome is really to be expected.
Post Offices
One example of where there apparently won’t be any cuts was offered in an article in New York’s Altamont Enterprise. The report was following up on “an unverified rumor that a regional post office executive was visiting [local] post offices to gather information to help with consolidation.” Responding to the newspaper, a postal spokesperson stated that:
“... sites are being evaluated for the creation of the centers [the new sort-and-delivery centers (S&DCs)], but that these centers will not result in the closure of any offices. As we move forward with this initiative, customers will see no changes to their local post office retail operations. No post offices will be closed and PO Box service will not be changed... There will be no employee lay-offs as part of this effort.” [Emphasis ours.]
In other words, as the USPS establishes thousands of new S&DCs to consolidate and, allegedly, make more efficient its delivery operations, and as there’s the likelihood that the centers will increase drive-time and related costs, in turn requiring more carriers, the USPS is offering no indication that facility costs will be reduced or, for that matter, that vacated space will enable relocation to smaller facilities or use for revenue generation.
Making more carriers, with more trucks, drive more miles obviously adds costs. If there are neither offsetting reductions in real estate or personnel costs from the delivery units no longer housing carriers, nor new income from revenue-producing activity in the vacated space, the economic benefit of the S&DC initiative is difficult to discern.
Congress
Meanwhile, Government Executive reported that Rep. Bill Huizenga (MI 4th) “recently questioned the consolidation plan’s impact on his district, saying it lacked transparency and would have negative impacts on mailers.” His letter stated that:
“This one-size-fits-all proposal originating from your ‘Delivering for America’ plan is likely to negatively impact the constituents I represent with a decline in the quality of service.”
Earlier, the article noted, Rep. Pat Ryan (NY 8th) “said Postmaster General Louis DeJoy was ‘sadly mistaken’ if he thought he could ‘mess with post offices’” in his district.
“Mail carriers from my district are also particularly concerned about the delays to service, added hours in commute time, and the destabilizing effects this plan will have. Our community knows that the journey can be long and there are additional risks posed by driving mail trucks on the highway or long distances in the snow.”
A Postal Service spokesperson previously had told Government Executive that “The goal of this [S&DC] initiative is to make significant improvements to the delivery network to better serve the American public and our business customers more efficiently and effectively.”
The potential for cost reductions or other savings was not mentioned.
Setting aside the political role-playing, the legislators’ comments not only reflect the questions of other observers about the S&DC plan but the same absence of transparency about the initiative that is being noticed more broadly. Though Louis DeJoy doesn’t feel the need to explain what he’s doing, such a deliberate lack of communication only fosters questions and, in turn, resistance to a plan no one understands.
Elsewhere
Another article in Government Executive reported that the PMG “vowed to double down on and accelerate his proposed reforms.” Among those would be “significantly reducing work hours by closing some facilities and removing other inefficiencies.”
Already, the article noted, the USPS is shuttering “annexes and contract facilities around the country that management has labeled as ‘inefficient.’”
According to a report by Save the Post Office, the USPS has informed labor groups than planned consolidations of operations at the Eugene (OR) and Medford (OR) facilities into the planned Portland (OR) Regional Processing and Distribution Center would enable the elimination of one management position and 53 craft positions, contributing to projected savings of $7.1-to-$12 million.
Similar consolidations of some operations from the Macon (GA) and Augusta (GA) facilities into the new Atlanta RPDC were projected to enable the elimination of nine management positions and 37 craft positions, helping generate cost savings of $4.7-to-$7.8 million.
In trying to reconcile these data with other projections, the article observed that:
“Another possibility is simply that the Postal Service has overestimated the cost savings. That’s been an issue with previous cost-reduction initiatives, including the Network Rationalization plan on plant consolidations in 2012 ...”
On the other side of the ledger, Multichannel Merchant reported that the Postal Service is planning to insource transportation now handled by contractors, noting that some contractors that move mail from plants to delivery units have already been told their contracts are terminated.
“A US Postal Service plan to insource all line hauling of mail and parcels between hubs and local delivery units, which had been handled by contractors, will be completely phased in by 2025, ac-cording to a source with knowledge of meetings with USPS officials... The services included transport of mail and parcels from area hubs to local post offices for morning delivery, then picking up outbound mail in the afternoon for injection into the system.”
A postal spokesperson was quoted as stating that as part of the PMG’s Plan,
“The Postal Service continues to move forward with its... plan, which includes optimizing the postal network. One aspect of optimization includes finding the best way to transport products from site to site. Some contract carrier companies we have contracted with will be affected.”
That the PMG has been clever with the postal labor unions has been apparent. The carriers’ unions were pleased when he codified six-day delivery in the Postal Reform Act of 2022, and he’s kept the clerks union happy by assuring them that they won’t lose members because of facility closures, converting temporary workers to career (and dues-paying) status, and – now – replacing cost-efficient contracted transportation with fixed-cost career postal drivers. Such a policy may, perhaps he expects, avoid labor unrest, but the costs of his decisions fall on ratepayers.
In the end, the inconsistency and lack of transparency into the activities associated with the PMG’s Plan continues to stimulate questions about how costs are supposed to be reduced, but perhaps the PMG prefers we just don’t ask.
Leo Raymond is Owner and Managing Director, Mailers Hub.
This article originally appeared in the September/October, 2023 issue of Mailing Systems Technology.
