September 2012

The incredible shrinking Postal Service: More tales of suspensions, reductions, relocations, and sell-offs

September 24, 2012

While the United Parcel Service is busy looking for innovative ways to make its retail stores more profitable, the Postal Service can only think about more junk mail.  Rather than seeing value in its own network of brick-and-mortar post offices, the Postal Service is cutting the hours at 13,000 small offices, replacing historic downtown post offices with retail counters in annexes on the outskirts of town, and closing and suspending post offices on an ad hoc basis, thereby avoiding another advisory opinion with the Postal Regulatory Commission.

Mass closures may have been temporarily averted, but the Postal Service continues to shut down post offices.  Rather than closing them the old-fashioned way, with a formal discontinuance process, the Postal Service is deploying an alternative vocabulary of “relocations,” “consolidations,” and “suspensions.”  Whatever you call them, though, from the point of view of citizens and communities, the result is the same: the doors of the post office are closed. 


USPS cuts back, UPS expands

A couple of weeks ago, the Postal Service began implementing POStPlan.  It's been scheduling public meetings and sending out surveys to determine whether customers would prefer to have their post office closed or to have its hours reduced.  It may seem like a silly question, and one wonders why the Postal Service would spend so much time and money on surveys and community meetings when the outcome is obvious. 

Judging by the way people are responding to the survey, however, one explanation is emerging.  The way the survey is worded, many people are being led to believe that their post office is actually in imminent danger of closing. Presenting four options — three of which involve closing the post office — turns out to be a useful tactic to make people happy to learn in the end that the hours at their post office are simply being cut and the office will stay open.  After all, it could be worse. 

While the Postal Service is busy getting ready to cut over 10 million hours at these 13,000 post offices (about a third of the hours of operation), the United Parcel Service is looking at ways to expand their retail business.  Last week the New York Times ran two pieces, one about the Postal Service’s efforts to expand its junk mail business, the other about how UPS is expanding services at its UPS Stores

UPS offers not only packing and shipping but also printing services and many other products, like mailboxes.  Its latest initiative is the “Small Business Solutions” campaign, which customizes services to meet specific business needs.  The Postal Service is also innovating with small businesses, but its main new offering is "Every Door Direct Mail" — a way to saturate a neighborhood with ad mail.


Hours cut in South Carolina — last year

While UPS sees value in its retail business, the Postal Service thinks it will come out ahead by cutting back on service at its own, much larger network of retail outlets.  It claims POStPlan will save $500 million a year, but that probably overestimates the savings by over a $150 million (as this analysis shows), and it doesn’t include any lost revenue at all.

During the advisory opinion process, the Postal Service told the PRC that it couldn’t estimate how much revenue might be lost under POStPlan because it had never done anything like this before.  Turns out, however, that’s not entirely true.

Last year the Postal Service cut hours at hundreds of post offices from 8 ½ to 6.  The reductions took place primarily in South Carolina, where about the half state’s 410 post offices are now open for 6 hours a day, typically 9:00 to 1:00 and 2:00 to 4:00.  The change in hours wasn’t nationwide and thus didn’t require an advisory opinion, but the scale was large enough for the Postal Service to evaluate how much revenue was lost in the process.  But when it responded to numerous interrogatories posed during the advisory opinion process about revenue impacts, the Postal Service didn’t even mention the change in hours that took place in South Carolina.

Consternation and confusion: Putting POStPlan in place

September 18, 2012

The Postal Service began implementing POStPlan a couple of weeks ago, and in a post last week we reported on problems that had already begun to emerge: surveys sent only to box holders, meetings scheduled during the workday, using the post office lobby as the meeting place.  A few more news reports have come out, and several people wrote in about problems they've observed.  Here are more some stories about how POStPlan is being put into action.


Confusion over the options

When the Postal Regulatory Commission reviewed a draft of the survey the Postal Service planned to send out to customers asking about their preferences among the four options, the Commission observed that it was a bit confusing because customers might not understand that three of the four were about closing the post office.  The Postal Service didn’t revise the survey, but it did try to explain in the accompanying letter that each of the options other than reducing the hours would lead to a discontinuance study. 

As the PRC anticipated, people are not getting the fact that three of the options involve closing the post office.   A news item last week about how POStPlan will affect the Isle of Wight and several other post offices in Tidewater, Virginia, illustrates the problem.  

The article cites Michele Martel, district communication coordinator for the Postal Service in Richmond, explaining the four options as: (1) Reducing the hours at the post office; (2) Giving up post office boxes in exchange for rural delivery; (3) Having a local business offer minimal postal services; (4) Or closing the post office.

Obviously someone reading this article is likely to come away thinking that only one of the four options involves closing the post office.  Many other news articles have been paraphrasing the survey without making it clear that three of the options are about closing the office.  The Postal Service reps will need to do a lot of explaining at the community meetings, but by then, the surveys will have already been submitted and counted.


Increase the hours — or else

Last fall, before anyone knew anything about POStPlan, the Postal Service reduced the hours at the post office in Waters, Michigan, from eight a day to four.  The USPS website currently lists the hours of operation as 10:30 to 2:30. 

But when the Postal Service released the POStPlan list in May, it mistakenly showed that Waters was open eight hours a day rather than four, and that it would be changed under POStPlan to a Level 6.

The Postal Service has a lot of post offices to keep track of, so it’s not surprising that it would make a mistake this like.  But now the Postal Service is proceeding to review Waters just like all the other offices on the POStPlan list. 

So it will be sending out surveys and holding a community meeting to determine whether the folks in Waters would prefer to have the post office closed (under one of the three options) or to have the hours at the post office increased from four to six. 

Waters was studied for closure back in July 2011, but after the community organized and protested, the Postal Service decided to keep the post office open.  Now residents are worried that the Postal Service is again considering closing the office, even though POStPlan is really about reducing the hours.  But when you’ve almost lost your post office and then you get a letter listing four options, and three of them are about discontinuance, you might get nervous.

“Of course, we would like to keep our local post office building open,” said Joe Ruby, a Waters post office patron. “The thought that 60 percent of us would vote to discontinue it is ridiculous.  We all spoke out about how we feel about closing it before. They (Postal Service) don’t need to keep on hammering it and hammering it.”

POStPlan implementation: The surveys go out, the trouble begins

September 11, 2012

Last week the Postal Service began notifying citizens across the country that their post office would either have its hours reduced or be closed completely.  Reports from the field indicate that the Postal Service will not be rolling out POStPlan in a very gradual way.  It appears that any post office with a postmaster vacancy will be reviewed immediately, and there are several thousand post offices in this category.

The Postal Service has said that it will take two years to implement POStPlan completely and that the first post offices to be reviewed would be those without a postmaster.  There were about 3,000 post offices on the POStPlan list with a postmaster vacancy (a list is here).  Some unknown number — perhaps as many as half — of the 4,000 post offices where the postmaster recently retired are now also without a postmaster.  There are, in addition, perhaps three thousand post offices where the postmaster is leaving to take one of the new postmaster positions that has opened up or a non-postmaster position that’s more secure. 

That adds up to about eight thousand post offices — well over half the POStPlan list of 13,000 — that could be reviewed very soon.  (This post breaks down the numbers in more detail.)  

Many patrons have already received a letter describing the plan and the options under consideration, along with a survey in which they can express their preferences.  The letter also indicates that a meeting will soon be scheduled where people can discuss the options with postal officials. 

The implementation plan involves scheduling the community meeting and then sending out the surveys about six weeks before the meeting.  Customers are asked to return the survey within two weeks, which will give the Postal Service about a month to tabulate the results.  At the meeting, the results of the survey will be shared and discussed, and those customers who haven’t filled out a survey can do so at the meeting. 

One week later, the Postal Service will announce its decision about the future of the post office.  If the decision is to reduce the hours rather than discontinue the office, the new hours of operation will be posted, and they’ll take effect 30 days later (or the beginning of the pay period after that).  The surveys are being sent out now, the meetings will begin in October, and the reduced hours will take effect starting in November.

In its advisory opinion on POStPlan, the PRC reviewed what it had been told by the Postal Service and its witness, Jeffrey Day, about how POStPlan would be implemented.  From what we’re hearing so far, things aren’t going quite the way the Postal Service said they would.


Who’s being notified and who’s not?

One of the problems seems to be that not everyone is being mailed a survey.  The PRC’s advisory opinion on POStPlan made it very clear that the Commission was under the impression that all customers would receive one.  The advisory opinion states clearly, “All customers of each POStPlan post office will be mailed a survey on which they can indicate whether they prefer reduced hours or discontinuance.” 

In another passage in the opinion, the Commission states that the Postal Service will send surveys to “all addresses serviced by the POStPlan post office under consideration.”  Additional surveys would be made available to customers who request them at the retail counter, and a notice would be posted in the lobby explaining that the post office is being considered for review under the POStPlan.

According to the reports we’re getting, at some post offices surveys are being sent only to box holders and not to customers in the community who get home delivery.  If those customers don’t notice the sign in the lobby and don’t know to ask for a survey at the window, they may not have their voices heard.

It’s important that everyone who uses a particular post office have an opportunity to participate in the survey because the surveys are being used to decide whether or not the post office will remain open.  If the office ends up having the hours reduced, the survey also asks people their preferences about when the post office will be open. 

All customers, not just box holders, should have input into that decision.  In some cases, the box holders may represent just a minority of customers served by the post office.  All customers may not feel the same way, and it’s likely that box holders will have a different view of the question than those with home delivery. 

An Open Letter to Senator Collins: It's time for a new vision of the Postal Service

September 8, 2012

[A few days ago, former postmaster Mark Jamison wrote a letter to Senator Susan Collins of Maine, urging her to exert her influence in Congress to change the direction of the Postal Service before it's too late.  Mr. Jamison can be reached at, and his contributions to Save the Post Office are archived here.—Ed.]


Dear Senator Collins:

I am a recently retired postmaster.  For the last three years I have written extensively on postal issues, including comments before the PRC beginning with the exigent rate case, and on the blog, Save the Post Office.  I have also written to you previously without response or acknowledgement, although I expected neither.

I have been very critical of the positions you have taken with respect to postal issues.  Although I have taken great exception with your positions, I also believe that you are one of the few honest brokers when it comes to the future of the Postal Service.  Right or wrong, it is clear that you care passionately about the fate of the Postal Service and recognize the absolute importance of the postal network.

The postal network and postal services are critical to the overall health of our economy.  It’s true that mail volumes have dropped over the last five years.  The initial drop in volume was precipitous and can be tied almost entirely to the economy.  The deterioration of volumes due to the recession, combined with the payments mandated by PAEA, caused the collapse of postal finances.

While it is true that structural and systemic problems related to the internet present challenges to the future of the postal network, our current crisis stems primarily from the economy and the PAEA payments.  Our response to those problems has been insufficient and misdirected and it has fueled additional deterioration in volumes.  More important, the misdirection and distraction caused by the crisis has caused a failure to promote policies that would strengthen the postal network and enhance its utility, now and in the future.

The greatest problem we face today is neither structural nor systemic; it is the failure of postal leadership, beginning with the Board of Governors and senior management.  Theirs has been a vision that is keyed to failure.  It is a vision that embraces a stilted view of the value of the postal network, a view that ties the fate of the Postal Service much too closely to only one segment of the postal market — the direct mail and commercial mailing industry.

To NSA or not to NSA? The Valassis Question

September 4, 2012


I would earnestly warn you against trying to find out the reason for and explanation of everything....  To try and find out the reason for everything is very dangerous and leads to nothing but disappointment and dissatisfaction, unsettling your mind and in the end making you miserable. — Queen Victoria to her granddaughter 

Why would the Postal Service give a huge discount to the direct marketing firm Valassis — a discount so large that it’s very possible the Postal Service will lose money on the deal, as well as doing severe harm to the newspaper industry, which will lose revenue from advertising inserts?  In other words, why would the Postal Service want to benefit one customer at the expense of some its most loyal customers, with little or no benefit to itself?

That’s the kind of question one might best avoid examining very deeply.  Surely, as Queen Victoria warned her granddaughter, such a pursuit can lead only to disappointment, dissatisfaction, an unsettled mind, and misery. 

Nevertheless, for those interested in postal issues, it seems a journey worth taking.  It will take us down a path that includes PAEA, NSAs, the Clayton Anti-Trust Act, the mailing industry in general, and that ever-present postal bogeyman, politics. 


PAEA and the NSA

In 2006, Congress passed the Postal Accountability and Enhancement Act (PAEA).  One of its goals was to make the Postal Service more businesslike, which one supposes included the idea that businesses make deals (and deals make the business).  PAEA therefore created something called the Negotiated Service Agreement (NSA), thus formalizing a practice that had actually begun sometime before.  The idea was that good customers could and should be rewarded — “incentivized” — to be better customers by giving them special deals and cheaper rates for more volume or better barcodes.

The special deals complicated an already complicated rate system that has close to 10,000 different rates.  With a complex rate system like that, problems inevitably ensue, like making sure the rates are assessed appropriately or that customers actually pay the appropriate postage.  I recently had an e-mail conversation with someone at the Postal Inspection Service regarding methods of protecting revenue, and she said that in many cases there are no programs or protocols to assure revenue protection because the rate system is so complex (a discussion for another day).

Making things even more complicated, PAEA split Postal Service products into competitive and market-dominant classes and special classes within the latter (for more on that see my previous post).  Basically, the competitive class includes priority, express, bulk parcels, and international mail; market-dominant is just about everything else, like first class and standard mail.

In an effort to make the Postal Service more businesslike, which many have taken to mean more efficient, Congress created an infinitely complex system of classes and rates of mail, all with their own specific rationalizations and justifications.  Although I suppose one might argue that it’s all very simple, the Postal Service was instructed to make deals.

Again, the reasoning behind the provisions in PAEA that created both the division of mail into competitive and market-dominant products and that prescribed the potential for NSAs was that all of this separating and classifying would make the Postal Service more efficient because it would make it more businesslike.  

Of course, the economic philosophy that supported some of this gets pretty complicated and involves looking at the way monopolies perform in the market.  Some of the discussions get very opaque and that may be intentional because the more complex and opaque one makes a system the more advantage one can build into that system, an obvious example being the instruments of financial mass destruction that were at the bottom of the financial crisis.


The Valassis case

This brings us to Valassis and its recent agreement with the Postal Service.  Valassis is a large mass marketing advertiser.  It prints saturation mailings under the title of Red Plum. These are mail pieces that, as the name suggests, saturate a route or a zip code. They generally have simplified addresses like “resident” or “occupant,” and they carry inserts from several different advertisers.

Valassis had $2.2 billion dollars of revenue last year, a significant part arising from mailings that went through the Postal Service.  In fact, Valassis mails about three billion pieces of mail to 60 million homes each year.  In other words, it’s a very big stakeholder, and it’s responsible for about 2 percent of USPS volumes.

The new Valassis deal offers the company rebates on postage if it mails at least an additional million pieces over the year.  It gets discounts of 20 percent off currently published rates, which comes to $.197 (nineteen cents) or less for pieces up to 6.5 ounces, and other fixed discounts for higher weighted pieces.  The agreement has provisions that determine which markets the mail must appear in, what may be advertised (primarily non-durable goods), and various other requirements designed to ensure that the mailings are in addition to, not in place of, what Valassis already mails.

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