The Postal Service presented its 10-year plan, Delivering for America, two years ago this month. It began implementing the plan’s main component — the transformation of the processing and delivery networks — about a year ago, when the Postmaster General approved funding to repurpose some processing plants and to lease three large new facilities. In July, the Postal Service began sharing information with management associations and unions about which facilities would become Sorting & Delivery Centers and which post offices would give over their carriers to the S&DCs.
The rollout hasn’t been perfect. Implementation dates on the S&DC conversions have been postponed, sometimes more than once. Facilities have appeared on one list of planned conversions, then been removed from the next list, then shown up again on a subsequent list. Stakeholders have expressed frustration about getting information in a timely way, if they’re getting any at all.
In Watkinsville, Georgia, and College Station, Texas — two of the first places where carriers were relocated to S&DCs — there have been complaints about lines at the post office and delayed deliveries. In Utica, New York, the new S&DC launched in February with the facility still under construction and “not quite ready to receive its new employees” — temporary locker facilities, restrooms in outdoor trailers, no swing room. The changes were “an eye opener for carriers coming from a small community-based post office to a very large, industrialized facility.”
At times the Postal Service seems to be moving ahead as fast as possible, with the Postmaster General saying he’s in “a race against time” and telling stakeholders to fall in line and support his “plans to save the post office.” It can also seem as if not that much has happened so far, as if nothing major will ever happen.
At this point it’s unclear how much of the radical transformation plan will be implemented before a big speed bump slows it down or stops it — pushback from employees and the public, Congressional oversight, a PRC advisory opinion, a change in leadership at the Postal Service — none of which seems likely in the foreseeable future. So for now, implementation is proceeding steadily, albeit with some delays, more or less as planned.
Progress on transforming the delivery network
On four different lists that have been made public so far, 40 processing facilities have been identified as potential S&DCs. As of mid-March, seven of them appear to be up and running — those in Athens, GA; Bryan, TX; Utica, NY; Gainesville, FL; Panama City, FL; Woburn, MA; and Brooklyn, NY. Another 23 appear on the most recent list, with launch dates in June and September, bringing the total number of potential S&DCs by the end of the fiscal year to 30.
Since July, over 280 post offices have appeared on one list or another as potential spoke offices losing their carriers. At this point, it looks like 28 of them gave up their carriers in November and February. Another 83 are expected to launch later this year — 22 in June and 61 in September. That adds up to 111 possible spoke offices by the end of the fiscal year.
The other 170 post offices that appeared on earlier lists don’t appear on the most recent lists, so their immediate fate is unknown, but most of them are likely to become spokes eventually.
The 280 offices that have appeared on conversion lists thus far house almost 2,600 carrier routes. About 450 routes have been relocated to an S&DC so far. By the end of fiscal year 2023, the number may surpass a thousand.
While there has been progress implementing the S&DC plan, the Postal Service is a long way from the goals we’ve been hearing about. In July 2022, an article in USPS Eagle Magazine envisioned 100,000 carrier routes being relocated to 500 S&DCs from 10,000 spoke post offices (later revised to more like 6,000 or 7,000 post offices). If the modernization plan is to reach its goals in eight or nine years, as described in the 2022 Performance Plan, the Postal Service will need to pick up the pace. Creating 30 S&DCs and relocating a thousand routes from a hundred spoke offices per year will not get it done.
In addition to getting started on restructuring the delivery network, the Postal Service has begun the transformation of the processing network. Central to this transformation will be the creation of about sixty Regional Processing and Distribution Centers (RPDCs). These are multi-functional mega-centers where various processing and delivery operations are consolidated into one facility.
During fiscal year 2022, the Postal Service leased new space and began construction for RPDCs in Charlotte, Atlanta, and Indianapolis. The Postal Service has also been renovating and repurposing its Network Distribution Centers (NDCs, formerly Bulk Mail Centers) to serve as RPDCs. As discussed in this post, the process is being called the “NDC unwinding.” Some NDCs have already been identified for repurposing, but all 21 NDCs are being evaluated as part of the RPDC network.
Over the past few years, the Postal Service has also been spending hundreds of millions of dollars on purchasing and deploying various kinds of package sorting machines, including Automated Delivery Unit Sorters, High Output Package Sorters, and Single Induction Package Sorters. (For a tour showing some of these machines at work, check out this previous post.)
Many of these sorting machines were originally deployed to one of the 43 Package Support Annexes (PSAs) that were set up in 2021 to help during two peak seasons (2021 and 2022). In most cases, their operations, including some of these machines, are being consolidated to other facilities, and the leases are not being renewed.
Since July 2022, four lists have been made public showing the facilities being converted into Sorting & Delivery Centers and the post offices that will lose their carriers to these S&DCs.
- July 29, 2022. A presentation shared with the postmasters association and perhaps the unions shows ten potential S&DCs and 146 spoke post offices. (USPS/STPO)
- August 12, 2022. The first formal notification to the unions and management shows 21 S&DCs and about 194 spokes — 12 scheduled for September (Athens, GA), four for November (Brooklyn NY), and 178 for February 2023. (USPS/STPO/Map)
- December 2, 2022. The second notification to the unions shows 13 S&DCs and 54 spoke offices — 17 scheduled for February, 37 for June. (USPS/STPO/Map)
- February 28, 2023. The third notification to the unions shows 23 S&DCs and 84 spoke offices — 22 scheduled for June, 62 for September. (USPS/STPO/Map)
A fifth list going around shows which of the planned changes have been implemented: Six post offices gave up their carriers to the Athens P&DC in November — perhaps four more in Brooklyn (not on this list) — and 22 offices lost their carriers in February.
A list compiling all five of these lists is here. It shows the launch date as best as can be determined at this point, along with the planned launch dates as they appeared on the lists from August, December, and February. It also contains data on distances between S&DC and spoke, the number of routes (estimated), and facility data. This is not an official USPS table and may contain errors.
A map of these 282 potential spoke offices is here:
A couple of additional lists may be useful, both unofficial and speculative.
If all 30 of the S&DCs expected to be operational by the end of September were to take routes from all the delivery units within a 30-minute drive (the maximum “reach”), at least 300 post offices would lose their carriers. A rough list, based on the national model created last September, is here, and a map is here.
In reports to Congress and the PRC, the Postal Service has described consolidation plans for five metro areas — Atlanta, Indianapolis, Charlotte, Chicago, and Memphis. In these metro areas, there are about 30 potential S&DCs and 300 post offices that are within a 30-minute drive. A list of the potential S&DCs is here, a list of the potential spoke post offices is here, and a Google map is here. A more detailed list for Atlanta is here and a map, here.
Looking at the 280 spoke post offices that have appeared on any of the four USPS lists, there are about 2,570 routes that could be relocated to an S&DC — an average about 9 routes per post office. This initial phase of the operation does not include a lot of large urban offices, where the average is about 30 routes per office. Overall, if 100,000 routes were relocated from a mix of small, medium, and large posts offices, the average would be about 20 routes per office.
For the list of 280 spokes, the average distance between S&DCs and post offices (weighted for the number of routes) is about 12 miles and an 18-minute drive. The drive times are usually under optimal conditions and could be several minutes longer.
As the new delivery network rolls out, those miles and minutes will add up to significant increases in transportation costs and work hours (which will show up in costs for overtime and new routes). At a full build out of 100,000 routes, the costs could reach $2 billion, as discussed in this previous post. These costs would need to be offset by eliminating jobs (such as clerks at post offices), reducing retail hours, and closing post offices.
The Postal Service owns almost a hundred of the 280 post offices on the four lists; the others are in leased properties. They average 8,500 square feet. Some are two or three times that size, some just a third.
Whatever their size, when the carriers go, they will leave a lot of empty space behind, typically more than half the building. That will eventually lead to node studies about not renewing leases and selling buildings. The Postal Service owns nearly a hundred of the post offices on the list of 280 — 23 of them historic post offices from the New Deal era or earlier. They’ll soon be at risk for disposal. (For more on the impacts of the delivery network changes, see this previous post.)
Consolidations in five metros, revisited
A couple of weeks ago, this previous post summarized the plant consolidations underway in five metro areas. The post was based on a report the Postal Service was required to submit by Section 207 of the Postal Service Reform Act. This 207 report was vague about which facilities would be impacted, and it repeatedly referred to future savings from not renewing leases, which seemed to include closing not only processing facilities but also post offices.
As part of the PRC’s Annual Compliance Review filed in late December, the Postal Service submitted a separate report on cost reduction initiatives summarizing purchases described in Decision Analysis Reports as required by under the requirement of 39 C.F.R § 3050.55. It covers much the same ground as the 207 Report, but with more details about which plants will be impacted and how much money the Postal Service has committed for each project. The cost reduction report (which I came upon in the ACR docket after writing the five metros post) makes it clear that the lease savings referenced in the 207 report will come from closing processing facilities, not post offices. That’s not to say there won’t eventually be lease savings from closing post offices as well — that’s part of the plan, too.
The following update on the plant consolidations in the five metro areas is based on the 207 report, updated with additional information from the cost reduction report filed for the ACR.
Atlanta: A new RPDC in Palmetto, Georgia, which is being called the Atlanta South Metro P&DC, will consolidate all the mail processing operations from the Atlanta P&DC, the Peachtree P&DC, the Atlanta Package Support Annex (PSA) in Austell, and the Atlanta Mail Processing Annex (MPA). The Postal Service has committed a total of $125.8 million to build out the South Metro facility, which is expected to open in October 2023. The PSA, like most of the others set up for peak season in 2021, will probably close, but other processing facilities in Atlanta will remain as S&DCs, as shown on the July 29 presentation. One of them, the Atlanta NDC, is being fully renovated, with obsolete equipment being removed to free workroom floor space to support the reconfiguration of the Atlanta network.
Indianapolis: A new RPDC on the east side of the city will serve as an S&DC and combine all mail processing operations from four facilities: the P&DC, the High School Road Annex, the Package Sorting Annex (PSA), and the Mail Processing Annex. The P&DC will serve as one of the two S&DCs for Indianapolis, as indicated on the July presentation. The other three facilities will presumably be closed. The cost reduction report says that the Postal Service has approved a total of $149.9 million to build out the new RPDC, which is expected to be ready by January 2024.
Chicago: The Chicago Network Distribution Center on Roosevelt Road will be repurposed as the New Chicago DNC and serve as an RPDC. (A second RPDC in Chicago is also in the works.) The Postal Service has allocated $65 million to renovate the facility, remove obsolete equipment, and relocate equipment from other processing plants. The New NDC will combine all mail processing operations from three current processing centers, but it’s not clear which. It will probably include the Parcel Support Annex in Elk Grove, and perhaps the Busse Road processing facility, also in Elk Grove Village.
Charlotte: The new Charlotte/Mid-Carolina Processing and Distribution Center will be located in the Northpoint Gateway 85 logistics park in Gastonia, North Carolina. It will serve as an RPDC and combine mail processing operations from other facilities, but it remains unclear which. Probably the Mid-Carolina Parcel Support Annex (PSA), and perhaps the Mid Carolina LDC/P&DC (which shares its name with the new RPDC). The Postal Service has approved $86.7 million to build out the new facility, which is expected to be ready in early 2024.
Memphis: The new Mail Processing Annex (MPA) on Swinnea Road took over operations from the Jet Cove Annex in November 2022. It may also consolidate operations from the Package Sorting Annex (currently listed for lease). The Postal Service has approved $45.2 million to build out the new MPA. The 207 report, it may be noted, described a new facility south of Memphis that sounded like something other than the MPA, leading me to speculate in the five metros post about another new facility being leased. But the cost reduction report makes it clear that the new facility is the MPA, not another new one.
The total amount that has been allocated for these projects is almost a half billion dollars, with almost that much for new sorting machines. The 10-year plan calls for investing $40 billion, including parcel sorting equipment, new information technology systems, and the new fleet. There’s a long way to go.
A cautionary consolidation tale
The 207 report doesn’t discuss the North Houston P&DC, so it wasn’t included in the five metros post, but the ACR’s cost reduction report has some details. It says that that two consolidations in the Houston area have been cancelled, and the North Houston P&DC will be converted to a RPDC.
These consolidations didn’t work out as planned. According to the cost reduction report, “there were no savings from efficiencies that were originally forecast. The work hour savings that were forecast did not materialize, but actually increased.” The consolidations produced net cost losses of approximately $24 million per year.
The consolidations also caused other problems. As discussed in a 2016 OIG management alert, the North Houston P&DC experienced serious mail delays due in part to the 50 percent increase in mail volumes that occurred when the Houston P&DC began consolidating destinating mail into the North Houston P&DC in April 2015.
The Postal Service canceled the consolidations and will now use the expansion of the North Houston facility to turn it into a RPDC. The Postal Service invested $73 million on this project. The failure of the original consolidations to produce the anticipated cost savings and the delays caused by the partial consolidations just go to show what can happen to the best laid plans.
— Steve Hutkins
For more about the transformation of the delivery network, check out the S&DC Dashboard.
(Featured Photo: DeJoy surveys construction at the RPDC in Palmetto, GA; Kendrick Brinson for TIME)