October 1, 2012
When the Postal Regulatory Commission issued its advisory opinion on the Retail Access Optimization Initiative (RAOI) last year, it said the plan to close 3,700 post offices wouldn’t optimize anything. On Friday of last week, the PRC issued its advisory opinion on Mail Processing Network Rationalization (MPNR), and while it doesn’t come right out and say so, the Commission suggests that the Rationalization plan won’t really rationalize the network.
The mountain of testimony and legal arguments submitted by the Postal Service just rationalize a decision made long ago, and postal management doesn't seem to care if the PRC thinks the decision was rational or not. The Postal Service didn't even wait for the opinion to come out. The changes in service standards were implemented in July, the consolidations began in August, and while the plan now calls for a phased implementation, there are few signs that the Postal Service is interested in changing course.
The advisory opinion nonetheless aims to shift the direction in which the Postal Service is headed. The opinion is long (240 pages), thorough, and extremely technical, but as the Commission states in the Introduction, its advice can be “succinctly summarized” as follows:
“The Commission views positively the network rationalization actions planned by the Postal Service through January 31, 2014, and recommends that the Postal Service take into account the considerations outlined in this Advisory Opinion before proceeding further. Specifically, the Commission encourages the Postal Service to make every attempt to retain overnight delivery in keeping with the analysis presented in the subsequent chapters.”
That summary of the Commission’s findings contains several important points. First, the Commission is basically approving the first phase of the Postal Service’s two-phase implementation plan, which was announced back in May. According to this revised plan, some 140 plants will be consolidated as part of phase one, starting this past August and running through January 2014. Phase two will begin after that, and include about a 90 more plants. (A list of the plants is here.)
The Commission expresses approval for phase one because it preserves overnight delivery for most of the mail that currently enjoys it. The Commission is much more skeptical about phase two because it requires ending overnight delivery for almost all First-Class mail, and it would cause most of the damage in terms of revenue losses. The Commission advises the Postal Service to consider the opinion’s recommendations carefully and to review what happens in phase one before proceeding with the second phase — if it moves on to phase two at all.
A large part of the advisory opinion reviews the detailed cost-savings analysis provided by the Postal Service. It concludes that “the Commission’s range of potential net savings estimates is lower than that projected by the Postal Service.” The Postal Service says that the gross savings from the plan (before deducting lost revenue) will be $2.1 billion. The Commission, on the other hand, says the gross savings could be as low at $54 million.
As for how much business the relaxed service standards may drive away, the Postal Service claims that its market research projects a net loss of $500 million (later corrected to about $430 million), bringing the total savings to $1.6 billion. The Commission, however, found the market research to be so problematic that it could put no credence in the bottom-line estimates. The Commission would not offer an estimate of its own, but the advisory opinion leaves one with the distinct impression that the lost revenue will be greater, perhaps much greater, than the Postal Service is anticipating.
All in all, then, the Postal Service’s estimate of $1.6 billion in net savings comes under serious scrutiny in the advisory opinion. The Network Rationalization plan will probably save much less than the Postal Service says, and there is the very real possibility that rather than saving anything, it will actually lose money, drive the Postal Service deeper into its downward spiral, and, as one of the expert witnesses put it, "herald a death knell” for the country’s postal system.
The great unspoken
For the most part, the advisory opinion presents a technical analysis of the Postal Service’s plan and the alternative models that were developed by outside experts. It was written by a staff well versed in the technicalities of postal operations, postal law, and the principles of statistics.
The advisory opinion mentions the word “jobs” only once, in a sentence about how the Postal Service is “a vital component of a mailing industry that supports millions of American jobs.” There’s not one reference in the advisory opinion to the jobs of postal workers, even though nearly all of the savings the plan purports to achieve will come by eliminating their jobs, and lots of them — 28,000, according to the USPS press release.
The advisory opinion doesn’t discuss how closing 229 large processing plants will affect postal employees or their families and communities. There’s no discussion of the economic impacts of shutting down a large plant, nothing about how some workers will have to commute two hours to their new jobs, nothing about how families will be split apart when the postal worker in the family gets transferred to a plant in another town, nothing at all about the 28,000 workers who won't even have a job to go to.
The advisory opinion doesn’t discuss the social costs of the Network Rationalization plan. It examines the Postal Service’s plan in the same terms with which the plan was presented — as a matter of sorting machines and square footage, of maximizing efficiencies and improving productivity. It’s all about numbers, not people. If money can be saved by consolidating plants, the issue is how many and which ones, not the value of providing jobs, sustaining families, and maintaining communities.
Perhaps eliminating 28,000 postal jobs is a necessary evil if we are to save the Postal Service — the lynchpin in a mailing industry that employs millions — but it seems odd to cut jobs in order to save them. Yet that’s what network “rationalization” is all about.
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.
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.”
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.