DeJoy Concedes to Slowing Network Changes

After years of compliant support for Postmaster General Louis DeJoy’s 10-Year Plan, the growing outcry over decreasing service performance seems to have inspired a member of the Postal Service’s Board of Governors to offer a different opinion.  Outsiders will never know whether that was a bold departure from the usual stilted consonance or a scripted preface to later events, but the coincidence is interesting.

In a public statement made at the Board’s May 9 meeting, former Deputy PMG Ron Stroman agreed that the Postal Service needs to develop an integrated network for mail and packages, and noted that the hub-and-spoke network it’s developing, modeled on those used by other carriers, “has the potential to create a more efficient network,” but cautioned that “it has some inherent risks.”  He added:

“By streamlining transportation routes, consolidating mail and package volume, insourcing surface transportation centers, and reducing the number of plants, the design increases the risk for delays.  In addition, consolidating mail and package volume in fewer locations means fewer but longer transportation routes, creating additional opportunities for delays.

“To better manage these risks, I believe we need to slow down new network changes until service has gotten close to our service targets for 2024.  We should then more gradually phase in changes over time.

“Slowing down our network changes would accomplish several things.  First, it would minimize the impact of any service declines on the entire network.  Second, it would stop the necessity to address sustained service declines in several parts of the country simultaneously.  Third, it would allow management more time to examine future network plans and to make necessary adjustments.  Fourth, it would provide more time to ensure that the right employees are in place and provide them with the sufficient training.  Finally, it would give the Postal Service more time to stabilize the network and ensure the country’s confidence in our network and the design well ahead of the November presidential election.

“This network design is the most sweeping change to the Postal Service’s processing and delivery network in over fifty years, and we need to proceed carefully.  At last November’s open session I said we should give the network change a fair opportunity to improve service, and while that does remain true, six months later that opportunity has yielded declining service performance.  Slowing further network changes, and re-examining our plans is the responsible next step.”

Regardless of their motive, Stroman’s public comments were unprecedented.  No member of the Board has ever spoken out during the Board’s open session in a way that was less than fawningly supportive of the PMG’s Plan, let alone suggestive of the need for any degree of reconsideration.

After he concluded, no other governor made comments on the record, so it’s unknown whether any of his colleagues supported his position.  Given how tightly the Board’s agenda and public statements are controlled, it’s notable that Stroman was afforded the opportunity to deliver his diplomatically-worded message – which is exactly the cause to wonder about its context.

The timing and content of Stroman’s cautionary message might have been related to the increasing Congressional scrutiny of how the PMG’s Plan, particularly how the related network changes, are adversely impacting service.  If so, the question becomes whether he spoke on his own initiative or whether he was asked to offer his statement as a way to acknowledge the Board’s awareness of Congressional interest, and establish a premise for separate actions the PMG may take to slow implementation of his network redesign.  Subsequent events suggest things were already in motion, however, and that the PMG had already made his decision.

In a letter sent the same day to Sen Gary Peters, chair of the Senate Homeland Security and Governmental Affairs Committee, DeJoy referenced a conversation the day before (i.e., May 8, the day before the Board’s open session).  In his letter, DeJoy repeated his usual defense of what his Plan involves before finally agreeing to slow some network changes:

“Thank you for the opportunity to speak yesterday about the efforts we are undertaking here to fix the Postal Service network, and the areas of concern about which you are hearing from fellow Senators.  I know we share the mutual goal to ultimately provide high-quality service for the American people in a financially sustainable manner.  I am also in receipt of your letter dated May 8 and signed by a number of your colleagues.

Mail Processing Facility Reviews:  The Senate signatories of your letter and other letters I have received are almost entirely concerned about the mail processing facility reviews (MPFRs) we are undertaking at nearly 60 (out of 427) processing plants.  These reviews are primarily considering whether to move originating volume to fewer regional plants to create consistency, precision, and efficiency.  I attach a list of these sites, and it specifies the status of the study, its outcome if a final determination has been made, and the level of investment and cost savings.

“In all cases on the list where we are moving a small subset of our operations, we are also making modernizing investments to vastly improve employee amenities and the automation equipment that helps our employees do their jobs, and as a result we are substantially enhancing our processing capability.  In some cases, the movement of these operations is freeing up space so that a Sorting and Delivery Center can be co-located at the facility, which could end up adding to our employee complement at the site.  These reviews will also achieve vitally necessary cost savings, most of which would be achieved from reduced transportation.

“Please note that contrary to some misplaced assertions, the MPFR study is a process of transparency, where we have undertaken analysis, notified the public and interested stakeholders, and provided opportunity for public input – all of which we have considered before making our decisions.  With only one or two exceptions, the MPFRs have not yet been implemented and the future plans to do so have not yet commenced.

“You have been hearing from fellow Senators about changes being made at processing plants in their home states, which your colleagues feel have the potential to adversely impact service in their states and especially locally.

We do not see these planned actions as at all consequential to service; rather, they are important elements of achieving a network that can provide greater service reliability in a cost-effective manner.  The career workforce will not see layoffs, new equipment will be installed, the facilities will not close, deferred maintenance will be performed, and working conditions will be substantially improved.  I acknowledge that we have not been able to convince Congress of this, even though these efforts will both improve the facilities and facilitate the significant cost reductions that we absolutely must achieve to have any hope of financial sustainability.

“That said, I suspect that these misconceptions are based on the past when we did close these types of facilities as part of a decidedly different strategy, and conflated with some current service issues we are experiencing.  I also know that there is legacy desire among some segment of our workforce at the local level to maintain the status quo, which I understand but frankly am disappointed by.  Through continued training and education, we will work to try to change hearts and minds and to sell the virtues of our plan for service excellence and financial health.

“Your Senate colleagues have also expressed concern about cases where originating volume (known as turnaround mail) is moved to be processed out of state or at a geographically more distant location.  In all cases this is a distinct minority of volume (usually less than 15 percent).  These actions will enable us to more efficiently handle most of the mail that is not turnaround mail, while still ensuring that we provide timely delivery for turnaround mail within established service standards.  In your case, you have expressed concern about the Iron Mountain, Michigan MPFR, where we have determined that originating volume should be processed in Green Bay, Wisconsin.  Again, that change has not taken place, nor is implementation planned yet.

Further to our conversation yesterday, I agree to pause the movement of processing operations associated with the Mail Processing Facility Reviews.  In response to the concerns you and your colleagues have expressed, I will commit to pause any implementation of these moves at least until after January 1, 2025.  Even then, we will not advance these efforts without advising you of our plans to do so, and then only at a moderated pace of implementation.  I will also continue to consider whether we should seek an advisory opinion from the PRC as a discretionary matter on our part, consistent with the process provided by 39 USC section 3661, taking into account the relevant legal requirements.

“I trust that this pause in implementation activity will be of interest to the signatories of your May 8 letter.  I want to stipulate as part of the pause however that the positive investments in the facilities on the attached list will also not commence, just as the annual cost savings associated with these mail moves will not be achieved while we pause.  We estimate the expected annual cost savings to be $133-177 million, and the positive investments to be more than $430 million.

“Chairman Peters, the dialogue we had yesterday was productive and it is my hope that this commitment to pause MPFR activity will work to restore confidence in the desired positive outcomes our modernization actions are meant to achieve from both a service excellence and cost savings perspective, and at a pace of network change that is acceptable.

“I am continuing to evaluate any additional changes we have underway and will advise you of our approach to satisfy any of your concerns regarding their engagement or any filing that might be warranted with the PRC.  I need more time to evaluate and hope you understand the complexity of our challenge.

“In the meantime, we will continue to work hard to restore service in those areas impacted.”

The sum of these events tends to support the conclusion that the senator made clear to DeJoy that deferring further network changes was the smart thing to do.  In turn, it would seem that the open session of the Board meeting provided a stage to give the public the impression that he was responding to the direction of the governors and not simply bowing to political pressure.

It deserves noting that his carefully worded agreement was to defer “movement of processing operations.”  He did not commit to a “pause” in either ongoing facility reviews or the opening of more RPDCs or S&DCs, so the “pause” is simply to let the heat cool on politicians, not to truly alter his Plan. The remaining item is whether he will agree to ask the Postal Regulatory Commission for an advisory opinion; he told Sen Peters that he would only “continue to consider” doing so.  Given that his ego was bruised by the Senate hearing, the demands of the senators’ letter, and his concession to Peters to “pause” moving operations, it remains to be seen whether DeJoy will continue trying to appear conciliatory.  Though he realizes the Senate could cause him serious problems, he may feel there’s less danger in ignoring the PRC, and so console himself by again defying the commission (see page 10).

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