Village Post Office


The Postal Service shares some lists: Closures, Suspensions, VPOs, CPUs, and Retail Channels

January 18, 2013

Yesterday the Postal Service provided the Postal Regulatory Commission with some lists and other material for the annual compliance report.  They include the post offices that were closed and suspended during fiscal year 2012 (October 1, 2011 to September 30, 2012), as well as information about retail revenue sources and Contract Postal Units (CPUs) and Village Post Offices (VPOs).

You can download the lists from the PRC website here.  To make access simpler, we’ve posted the lists on Google Docs, where you can see them in the original spreadsheet form but also as tables and maps.

Post Offices Closed in FY 2012
Post Offices Suspended during FY 2012
VPOs in operation as of 9/30/2012
CPUs and CPOs at end of FY 2012

 

Retail Revenue Channels

The Postal Service has provided a table that shows the sources for retail revenues.  Because the big mailers are not considered “retail," the retail revenues account for only a portion of the agency’s total revenues — about $17 billion out of $65 billion.  The big mailers take their mail to pre-sort companies or directly to USPS Bulk Mail Entry Units.  “Retail” therefore applies to the average customer — individuals, small businesses, etc.

The following table indicates the “channels” through which the Postal Service takes in its retail revenues.

Channel
FY2012 Revenue (in $ millions)
Share of Total Retail Revenue
Change from FY2011
Post Offices (WIR)
$10,627
60.9%
-3.6%
PC Postage
$3,604
20.7%
4.1%
Stamps Only Sales by Retail Partners
$1,226
7.0%
0.2%
Automated Postal Centers (kiosks)
$497
2.9%
-0.4%
Stamps by Mail/Phone/Fax
$517
3.0%
0.0%
Contract Postal Units
$376
2.2%
-0.4%
Click-N-Ship
$484
2.8%
0.1%
Other
$119
0.7%
0.1%
Total Retail Revenue
$17,450
100.0%
2.9%
 

The Postal Service likes to say that people aren’t using the traditional brick-and-mortar post office like they used to, but the traditional post office continues to be the main source of retail revenue.  As the table shows, while post office retail is down 3.6% since last year, post offices still account for over 60% of retail revenues

The only significant source of retail revenues aside from the post office is PC Postage, which refers to vendors and authorized providers who print their own shipping and postage labels, such as Click-N-Ship, PayPal Ship Now, eBay's Shipping Label, and Dymo Stamps.  Retail revenues from PC Postage have naturally increased along with the rise of e-commerce — and thanks to promotional efforts by the Postal Service.

Stamp sales by retail partners account for a mere 7 percent of retail revenues.  That’s despite the fact that there are about 32,000 post offices (not including contract units) and over 63,000 retail partners.  Plus, revenues from those partners are virtually flat since last year, with an insignificant increase of 0.2 percent — despite all the effort the Postal Service has put into its USPS Everywhere campaign. 

In fact, now when you go to the USPS “find locations” page, the default for “location types” is not post offices, but “post offices and approved postal providers.”  The Postal Service is doing everything it can to encourage customers to look for alternatives to its network of post offices.

It will be interesting to see how post offices revenues fare over the next couple of years as hours are reduced at 13,000 small rural post offices and larger urban offices are relocated to inconveniently located annexes.  

 

The New York Times Editorial: How many things can you get wrong in 300 words?

November 25, 2011

The New York Times welcomes the holiday season with a 300-word editorial entitled “Overhauling the Post Office for the 21ST Century.”  The piece gets so many things wrong that it would be laughable if it weren’t so maddening.  It’s really the Times’ editorial staff that ought to overhauled.

 

On five-day delivery

First, the Times calls the request from management to end Saturday delivery “reasonable,” and says it would save $3 billion a year.  But the Postal Regulatory Commission — the agency responsible for regulating the Postal Service — took up the issue of five-day delivery in an Advisory Opinion issued in March 2011.  Based on data provided by the Postal Service, the PRC found that the cost savings would be far less than the Postal Service claimed — more on the order of $1.7 billion.  (The Postal Service never challenged the PRC's analysis.)

More important — and the Times says nothing about this — the PRC found that eliminating Saturday delivery would have many adverse effects.  It’s not just about the inconvenience of not getting your mail on Saturday.   Cutting Saturday delivery would also cause 25% of First Class and Priority mail to be delayed two days.

Add that delay to yet further delays caused by consolidation of 500 mail processing plants down to 135 facilities (120 P&DC's and 15 hubs) — a plan now being implemented — and delivery times will slow down even more.  If you’re used to seeing your mail delivered in one or two days, think three or four, or more.  Eliminating Saturday delivery would also hurt some people more than others, like people in rural areas and small businesses, or people waiting for medicine or perishable matter.

Given all the problems with cutting Saturday delivery, you have to ask, who's behind it?  In the PRC Advisory Opinion, one of the main advocates was Valpak, the direct mail company that sends you the blue envelope filled with coupons.  And why would they back five-day delivery?  Simple.  Anything that keeps the Postal Service's costs down also keeps postage rates down.  Valpak and many others in the bulk mail industry don't care if you get their mailings on Saturday or Tuesday or whenever, so long as the rates they pay are as low as possible.  Apparently the New York Times doesn't care when you get its newspapers delivered either.

 

On Village Post Offices

The Times goes on to say, “Congress needs to produce a bill that allows the Saturday shutdown as well as the closure of up to 3,700 local post offices where service would be continued through automated outlets at neighborhood businesses.”

It’s hard to imagine where the Times got the idea that the Postal Service wants to replace 3,700 post offices with “automated outlets at neighborhood businesses.”  The Times must be referring to the “Village Post Office” concept — the Postal Service’s plan to contract with a local business so it can provide basic postal services.  But this concept has nothing to do with automation.  It’s not about putting an “automated postal center” or postal kiosk in a business. 

Rather, the Village Post Office is about allowing a local business to sell stamps and flat-rate boxes.  And that is all a Village Post Office can do.  The folks working in the local business cannot weigh packages, do registered or express mail, sell money orders, or any of the other things a post office does.  In other words, a Village Post Office is not a post office at all.  It’s just a place to buy stamps.

The idea for the Village Post Office was released last August amidst much ballyhoo about what a great new “concept” it was.  It would save the Postal Service money and help a local business bring in new revenue.  (The business is paid a couple of thousand dollars per year but makes no money on the stamps or flat-rate boxes.)  Supposedly people coming in for stamps would buy something else.  Forget about the fact that in a small town, people are going into that local business anyway.

Grand as it all sounded, the Village Post Office idea ran into a little trouble, and so far, some four months later, the Postal Service has established just five VPOs.  Turns out a large number of the 3,700 communities where the Postal Service planned to locate a VPO didn’t even have a business where you could put one.  The Postmaster General has recently backed off the concept and said he needed to find an alternative to this alternative.  

(It’s possible the Postal Service has leaked to the Times that its newest concept is to put 3,700 automated kiosks in local businesses, but if that’s the case, the Times has buried a terrific scoop inside a silly editorial.)

 

On post office closings

The Times also makes it seem like the Postmaster General is interested in closing only 3,700 post offices.  That is the number of offices on the Retail Access Optimization Initiative (RAOI), the plan released in July that is now being reviewed by the PRC, as it's being implemented by the Postal Service.  (Actually, the original number was 3,650, and about 200 have already been removed from the list.) 

However, far more than 3,700 post offices are going to close.  In a recent article in Time.com, the Postmaster General is quoted as saying, “We'll probably look at 15,000 post offices rather than just 3,700.”  That’s half the country’s post offices.

And it’s not as if the Postal Service is waiting on the PRC’s Advisory Opinion or new legislation to get the process started.  A few days ago, the Postmaster General told the National Press Club that the Postal Service had closed 500 post offices this year.  At least a hundred more have received a “Final Determination” notice saying they would close in 60 days.  There’s a temporary suspension on closures until January 3rd, but those post offices will close soon after the New Year.

While many of the closures have been reported in the local news, there’s been little attention in the national media to these closings.  The Postal Service has not even produced a list of the closings.  In Great Britain, where they have closed over 7,000 post offices over the past few years, there’s a phenomenon called “the secret closure programme” — closings that happen “quietly,” under the radar of the media.  The same thing is happening here.

The cost savings from closing post offices is surprisingly small.  The Postal Service says closing the 3,650 offices on the RAOI list would save $200 million a year — about 0.3% of its annual budget — and even that estimate may be inflated.  As we’ve seen in the appeals on closings that communities have brought to the PRC, the amount of savings for closing an individual office is consistently inflated by the Postal Service, and several closing decisions have been questioned by the Commissioners for precisely that reason.

Now, closing 15,000 post offices might realize more significant savings, perhaps over a billion dollars a year.  But at what cost, and at whose expense? 

Think about all the extra driving closing half our post offices would cause, all the fuel consumption, pollution, and gas money and extra time each person would need to spend on postal matters.  Think about the harm to small businesses that go to the post office once or twice a day.  Think about all the people who walk to the post office, like seniors or people who don’t have a car, who won’t be able to get to a post office at all.  Think about the communities — small rural towns, inner-city neighborhoods, and suburbs too — that will lose an important social and economic hub.  For many towns, the post office is a nexus of its identity — close the post office, take away the zip code, and the place isn’t a place anymore.

 

On the legislation

The Times editorial also refers to the House bill, legislation crafted by Tea Party congressmen Darrell Issa and Dennis Ross on behalf of the right-wing, anti-government, anti-union 1% in this country — people like the billionaire Koch brothers, who are large campaign contributors to Issa and Ross and whose Cato Institute has been cranking out studies advocating the privatization of the post office for years.

The first RAOI post office closes, more Village Post Offices open, but where's the hoopla?

November 2, 2011

It looks like the first post office on the Retail Access Optimization Initiative (RAOI) may have closed already — weeks ago, in fact — but somehow the news slipped by under radar.  Plus, five more “Village Post Offices” (VPOs) have opened over the past few weeks, and hardly a word from the Postal Service about that either.  Today we learn from an article in Reuters that the Postmaster General is backing off the VPO “concept” altogether and revising plans for closing thousands of rural post offices.  Turns out many of the small towns where they planned on locating a VPO in a small business, like a mom-and-pop convenience store, don’t even have a place to put the VPO. 

 

New Village Post Offices

It had been several months since the first VPO opened in Red’s Hop N’ Market in Malone, Washington, and it was starting to look like Red’s might be not only the first VPO but also the last.  Not so.  Several more VPOs have opened over the past month, but it looks like the Postal Service has decided a “soft opening” was the way to go. 

The first part of this VPO story was broken by Jay Bigalke in Linn’s Stamp Magazine, which recently reported that there were three new VPOs in Michigan — in Twining, Tower, and Brant.   Who knew?  There were a few short reports in the local Michigan media, but the openings occurred without any of the hoopla deployed by the Postal Service when the first VPO opened in in Malone.  That one was accompanied by photos, press releases, news reports featuring quotes from USPS VP Dean Granholm, and even a CNN TV spot.   

The Stamps article on the new VPOs came up during testimony before the Postal Regulatory Commission last Friday, when James Boldt, the man running the RAOI, was asked about it by PRC Chairman Ruth Goldway.  (The webcast is here.) There was some confusion about how many VPOs actually existed at that moment.  Boldt indicated that later the same day (October 28), a fourth VPO would be opening in Star Tannery, Virginia, but with one in Malone and three in Michigan, that would have been the fifth.  (And according to the Reuters article, there are actually six.) 

Boldt seemed almost giddy that another VPO “grand opening” would be happening in “just an hour,” and he was sorry he couldn’t be there and had instead to be present for a grilling by the PRC’s commissioners, the Public Representative, and representatives of the postmasters associations.  No doubt he would have preferred to be anywhere but the PRC hearing room.  But didn't Boldt get the memo?  Hadn't the Postmaster General told him that the Village Post Office concept was being revised and there was no reason to get too excited about another "grand opening"?

 

The VPO concept, come and gone? 

In July when the RAOI was announced, it was accompanied by the unveiling of a great "new concept" — the "Village Post Office" — basically a watered-down version of the "contract postal unit," which puts a postal counter in a private business.  There had been talk of opening a couple of thousand VPOs, and the Village Post Office concept was used to pacify citizens at many community meetings on post office closings.  "Don’t worry so much about losing your post office," USPS management told patrons at these meetings.  "We’ll replace it with a Village Post Office.”

But now Postmaster General Patrick Donahoe says, in the Reuters story that its plan to replace post offices with “Village Post Offices” will not work in many rural communities because there’s no business in which to locate the VPO.  "When you get west of the Mississippi,” Donahoe said, “it's more prevalent that you don't have stores in these communities, you have nothing in these communities. It's pretty much just the post office."  And they didn’t know this before they rolled out the VPO concept? 

The Postal Service says that at this point, in addition to the six VPOs already up and running, one more opens next week, four more are finalizing the deal, 30 others are in various stages of contract developing, and about 400 inquiries have come in. 

But it’s hard to imagine a significant number of VPOs ever opening.  The future is in putting postal services not in mom-and-pop convenience stores but in large chains like Walmart, Staples, and CVS.  These do not require the kind of one-on-one contract negotiation, training, and oversight required when a VPO opens in an owner-operated store.  The VPO was never going to happen on a large scale.  It was mainly a dodge so that it wouldn’t look like the Postal Service was abandoning its universal service obligation.  

In any case, the Postal Service is going to have to look elsewhere.  As the PRC’s Ruth Goldway put it in the Reuters article, “It's not going to be their great solution to the problem."  So now the Postal Service is talking about keeping some of those small rural post offices open, but for fewer hours — and for less pay and benefits for postmasters.

 

The first RAOI post office closes . . . maybe

In written response to a question from the PRC about the status of post offices on the RAOI, the Postal Service replied that "as of November 1, 2011, no Final Determinations have been posted as part of the RAO Initiative."  However, the post office in Tower, Michigan (49792) appears on the USPS website's RAOI "Expanded Study List" for Michigan.  And this news account sure makes it look like Tower closed.  Plus, the Tower post office no longer appears on the USPS Locator page.  

So it would appear that Tower, MI, is the first of the RAOI post offices to close.  But how could that have happened already?  The closing process implemented in July as part of the RAOI is supposed to take five months, so it seemed as if no post office would close under the Initiative until the end of the year.  What happened?

The RAOI list released on July 26, 2011, includes 265 post offices that had been initiated for closure study but had not progressed to the community meeting stage.  It’s possible that Tower was well along in the 60-day comment period by July 26, and perhaps a community meeting took place soon after.  Maybe the post office received its Final Determination notice in early August.  But the soonest it should have closed would have been 60 days later — early October.

Rolling Out Red’s: Meet your first Village Post Office

August 12, 2011

The Postal Service is rolling out its inaugural “Village Post Office” this week, and it's the cutest little place you ever saw.  It’s called “Red’s Hop N’ Market,” and it’s located in the small town of Malone, Washington, pop. 473.

The Postal Service closed Malone’s post office on August 9, and it opened the Village Post Office (VPO) in Red’s the next day, right across the road.  Talk about a smooth transition.  And the Postal Service did an outstanding job staging the debut.  All that was missing was the ribbon-cutting ceremony. 

Red’s looks like the quintessential mom-and-pop convenience store.  Red himself isn’t around, but it’s definitely a family-run business — Cheryl Lee and family have been running the store for the past five years.  The Postal Service wasn’t taking the event lightly, and it brought out the heavy hitters for the news media — Dean Granholm, VP of USPS operations, and Lee Fritschler, a scholar at George Mason University. 

“Malone was costing us about $85,000 to $90,000 a year and was bringing in less than $20,000 a year,” Granholm told American Public Media’s Marketplace, which did a spot on the “debut.”  Putting a scaled-down version of the post office inside a store will be much cheaper to operate.

How much cheaper isn’t clear.  The old post office, which had been there since 1982, was paying $450 a month, just $5,400 a year — pretty typical for a small rural post office.  The salary for the postmaster and two part-time postmaster reliefs (PMRs) may be a cost-saving, but postal workers at other locations will have to pick up some of the slack, and there’s also a fee to be paid to Red’s.  

Plus, folks in Malone are going to have put some extra gas in the tank to drive five miles to Elma when they need to do things you can’t do at Red’s — like anything requiring weighing, rating, scanning or tracking (there's no Contract Access Retail System at Red's), plus money orders, passports, bulk mailings, change of address forms, etc.  Given how limited the Village Post Office is in the services it provides, maybe VPO should stand for "virtual post office."  But there will be nothing virtual about the extra gas folks will have to pay for — not that this cost will show up on the Postal Service’s books.  

Marketplace doesn’t provide any details about the contract with Red’s.  It’s probably similar to the way they set up a “contract postal unit” (CPU). For a small operation, the Postal Service and business arrange a firm-fixed contract, in which the business is paid a fixed annual rate in twelve monthly installments.  Marketplace says the Postal Service paid Red’s $2,000 to become the new Village Post.  That's the annual fee, and it includes retail space.  It's not much (it ought to be the monthly fee), it's locked in for two years, and it's almost impossible to get an increase out of the Postal Service.  That's one of the main reasons businesses drop their CPU contracts.

The Markpetplace report also doesn’t say anything about how Red’s was selected to be a Village Post Office.  In its responses to interrogatories for the PRC Advisory Opinion, the Postal Service said that to get a VPO started, “management in the field will solicit vendor bids, and they will award firm fixed price (flat fee) contracts establishing the terms and conditions under which each VPO will operate.” 

There’s no mention of the solicitation of vendor bids in the Marketplace piece.  Maybe the Postal Service skipped that stage of the process.  CPU contracts are supposed to be competitive, but the Postal Service can use a “noncompetitive purchase method” when it’s done business with the retailer before in other locations or when “the proposed CPU is the only supplier capable of providing or willing to provide the service needed” (Postal Employees Guide to Contract Postal Units). That may have been the case with Malone — it’s not as if there are a lot of other convenience stores in town.  But does that mean the Postal Service is going to skip competitive bidding on a couple of thousand Village Post Offices since most of them are going to be in places like Malone? 

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On Privatization

Good Reading on Postal Privatization

Also: Sarah Ryan's "Understanding Postal Privatization: Corporations, Unions, and the "Public Interest"


 

Privatization in the UK

save your p.o.

Organizing to Save Rural Post Offices


A Community Organizing Toolkit

Revised November 2012

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