August 24, 2013
Add another historic post office building to the list of those being sold. The Postal Service has announced that it plans to close the main post office at 59 North Fifth Street in downtown Reading, Pennsylvania, and put the building on the market.
The Postal Service says there’s too much space in the building for its needs, and it points to the reduced volume of mail in the electronic age as the explanation.
Actually, the space issues are a little more complicated than that. There are several postal facilities in Reading, and the Postal Service has spent the past couple of years shuffling operations around, including the consolidation of the Gus Yatron mail processing plant. The Postal Service itself has created the excess space in the main post office, not declining mail volumes.
Playing musical chairs with post offices
Reading’s main post office was built in 1940 under the New Deal. (For some reason, on the USPS facilities list, it’s called the Downtown Station, and there’s no facility in Reading identified as the Main Post Office.) It has 44,894 square feet, and about 23 employees — a few retail workers and several bulk mail handlers.
There’s also a large processing plant in Reading, the Gus Yatron facility on N. 13th Street, which offers retail services as well. Built in 1986, it has 105,000 square feet. There used to be over 200 workers at the facility, but in 2011 outgoing mail operations were consolidated with plants in Harrisburg and Lehigh Valley, and this summer incoming mail was consolidated with Harrisburg. A couple of dozen workers are still at the facility running the retail and bulk mail operations.
In addition to the main post office and the Yatron plant, there’s a carrier annex at 1910 North 5th Street. Built in 2000, it has 17,115 square feet and about 70 workers. There are also several stations and branches in the Reading area.
The consolidation of the Gus Yatron facility has opened up a lot of space in the building, and now the Postal Service wants to put it to use. The plan is to close both the carrier annex and the main post office and move most of their operations to Yatron. To replace the main post office downtown, the Postal Service will open a small retail office of 3,000 square feet, location yet to be determined.
The extra space in the main post office — the rationale for closing it — is thus not simply a result of declining mail volumes. It is a situation that resulted from decisions made by the Postal Service to move operations around among its other facilities.
August 23, 2013
The Postal Service’s July financial report is something to write home about. It looks as though the improvements seen over the past several months continue to hold strong. (The July report is here. If you want to compare it to June, that’s here.)
Revenues are up 1.6 percent over the same period last year (i.e., ten months, Oct. – July). In the previous report for June, revenues were up 1.4 percent, so this month's improvement is slightly better than last month's. For July, revenues are up 3.9 percent compared to last July.
The bottom line shows a net operating loss of $4.32 billion, which is probably the number that will be widely reported. Of that, however, $4.67 billion is for the payment to the Retiree Health Benefit Fund (RHBF). Take that out of the calculations and the Postal Service would be showing a net operating profit of $350 million for the year so far.
For July itself, there was a net operating loss of $574 million, which includes a RHBF payment of $467 million. Exclude that, and the loss for the month was $107 million.
The numbers are significantly better than the Postal Service had projected. The plan shows that at this point in the year the Postal Service was anticipating a loss of $1.5 billion (excluding the RHBF payment), as opposed to the profit of $350 million it has posted.
As usual, First Class mail continues to show difficulties, but maybe the declines are slowing down. In the month of July, volumes were down just 0.5 percent. If you compare that to the volume decline for the year-to-date, 3.7 percent, it suggests that the rate of decline is decreasing. Plus, revenue from First Class mail is actually up a decent 1.5 percent for July. It’s probably been a long time since First Class revenues were up that much.
Standard mail continues to do well. For July, revenues are up 4.8 percent; and for the year-to-date, up 3.1 percent. Revenues from Shipping & Package Services are up 8.6 percent for July and 8.3 percent for the YTD.
Periodicals are having a hard time, as they have been for a while. For the YTD, volumes are down 5.3 percent and revenues are down 3.9 percent. Even there, though, the YTD numbers are slightly better than last month.
Overall, the upswing in the economy, as gradual as it has been in many sectors, looks like it’s being reflected in the habits of mailers. If things keep going like this, it will become increasingly difficult to justify the Draconian cuts that are part of the postal reform legislation being crafted in both houses of Congress. It may also make it difficult to justify the exigent rate increase that’s being talked about.
Maybe this would be a good time to just leave things well enough alone. Congress should stay focused on eliminating the prefunding mandate. Continued improvements in the economy may take care of the rest of the problem.
That, of course, will not exactly sit well with postal officials, who continue to cite a $25 million a day loss and a 25 percent decline in mail volume over the past five years when they want to explain to citizens why their post office has to be closed or downsized or why their historic post office building needs to be sold or why they can expect to pick up their mail at a cluster box unit down the road.
The Postal Service is obviously not losing $25 million a day. (There’s more on that spurious meme here.) If you figure a six-day week, the average daily loss for 2013 YTD is $16 million a day if you include the RHBF. Exclude the payment, and the Postal Service is making a daily profit of $1.4 million. Of course, you can’t tell that to people when you want to take away their post office or replace their mailbox with a cluster box.
August 20, 2013
BY MARK JAMISON
The Postal Service didn’t think the folks in Freistatt, Missouri, should have a post office, so they closed it.
The Postal Service didn’t think the folks in Freistatt, Missouri, should get rural carrier delivery like their neighbors, so they tricked the town into accepting cluster boxes.
Now the Postal Service doesn’t think the folks in Freistatt, Missouri, ought to have the opportunity to tell their story to the Postal Regulatory Commission, so they filed a motion asking the PRC to dismiss the appeal because it was submitted a week late.
As reported on STPO back in March 2013, the Postal Service closed the Freistatt office on two-days’ notice by emergency suspension — and on Good Friday no less. But that was not the end of the story. It was only the beginning.
The first push to close Freistatt: The 2011 RAOI
Freistatt is an incorporated town of 160 people in the southwest corner of Missouri. The town is situated along Highway H, a main road that serves trucks traveling between Missouri and Arkansas, and it has a fairly thriving business sector. There is a major insurance agency in the town, an active non-profit that mails Braille bibles for the blind, a large John Deere outlet, and a housing complex for seniors and the disabled. Although the town’s population decreased between the 2000 and 2010 census, the general area of Lawrence County grew by about 34% during that time.
In 2011 the Freistatt post office was one of 3,700 offices marked for closing under the Retail Access Optimization Initiative (RAOI), and a discontinuance study was initiated in August of that year. Like most discontinuance studies, this was a pro forma exercise that was less a study to determine if the office should close than a means to legitimize the Postal Service’s decision to close it. The plan back then was to replace the post office with rural delivery.
The discontinuance study was flawed by the usual anomalies and misinformation that has become an all-too-common feature of this process. For example, even though the office had both a postmaster and a postmaster relief (PMR), in the cost-savings analysis, all of the offices hours were rated at the higher labor rate of the postmaster, thus giving the impression of greater savings than actually would have been accrued.
The initial letters sent to Freistatt’s customers had more than a few things wrong as well. For example, the mileage to the other post offices was incorrect, and an office that was more than seventy miles away was included as an “alternate” facility. That initial letter, which is not in the administrative record provided by the Postal Service, also apparently had some assertions about the town and the post office that were wrong, including the notion that the town was unincorporated and that the postmaster did not help the elderly.
August 16, 2013
Netflix is planning to close one of its distribution centers in Connecticut, and it’s blaming the Postal Service. A Netflix spokesman had this to say:
"Netflix has closed the Bloomfield DVD distribution center due mainly to United States Postal Service transportation and service changes, along with increased internal production efficiencies, resulting [in] a small number of jobs lost."
That announcement has to be hurting some feelings at L’Enfant Plaza. Netflix is the Postal Service’s largest individual commercial mail client, with postage expenditures topping $500 million annually. For several years now, the Postal Service has been fighting with GameFly and the Postal Regulatory Commission in defense of the good deal Netflix receives on postal rates.
After everything they have done for Netflix, postal officials may be feeling it’s rather ungrateful for Netflix to blame them for closing a distribution center. They're having enough trouble defending their decisions to close mail processing plants. Now postal officials are getting blamed for closing a Netflix distribution center, too.
The high cost of slowing down the mail
The Netflix spokesman would not specify how the Postal Service is hurting business, but his reference to “service changes” is a clue. It may have something to do with the Network Rationalization plan to consolidate 240 mail processing plants. When fully implemented, the plan will end overnight delivery and slow down First Class mail a day or two. Netflix mails First Class, so slowing down the mail adds a day or two both ways, which means that subscribers get fewer movies per month.
When the consolidation plan was announced in 2011, there was immediate speculation about how it would affect particular mailers like Netflix. Some said that delays in sending disks back and forth would lead some customers to end their Netflix service contact. Other customers would demand that Netflix lower its prices because customers would be able to see fewer movies per month.
Slower delivery times may already be pushing some Netflix customers to the streaming alternative. Over the past 15 months, Netflix's DVD business has fallen from 10 million members to 7.5 million. During that same period, the “Domestic Streaming” segment has increased from 23 million members to 30 million.
There are a lot of reasons besides mail delays that would turn people from DVDs to streaming (like convenience), but this is just the kind of thing that had critics of the Postal Service’s Network Rationalization plan worried. While the plan might save a couple of billion dollars in operating costs, it also has the potential to drive away billions in revenue as well. According to a marketing study that the Postal Service tried to keep hidden, slowing down the mail could cause revenue losses of over $5 billion a year.
It should come as no surprise, then, that Network Rationalization might be pushing some customers from subscribing to streaming. The changes in delivery time could easily be driving away some portion of the $500 million a year in Netflix mail business. And they may have also contributed to the decision to close the Bloomfield distribution center.