USPS Network Optimization Plan For Everyone?

Industry experts view the U.S. Postal Service’s proposed Network Optimization Initiative as a necessary move to effectively adapt its network and infrastructure to meet its current needs on the heels of all the five-day delivery talk.

But the president of the American Postal Workers Union thinks the plan will “dismantle” the mail processing network. The aggressive plan calls for the 487 mail processing facilities nationwide to be reduced by 252 in the next two years.

“The Postal Service should be urging Congress to address the cause of its problems – not slashing service and demolishing its network,” APWU President Cliff Guffey said. “Destroying it is misguided and counterproductive. The Postal Service should be looking for ways to strengthen service and increase its relevance in the age of digital communication.”

In an Oct. 5 letter to the USPS manager of industry engagement and outreach, Guffey said if the proposal moves forward it would “deprive postal customers of needed service, damage the economy, and drive customers away from the Postal Service.”

“It is worth noting that the proposal acknowledges what the Postal Service has repeatedly denied regarding the closure and consolidation of mail processing facilities: Slashing the mail processing network will result in drastic cuts in service to the American people,” Guffey wrote.

But industry experts applaud the proposed initiative, saying it needs to be done given the massive decline in mail volume. First-class mail was around 98 billion pieces in 2006, and is projected to fall to 54 billion in 2016 and 39 billion by 2020. Standard Mail was around 103 billion pieces in 2006 and is projected to slip to around 85 billion in the next decade.

Joe Schick, director of postal affairs for printer Quad/Graphics, says the Network Optimization Initiative is starting to create more discussion within the mailing community.

“The industry should respond and make sure everyone knows the facts, that the network can support 300 billion pieces of mail while there will only be about 165 billion so it’s twice as big as needed and must be right-sized,” Schick says.

No congressional or Postal Regulatory Commission approval is necessary, Schick says. He adds the concerns within the plan include: changes to service standards for First Class, Standard Mail and periodicals; communication to mailers and USPS internally as the plan is implemented; and the ability to keep up with software and labeling list changes as facilities are closed, so mail is going to the right location.

What’s more, what changes might there be to mail preparation within the surviving facilities? How will drop shipments be impacted? And what’s the cost to shut down 300 facilities in a year, and how are those costs allocated and how could that impact prices?

Jerry Cerasale, senior vice president of government affairs for the Direct Marketing Association, says the DMA supports the proposal.

“The USPS must eliminate its excess capacity,” he says. “The one huge area that raises concerns on the plan is time to enter the mail into the system. Will the acceptance offices be open 24/7” Will mailers have to make an appointment with a long lead time? If a truck is late arriving will it miss mail entry?”

Don Landis, vice president of postal affairs for catalog printer Arandell Corp., says network optimization is inevitable. “Our hope is the USPS will keep us well informed as the process takes place. We have some concerns that as the consolidations take place there will not be enough appointments at the gaining facilities.”

Consolidations could begin as early as February.