What happened in Richmond won’t stay in Richmond: OIG audits the first RPDC

Steve HutkinsBlog, Featured

Last week the USPS OIG issued its report on the launch of the Regional Processing & Distribution Center in Richmond, Virginia.

Eventually there will be sixty of these mega-facilities — the Postal Service calls them the “backbone” of the new network — and implementation is proceeding at a rapid pace. Consolidation reviews are currently underway for some 58 processing centers that will send operations to 36 new RPDCs. Since Richmond was the first RPDC, it provides a cautionary tale for what may happen as the rollout continues over the coming months.

The Richmond region has been experiencing severe mail delays almost since the RPDC launched back in July 2023. When questioned by the media and elected officials about the delays, the Postal Service has been less than responsive and offered only vague explanations, hoping that what happened in Richmond would stay in Richmond.

In comments to the Postal Regulatory Commission last week, the Postal Service claimed that the events in Richmond “do not indicate a broad nationwide service performance problem,” and now that those issues have been addressed, service performance will improve. “Moreover, having learned from experience, the Postal Service is better poised to minimize and mitigate local issues that may arise as it opens new RPDCs across the country.”

The IG’s report, however, suggests that the failures in Richmond point to bigger problems with the Delivering for America plan. Rather than reducing costs, the first RPDC increased costs, and rather than speeding up the mail, it caused performance scores to plummet. (More on that in this post.)

During the first four months of operations, the Richmond RPDC went through three different plant managers, and employee absenteeism increased. According to the IG, “staffing was not sufficient to effectively perform mail processing and transportation operations.” This led to late trips and extra trips, congestion, and delays across the region.

These “challenges,” as the IG calls them, caused the Postal Service to incur additional labor and transportation costs of over $8 million over the first four months of operations, and contributed to a decrease in service performance that continued months after launch (and that still continue).

Implementation successes

The Postal Service, notes the IG, did succeed in implementing the basic elements of the RPDC:

  • Operations were transferred to the RPDC from plants serving three ZIP code areas and absorbed package operations from the Norfolk P&DC.
  • Two new HOPS machines were installed in March 2023 to meet future package capacity requirements.
  • The Postal Service implemented a standardized workroom floor layout that will be repeated in other RPDCs.
  • Many tasks were completed without shutting down operations.

But descriptions of these “successes” occupy a small part of the IG’s report. Most of it is given over to discussing the failures. They include the following:

Not addressing pre-existing conditions

The Postal Service did not address known weaknesses at the Richmond (Sandston) P&DC before converting it into an RPDC. The IG had pointed out these weaknesses in previous reports, one on late and extra trips and another on improving service performance and processing efficiencies at historically low performing facilities like Richmond.

According to the IG, “Selecting a facility without identifying and addressing known issues created additional challenges to successfully implementing the RP&DC model, increased costs, and contributed to the decrease in service performance. As a result, we were unable to determine if the challenges are unique to the Richmond RP&DC conversion or tied to preexisting conditions.”

Mismanagement & staffing problems

The IG identified various sorts of management and staffing problems (some of which were pre-existing):

  • Local management didn’t take ownership of changes and were deficient in operational execution.
  • Management did not train all employees on standard work instructions for new processes.
  • A lack of supervisors and expeditors and the inability to locate mail handlers on the workroom floor caused delays on the dock and increased congestion.
  • Staffing was not sufficient to effectively perform mail processing and transportation operations.
  • Employee absenteeism increased after the launch.

Mail processing issues

The IG identified various problems associated with mail processing operations:

  • New processing equipment did not perform as expected.
  • Packages committed for delivery the next day required subsequent processing after operations were complete.
  • Package operations were shut down at the scheduled time for dispatch, and any packages left on mail processing equipment remained at the facility until the operation resumed the next day.
  • Collection mail arrived late at the RPDC, after sorting operations were finished for the day, so this mail remained unprocessed until the following day.
  • Collection mail arrived without proper separation (such as separating Priority Express Mail, Non Machinable Packages, and Hazardous Materials), which caused delays as mail was sent to incorrect operations.

Transportation troubles

According to the IG, the Postal Service did not adequately plan and establish new transportation routes to support operations at the Richmond RP&DC. As a result, extra trips increased dramatically compared to the same period in the previous year, as shown by this chart in the report.

The transportation schedules were being adjusted even until the day before the launch, resulting in insufficient time to set up and make changes to routes. Further, the implementation team did not account for all local needs — such as mailer and commercial package pickups — when it developed the new transportation plan.

Richmond was the first location where the Postal Service implemented its initiative to insource transportation from Highway Contract Route companies to USPS postal vehicle operators. But, says the IG, the Richmond RPDC was not able to hire sufficient PVOs to cover the newly created routes, so the Postal Service had to turn to outside contractors.

Additionally, the Postal Service hopes to eliminate 24 contracted transportation trips at the Norfolk LPC (packages originating in Norfolk are now sent through the Richmond RP&DC), but as of Dec. 1, 2023, only nine trips had been eliminated.

Increased labor costs

The Postal Service hopes to reduce workhours and positions to generate mail processing labor savings. This includes eliminating 238 positions at the Norfolk LPC and Rocky Mount P&DF. However, as of Dec. 1, 2023, the Postal Service had not reduced any mail handler or clerk bid positions in the Richmond region.

In fact, over the first four months after the launch of the RPDC, workhours and overtime increased by 2 percent, despite a 9 percent decrease in mail volume. This chart from the report shows workhours and pieces handled from July 29, 2023, through December 1, 2023, compared to the same period in 2022.

The report also notes an increase in unauthorized overtime. During the four months after launch, nearly 83 percent of all overtime hours were not authorized.

Delays from Local Transportation Optimization

Richmond was the first place in the country where the Postal Service implemented what it calls Local Transportation Optimization, or Optimized Collections. Under LTO, mail and packages are not collected at the end of the day at the post office for transport to a processing center. Instead, everything sits overnight in the back of the post office, waiting to be collected in the morning at the same time that the day’s mail is dropped off. (This initiative has been described in several previous posts.)

The IG notes that “the percent of mail and packages delivered on time declined significantly beginning in October when the Postal Service implemented its Local Transportation Optimization initiative while simultaneously making changes to the RP&DC, handling Election Mail for local elections, and processing the increased mail volumes of its peak mailing season in the same area.”

While it seems clear that leaving the mail at post offices overnight will add a day to delivery times, the Postal Service has told the PRC that the initiative will have no “material impacts” on service. The OIG said it was “not able to isolate the specific service and cost impacts of the Local Transportation Optimization initiative,” but it will be issuing a separate report on that later.

Not-so-Priority Mail

If the mail isn’t collected until the day after it’s sent, meeting the service standards for Priority mail and packages will be difficult, if not impossible. Priority has a service standard of one to three days, with most local mail receiving next-day delivery. But how can that happen if the mail and packages aren’t picked up until day after they’re sent?

The Postal Service has apparently decided the way to fix this problem is by changing the service standards. That may be necessary anyway, since the new operating model apparently doesn’t support next-day Priority.

As the IG explains, “In the new Richmond RP&DC operating plan, package operations are scheduled to be completed before local mail would arrive at the facility to be sorted. Thus, this model does not support next-day service products such as local Priority Mail. In response, on October 16, 2023, the Postal Service added an extra day to local Priority Mail service, thus making it a two-day service standard.”

There doesn’t seem to have been any public announcement about this change. I haven’t found anything about it on Postal Pro, the PRC website, the National Register, or the Postal Service’s own news alert page.

One wonders if adding an extra day to local Priority will be restricted to Richmond on a temporary basis, or if this is going to be a permanent feature of Priority, nationwide. If that were the case, it certainly seems like the kind of change that would require a PRC advisory opinion, but don’t expect that to happen.

No public engagement

Federal regulations require the Postal Service to provide adequate public notice to affected communities when closing or consolidating a processing facility. Normally this notification takes place under the procedures for a Mail Processing Facility Review (MPFR), which also require a public meeting and comment period.

The Postal Service did not conduct such a review before consolidating mail processing from the Norfolk P&DC (now an LPC) to the Richmond RPDC. As the IG notes, these changes appear to have met the requirements to trigger an MPFR. Such a review might have anticipated and prevented some of the problems that occurred.

The Postal Service says no such review was necessary because MPFRs are required only when all operations move outside of a “service area.” But the definition of “service area” is conveniently ambiguous, and as the IG notes, using that interpretation of the trigger rule, the Postal Service could move one three-digit ZIP Code at a time as long the original processing facility retained some operations. This could be repeated until all mail processing has been moved to another facility, and there’d be no MPFR if the last move is within the same service area.

In any case, as the IG observes, “when the Postal Service’s policy for conducting MPFRs is not clear and service changes are not communicated to affected areas, it harms the Postal Services reputation and public trust.”

And that’s really the bottom line on what happened in Richmond. The delivery delays and the failure to communicate effectively are undermining trust in the Postal Service.

As we now know, most of the problems in Richmond were self-inflicted and caused by postal management. But rather than owning up, management preferred to blame external forces, like the bankruptcy of a contractor and a tight labor market.

From Richmond to Atlanta

As for the problems being restricted to Richmond, we’ve already seen delays caused by the next two RPDCs to launch, in Houston and Atlanta.

As Linn’s Stamp News put it this week, the brand new RPDC in Palmetto, outside Atlanta, has been experiencing “massive” disruptions: “The Atlanta metropolitan area replaced beleaguered Houston as an epicenter of infuriating and unexplained mail disruptions in mid-March, when a breakdown in mail processing at one of the United States Postal Service’s huge sorting and delivery centers left consumers bewildered, politicians fulminating and tractor-trailer drivers waiting as long as eight and a half hours to drop off their time-sensitive cargoes.”

One employee at the Atlanta RPDC told 11alive.com, “There’s too much coming in. There’s too much automation. So there’s no room to store the mail….  I think the facility is just overwhelmed, and I don’t even blame local management because this plan was made, and they were told to go manage it. If they were given some input, maybe it would be different. We just don’t have space for all of this mail.”

I myself have heard from a postal employee in another location that so much mail was backed up in Atlanta that some of it was diverted to facilities in other states, where it’s been sitting for weeks, and these other plants may not be in a big rush to process mail that doesn’t count as their own.

The Atlanta problems are ongoing. During the third week of March, for First Class mail with a 3-day service standard, only 31 percent was delivered on time — compared to 85 percent during the same week last year and a target of 90.5 percent — and the average delivery time was 5.7 days, compared to 2.7 days last year. Those are dismal numbers.

The threat to election mail

For months now, the news has been filled with reports of delayed mail across the country, raising serious questions about the Postal Service’s ability to handle mail voting in November.

Virginia Senator Tim Kaine says he’s concerned about how the issues could impact mail-in ballots, and Keith Balmer with the Richmond Office of Elections is urging voters to make sure they get their ballot in early and drop off mail in person if possible. “This is not the election to wait until the end to decide that you want to vote by mail, unfortunately, because of what we’re hearing,” Balmer explained.

Consolidating operations to more new RPDCs and ending evening collections at thousands of post offices will continue to erode service, damage the Postal Service’s reputation, and threaten voting by mail. Perhaps it’s time for a moratorium on further changes, at least until after the election.

— Steve Hutkins

Related posts: