The PRC’s Public Inquiry into the Delivering for America plan began back in April. The Postal Service tried to shut it down before it even got started, arguing that reviewing the DFA was outside the Commission’s jurisdiction. The Commission went forward nonetheless, but thus far it has made only two requests for information, and they have not yielded very much.

The Commission’s questions have generally focused on issues that could indicate that a formal Advisory Opinion process is warranted. These include matters like post office closings and reducing retail hours, projected cost savings, lists of impacted facilities, and the possibility that the S&DC network discriminates against those who live too far from a Sorting & Delivery Center to enjoy its benefits.

A couple of weeks ago, the Greeting Card Association (GCA) submitted a motion for an information request asking for details about the Postal Service’s projections on mail volumes, which are the basis for much of the plan. The Postal Service promptly filed an opposition to the motion, arguing that the questions were outside the scope of the inquiry. The Commission has yet to rule on the motion. [Update 9/1/23: The Commission granted the GCA motion, and issued Information Request No. 3, which also has additional questions on other topics.]

The Postal Service is clearly reluctant to share information about the DFA plan with stakeholders. The Postal Service prefers flashy tv spots, press releases, and articles in Eagle magazine — venues where it can shape the narrative.

Information Request No. 2

On August 22, the Postal Service filed a response to Chairman’s Information Request No. 2. Some of the responses repeat what the Postal Service had already told the Commission in its responses to the first information request (as discussed here) or in other contexts, but there is some new information as well. The docket materials are on the PRC website here.

Excess space: The Chairman asked the Postal Service to describe any plans, studies, or analyses related to the utilization of excess space created at post offices due to the transfer of delivery functions to S&DCs. The Postal Service responded that it might make the space available to commercial entities or other government agencies, but went on to state, “The Postal Service does not currently have specific plans regarding the utilization of any specific excess space.” Needless to say, the Postal Service provided no studies or analyses of the excess space issue.

That was a fairly remarkable admission, given that the S&DC plan, if it were eventually to encompass 100,000 routes, would empty out more than half the space in 6,000 post offices and create 36 million square feet of excess space (366 square feet per carrier route, according to a 2012 OIG report, as discussed in this post). The S&DC network has already created a significant amount of excess space at over 70 post offices, and 70 more offices will lose their carrier operations in February. All that excess space can’t help but make customers worry about the future of their post office.

Perhaps there are no specific plans for putting the excess space to use because there is instead a plan to close post offices and relocate to smaller spaces and sell the buildings, many of which are historic post office properties.

Benefits of S&DCs: The Chairman asked the Postal Service to provide any relevant data related to the “operational benefits” from the first S&DC in Athens, GA.  The Postal Service replied that “customer call data are pointing to more precise delivery and fewer negative customer interactions,” and the Athens area has seen a reduction in workhours for Function 4 — work on Post Office boxes, retail windows, scanning incoming mail and distributing it to carriers, etc. The Postal Service did not provide any public data on these benefits, but it did submit a non-public library reference.

These workhour reductions have already led to excessing some clerk positions, but without data to examine, it’s not clear just what the removal of carriers has accomplished in terms of benefits or cost savings. And given that the Commission has yet to ask the Postal Service about the cost of the additional miles carriers must travel to their routes when they’re moved to an S&DC, the bottom line on the S&DC plan remains a complete mystery.

Cost savings for retail cuts: The Chairman asked the Postal Service to clarify whether the projected cost savings of $34 billion referenced in the 2021 version of the DFA plan (and a subsequent response to the first information request) includes savings related to reducing operating hours at post offices and closing some stations and branches.

In response, the Postal Service said, basically, yes, those cost savings involved retail access. And it then repeated what it said previously: The Postal Service may pursue initiatives like closing post offices and reducing hours, depending on circumstances, “including whether the DFA Plan’s financial and operational goals are being achieved through the other elements of the Plan or by other means.”

A living plan: The Chairman also asked the Postal Service to clarify that the network transformation described in the original DFA plan has been superseded by the plan as described in the Second-Year Progress Report, as indicated by the contrast between these two graphics. (Click on image to enlarge.)

The Chairman asked for any data and analyses related to the cost and service impacts of the Second-Year Report Network as opposed to the impacts of the original DFA plan, which were previously shared with the Commission in response to the first information request. The Postal Service responded that the projections have not been updated since 2021, even though the plan itself has been revised, probably more than once. As the Postal Service says, it’s a “living plan.”  The Postal Service didn’t have any data to share on service impacts as well.

Optimizing delivery . . . in some markets

One interesting topic covered by the information request involves a geographic aspect of the improvements to the delivery network. The Second-Year Progress Report states that the new S&DC network “will optimize delivery in [its] busiest markets.” The Chairman asked if customers outside the busiest markets will receive the same benefits — like faster delivery — as customers within those markets.

The Postal Service responded by saying that “all customers will benefit from the redesign of the Postal Service’s processing and delivery networks.” But the Postal Service went on to state the following:

“At the same time, there will not be a Sorting and Delivery Center (S&DC) in every community…. In areas where a S&DC is not developed, the community will continue to be served by existing Delivery Units. These communities will not receive the direct benefits of an S&DC, such as the ability to drop packages for delivery to an entire local market from a single consolidated location. However, these communities will still see the benefits of the network transformation initiative, including the fact that our enhanced processing facilities will enable expanded next day and two-day reach for customers entering packages at those facilities, and improved service performance generally consistent with the current service standards.”

This response does not really address the question of whether customers outside the busiest markets will get the same “faster delivery” as those within these areas. Clearly, they will not.

The Commission asked about this issue several months ago in the context of the test marketing for USPS Connect Local Mail (MC2023-12), the companion to USPS Connect Local for packages.

The Postal Service explained that “Where carrier operations for an existing DDU are transferred into an S&DC, that S&DC will replace the function of the DDU for the delivery points serviced by carriers dispatched for their route from that S&DC location… USPS Connect Local Mail customers will be able to enter mailpieces at an S&DC for any addresses that are served by that facility. The S&DC will consolidate multiple existing DDU drop-off points into a single S&DC location. Mail that is accepted prior to the critical entry time will still receive same-day delivery service and mail accepted after the critical entry time will be delivered the next day.”

In other words, when multiple DUs are consolidated to an S&DC, that S&DC becomes the DU for all the addresses served by those individual DUs. Same-day delivery will be provided to the addresses served by the S&DC when the Connect mail pieces are dropped at a delivery unit during the critical entry time (CET) between 5 a.m. to 7 a.m.; pieces dropped after the CET will get next-day delivery.

While people living within the S&DC service area can get same-day or next-day delivery through USPS Connect Local, those outside this service area will get this benefit only for pieces dropped at their local post office (the way Amazon takes its packages to post offices early in the morning for last-mile delivery). In most cases, however, mailers won’t do that. Why would they truck shipments to dozens of small or mid-size post offices, each of which serves a few thousand addresses, when they can drop pieces at an S&DC that serves a hundred thousand?

For the most part, then, those outside the S&DC service area will get delivery according to the regular service standards. To see what this means in practice, consider the region of Richmond, Virginia.

Richmond Region: US-R-0002

The service standard for First Class Mail and Ground Advantage (which includes just about all packages except Priority) is two to five days, depending on the distance between origin and destination. Here are the service standard maps for the Richmond area (ZIP prefix 224). The orange is the two-day area; the yellow is three days. (The full national Richmond map for First Class is here; for Ground Advantage, here. All the service standard maps are PostalPro here.)

As you can see, the two-day service area for packages is much larger than that for First Class Mail. This is yet another indication of how the Postal Service has been giving parcels priority over First Class letters. But that’s another story. Here the focus is on same- and next-day delivery via USPS Connect Local.

In the new network, the country is divided into 61 regions, each with its own Regional Processing & Delivery Center (as discussed in this post). The Richmond region — its ID is US-R-0002 — covers roughly the same territory as the two-day service standard for First Class Mail.

The region has an RPDC in the Sandston P&DC, which will also house a Local Processing Center (LPC); a second LPC at the Norfolk P&DC; and four S&DCs — one at the Norfolk LPC and the others in repurposed P&DCs in Richmond, Charlottesville, and Hampton.

The region encompasses about 520 post offices. With 31,000 post offices in the country, that’s probably about average for each of the 61 regions.

About 94 post offices with delivery units are within a 30-minute drive — the maximum “reach” — of one of the four S&DCs in the Richmond region. They would become “spoke” offices that give up their carriers to the S&DC hubs. About fifteen other post offices are within the S&DC service areas, but they are finance units without delivery units. The remaining 410 post offices are outside the 30-minute reach of an S&DC.

Here’s a map of the Richmond region from a recent USPS presentation showing these 520 post offices. It’s followed by a Google map that recreates the USPS image. The spreadsheet used to create the map is on Google docs here. It contains all the information discussed below concerning population data and so on.

The dark red dots on the Google map indicate post offices likely to have a delivery unit. The orange dots indicate those that probably don’t have delivery units — finance units and most of the Remotely Managed Post Offices that saw their hours cut under POStPlan. The black dots are the potential spoke offices of one of the four S&DCs.

It’s difficult making out the S&DC service areas on this map, so here’s another that shows the Richmond region in red and the S&DC service areas in blue. These S&DC service areas are generally those with post offices within 30-minutes of the S&DC, but the areas may not be entirely accurate around the edges because the Postal Service hasn’t provided any information about which post offices and addresses will be served by each S&DC. There’s an interactive version of the map here.

Letters and packages sent by USPS Connect Local and dropped at one of the four S&DCs would get same- or next-day delivery to addresses within the corresponding S&DC service area, but not outside this area. For the most part, delivery outside the S&DC service area will take another day, maybe two (the service standard being two days).

In terms of territory, the four S&DC service areas represent a relatively small part of the region. But they represent a significant portion in terms of population.

(The following population numbers are rough estimates based on the Census, which uses Zip Code Tabulation Areas, a geographic representation of a USPS zip code, and the two don’t always correspond.  A more detailed discussion of the differences here.)

The Richmond region has a population of approximately 4 million. About 2.4 million — 58 percent of the region’s total — live in S&DC service areas: 1.1 million in Norfolk, 757,000 in Richmond, 360,000 in Hampton, and 167,000 in Charlottesville. Those living in these areas will be much more likely to benefit by the S&DC network and the faster service of USPS Connect Local than the 1.6 million living outside these areas.

That in itself should be cause for concern, but the problem is compounded by the fact that the S&DC service areas are almost entirely urban, while the places outside the S&DC areas are largely rural.

The region as a whole is about 75 percent urban. But the S&DC areas are 92 percent urban (2.2 out of 2.4 million), while the non-S&DC areas are more than 50 percent rural (860,000 out of 1.7 million).

Of the region’s 3 million people living in urban areas, 73 percent (2.2 million) are within the S&DC service areas, whereas only 18 percent (180,000) of the region’s 1 million rural residents are within the S&DC service areas.

Most of the Richmond region’s larger post offices and stations and branches (the subordinate offices of a city’s main post office) are located within S&DC service areas, while most of the region’s smaller offices are outside these areas. More than half of the 410 post offices outside the S&DC service areas are small, rural RMPOs. By contrast, within the S&DC service areas, there are a hundred post offices, and only three are RMPOs.

Discriminating against some users

The fact that S&DCs will service primarily urban areas comes as no surprise. Most of the S&DCs will be located in metropolitan areas, and the 30-minute reach ensures that most of the S&DC service areas will be urban.

Nearly a year ago, I made a model of the national network showing about 6,000 potential spoke offices, as discussed in this post. The model indicated that the S&DC network could encompass 116 million people — a third of the country’s population — and 90 percent of them would live in urban places. (The U.S. population as a whole is 80 percent urban.)

The current list of S&DCs includes 142 spoke post offices and encompasses ZIP codes with a population of about 2 million, of which 1.8 million — 90 percent — live in urban areas.

Putting aside the urban-rural issue, it’s clear that not everyone will benefit from the S&DC network equally. Generally speaking, people who live within 30-minutes of an S&DC will benefit more than those who live farther away.

The underlying issue here — implied but not stated directly by the Chairman’s information request — is that providing faster service to only some people could violate the legal prohibition against discriminating against some users of the mail. According to 39 U.S.C.§403, “in establishing classifications, rates, and fees under this title, the Postal Service shall not … make any undue or unreasonable discrimination among users of the mails.”

Providing same- and next-day delivery to people living in the “busiest markets” and not providing the same service to those living elsewhere would appear to be a perfect example of discriminating against some users of the mail, particularly when most of those users live in rural areas.

A similar issue arose a couple of years ago when the Postal Service relaxed service standards on First Class Mail and shifted a lot of mail from air transportation to ground. In that case (docket N2021-1), the APWU, postal advocate Doug Carlson, and I submitted testimony and briefs to the PRC arguing that the mail would slow down more in some parts of the country (like the West) than in others.

The Commission’s Advisory Opinion discussed the matter at length, but nothing came of the issue. Those predictions, by the way, have come true. According to the service performance report for Q3 FY23, for First Class Mail with a 3-to-5 day service standard, most of the country has been averaging about 3 days to deliver, while the Western districts average 3.5 days.

The legal criteria for evaluating whether a particular instance of unfairness actually violates section 403 are complex (it’s called the “Gamefly test“), and it’s not likely that anyone will go through the arduous process of filing a formal PRC complaint and following through with motions, replies, information requests, and so on. But the fact that the S&DC network will benefit some people more than others should concern the Commission, and it would be useful if subsequent information requests pursued the issue further.

— Steve Hutkins

For more about the DFA plan and S&DCs, visit our DFA/S&DC dashboard.

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