The U.S. Postal Service has become very good at closing and consolidating postal facilities.
It may not be something that Postmaster General Patrick Donahoe and his COO Megan Brennan are likely to take credit for in public, but the U.S. Postal Service has become very good at closing and consolidating postal facilities. So good, in fact, that when Donahoe announced in June that the Postal Service would begin implementation of Phase 2 of its Network Rationalization Plan, mailers reacted with a yawn. The Phase 1 shutdown of 141 mail processing facilities completed in 2013 barely caused a ripple in their on-time delivery rates, and they’re expecting more of the same this time around.
“Service levels actually improved in the year following the implementation of Phase 1,” says Hamilton Davison, president and executive director of the American Catalog Mailers Association (ACMA). Indeed, the Postal Regulatory Commission’s Annual Performance Report, released in July, put 2013 on-time rates for three ranges of Presort First Class at or above 2012 levels. Ninety-seven percent of overnight and two-day mail was on time, as was 95% of three- to five-day mail. (Standard Mail rates are not reviewed.)
“The Postal Service has been closing plants for almost a decade now, and they’ve done a pretty good job of working with mailers to reduce some of the overall impact. There may be some local service glitches, but national service levels should remain high,” says Ursa Major Associates Research Director Kent Smith, who served in that same role with the Postal Service during a 30-plus-year career at the agency.
Phase 2 will commence in January 2015 and be completed by the fall mailing season, according to a letter Donahoe sent to large customers. Financial losses of $26 billion over three years, lack of taxpayer funding, increasing operating costs, and absence of postal reform to provide an alternative solution forced USPS to activate Phase 2, Donahoe said. He expects the initiative to generate $750 million in annual savings; Phase 1 trimmed $865 million from the Postal Service’s annual budget.
Facilities to be closed include processing and distribution centers, network distribution centers, airmail centers, and logistics and distribution centers. As a result, the average time it takes First Class Mail to reach its destination will increase from an average of 2.14 days to 2.25 days. USPS claimed, however, that speed of package delivery will not be affected. It also noted that the load-leveling plan it initiated earlier this year for presort mailers would not in any way be affected by Phase 2 closures.
In an early July meeting with stakeholders, senior Postal Service managers promised to give bulk mailers six months notice on any significant changes facing them as a result of the consolidation. They also promised to post weekly progress reports on Phase 2 on the RIBBS customer service website (https://ribbs.usps.gov/) to notify mailers of alternate drop-off points as facilities are shuttered.
“They really executed a textbook implementation of Phase 1,” ACMA’s Davison says. “There was no impact on Standard Mail last time, and I don’t expect there to be one this time.”