OIG reports on Sorting & Delivery Centers

Steve HutkinsBlog, Featured, News

The OIG’s long-awaited report on Sorting & Delivery Centers was published earlier this week. Unfortunately, it was hardly worth the wait.

The report limits itself to comments about how good — or bad — a job the Postal Service has done communicating elements of the plan to stakeholders, how S&DC facilities have often been under construction when they opened (leading to mobile restroom trailers, temporary breakrooms, and safety hazards like blocked exits), how the package sorting machines are fast but have problems rejecting packages, and how P.O. Box-up times are suffering delays.

These are real problems, but the OIG had nothing to say about the more significant issues with the S&DC plan, like how moving carriers to sorting centers adds 12 miles to the average route, each way, six days a week, essentially doubling the length of the average route and necessitating many more routes, carriers, vehicles, charging stations, etc.

Or how many carriers will see their commute to work increased significantly, at their own expense, exacerbating the Postal Service’s huge retention problem.

Or how this increase in transit distances between S&DCs and routes will cost hundreds of millions of dollars in transportation and labor expenses, lead to more vehicle accidents, and cancel out all the benefits of moving to electric delivery vehicles.

Or how post offices that lose their carriers will also lose some of their clerks and be left with a skeleton crew in a largely vacant facility, which will eventually lead to post office closings, relocations, and a massive sell-off of postal properties.

The Great Decoupling

While disappointing, the OIG’s failure to address the real issues with the S&DC plan should come as no surprise. The idea of “decoupling” retail services from delivery operations was the OIG’s idea in the first place.

Back in 2011, the OIG issued a study about how relocating thousands of carrier routes to other nearby post offices would lower costs, make delivery more efficient, and allow retail-only post offices to be more responsive to customers. It was a terrible idea and seemed like something an advocate of postal privatization would come up with, as discussed in this post from 2011.

In a follow-up report in 2012, the OIG got into the weeds on the decoupling scheme and examined the effects of relocating over 100,000 carrier routes from nearly 10,000 post offices (pretty much what the DFA plan promises to do). The study determined that the average transit distance between post office and route for all 250,000 routes would increase by about about a mile (from 2.8 miles to 3.7 miles), which would increase costs for carrier labor and transportation by $374 million. This increase, however, would be more than offset by the savings from eliminating clerk labor and lease expenses once these 10,000 post offices were closed.

The OIG’s new report on S&DCs should have focused on the impacts of increasing transit distances to S&DCs, which are much farther away than the nearby post offices where carriers were relocated in the 2012 study. The average transit distance for all the nation’s routes would increase by about 6 miles — six times the increase in the OIG study. And under the S&DC plan, the cost savings will be severely limited, given that the Postal Service has promised that the  plan would not lead to any post office closures. But there’s not a word about that in the report. (For a cost-savings analysis of the S&DC plan, see this post from over a year ago.)

P.O. Box-up Times

One of the main issues discussed in the OIG’s report involves P.O. Box-up delays. In the “old network,” as the OIG calls it, P.O. Box mail is transported very early in the morning, directly from processing centers to post offices, where clerks distribute mail to Boxes, usually before retail windows open.

Late Box-Up Time in OIG report

Under the new S&DC network, the P.O. Box mail goes from the processing center to the S&DC, and then carriers deliver it to the post office. The post office is probably one of the first stops on the route, but even so, the mail arrives at the post office later in the morning, when clerks are already busy at the windows (and don’t forget, there are fewer clerks at the office).

The OIG analyzed box up-times at 14 post offices serviced by the first six S&DCs and found that every one of them reported late times, and 12 were late more than 50 percent of the time (the national average is about 10 percent). The OIG included this chart in the report; the Postal Service said it’s “confusing and should be removed”; the OIG included it anyway.

Since there’s not much the Postal Service can do to get the carriers to post offices earlier in the morning, the solution to this problem will be to change the published schedule for P.O. Box mail. Box holders — most of whom are paying for a premium mail service — will simply be told to expect their mail later in the day.

The Box mail will thus not be “late” — which, the OIG notes, would negatively impact the customer experience and hurt revenues — it will just be delivered later than it had been before the S&DC implementation.

What we’ve got here is a failure to communicate

The OIG’s report identifies some of the shortcomings in the way the Postal Service has communicated details about the plan to stakeholders, but to be fair, the Postal Service has produced some very slick TV commercials, and the Postmaster General has been all over the place giving upbeat interviews and conference presentations touting the virtues of his plan.

Still, according to the report, some large shippers and mailers have said they are not getting much information from the Postal Service and have instead had to rely on updates shared with the unions and management associations and on postal blogs.

While savethepostoffice.com is not mentioned, it’s been one of the main sources for details about the S&DC plan. That shouldn’t be the case. Mailers and  shippers, postal employees and stakeholders, elected officials and the general public shouldn’t have to depend on blogs to get information about the DFA plan. But given the Postal Service’s reluctance to share details, the paucity of information in the OIG’s report, and the lackluster performance of the PRC in its public inquiry, it looks like that’s the way it will be for the foreseeable future.

For more about the S&DC plan, check out our DFA dashboard.

— Steve Hutkins