In perhaps the least surprising announcement since the last rate case, on February 26 the Postal Service stated it would proceed with implementing the network and service standard changes it revealed last October 4 in a filing with the Postal Regulatory Commission.
That 55-page filing, seeking an advisory opinion from the PRC, explained how the USPS is reorganizing its processing network, eliminating afternoon collections at most post offices, and redefining service standard calculations. Using language invoking the themes often used by Postmaster General Louis DeJoy, the USPS spun its proposal as enabling service and financial goals – even though many might argue that “high quality service” would not result – and that challenges to “financial sustainability” go well beyond whatever savings may result from the proposal. (See the October 7, 2004, issue of Mailers Hub News for more details.)
Comments and testimony were received from the Postal Service and other stakeholders during the course of the commission’s proceeding, culminating in issuance of the PRC’s advisory opinion on January 31 (see the February 10 issue of Mailers Hub News). In its In a 301-page document, Operational and Service Standard Changes Related to the Delivering for America Plan, 2024, the PRC was not ambiguous in its unanimous opinion. As stated in the executive summary:
“The Commission finds that the Postal Service’s proposal relies on defective modeling, overly optimistic financial and cost saving projections, and unclear timeframes for rollout of the changes. In addition, the Commission finds that the proposal fails to fully consider the significant, negative impact of these changes on rural communities across the country.”
For reasons only the USPS could formulate, the agency apparently expected a more supportive opinion of its plans, as reflected in its indignant response, released February 20:
“In sum, the Commission’s AO epitomizes the bureaucratic status-quo perspective that has led the Postal Service to financial and operational crisis … … Taking this ‘head in the sand’ path would, however, lead to the Postal Service’s continued financial and operational deterioration and eventual ruin, and therefore does not constitute an appropriate balancing of the statutory policies. …”
Repetition
The Postal Service’s announcement that it would implement its planned changes – issued as a press release, Federal Register notice, Industry Alert, and DMM Advisory – reiterated its perspectives on the planned changes and the PRC’s opinion. (The complete text of the Federal Register notice containing the final rule amending service standards is at the end of this issue.)
Generally, as explained previously, the USPS asserts its service standard changes are needed to align with ongoing changes to its transportation and processing network intended that promote “efficiency” and help stabilize its finances. More accurately, as the USPS does not explain, the service standard revisions are intended to allow the network changes to be implemented without having an adverse impact on service performance scores.
Primarily, because the Postal Service in ending afternoon collection runs to post offices more than fifty miles from a major processing facility, its new service calculation rules simply disregard the one-day delay for mail deposited at those post offices after the morning transportation run.
In addition, it assumes “zero” days from the destinating local processing center to the delivery unit and the addressee. With such self-serving business rules, the USPS can define “timely service” to be much different than what the sender and recipient of a mailpiece might experience.
In its Federal Register notice, the Postal Service again displayed the dismissive confidence that its changes need no alteration, rejecting the PRC’s advice (“the Postal Service does not agree with the PRC’s recommendation”) and four times refusing to make any amendments to the final rule based on comments received (“the Postal Service has determined that they do not necessitate any revisions to the Proposed Rule”). Moreover, that the upcoming network changes actually will yield greater “efficiency” and significant cost reductions – which, to the annoyance of the USPS, the PRC doubted – remains for the Postal Service to prove.
The process
As explained in the final rule, implementation of the network and service standard changes begins April 1.
“… The Postal Service will implement the final rule in two phases, with phase 1 going into effect on April 1, 2025, and phase 2 going into effect on July 1, 2025. As described further below, during phase 1, the Postal Service will enable the implementation of RTO by adding one service expectation day to certain volume in Leg 1 (i.e., from collection to originating processing facility) for items originating in ZIP Codes covered by RTO. …”
In other words, afternoon collection runs to post offices that are more than fifty miles from the origin processing center will end as of March 31. The resulting one-day delay experienced by the impacted mail will be excluded from service measurement by the USPS simply by not counting it; “Day 1” would be when the mail is finally collected, not when it was tendered to the Postal Service.
The next phase of implementation is three months later:
“… On July 1, during phase 2, the Postal Service will implement the proposed rule in its entirety and will therefore among other changes accelerate the movement of mail in Leg 2 (i.e., from originating processing facility to destinating processing facility) by expanding the drive times for each of the travel bands that establish the delivery expectation days for First-Class Mail by four hours. …”
However, the Postal Service conditioned implementation on the readiness of its network, which is expected to complete in the April 1 to July 1 period:
“… Phase 2 is dependent upon certain efficiencies gained as a result of RTO and requires significant changes across the Postal Service’s processing, logistics, and delivery networks. By delaying the service standard changes related to Leg 2 for a brief period of 90 days, the Postal Service will be able to facilitate effective operational execution and change management by gradually implementing these changes, reducing the immediate impact on front-line employees and decreasing the level of change that is implemented at one time. …”
To allay concerns over service degradation, the USPS will need to demonstrate that its new network and operational schemes actually provide service improvements:
“… In addition, during the 90-day period between phase 1 and phase 2, the Postal Service will gather data on real-world operational conditions and constraints arising from RTO and use this data to adjust operational planning regarding Leg 2 operations to the extent warranted, and therefore help ensure that the Postal Service is well positioned to implement the Leg 2 service standard changes. To be clear, the phased approach is to facilitate more effective implementation of the changes. The rule, as originally proposed and as repeated below, will be implemented in full on July 1. …”
Results
The Postal Service has put itself in a potentially problematic position. Although it chose the period of the year when mail volume is lower, it still needs to get facility renovations and equipment installations completed, transportation schedules and operations in place, and staffing levels adjusted. As has been found to be the case in the past when major facility activations have occurred, preparations – including training and communication with operations managers – has not always been given the attention needed to minimize glitches. (Arguably, the new Atlanta RPDC still isn’t performing as expected despite being in operation for a year.)
As the PRC noted in its advisory opinion, the Postal Service basically tells ratepayers “trust us” that everything will work as advertised, but the agency will be evaluated not on what it claims but on actual, demonstrable results.
In earlier phases of RTO implementation, however, the USPS Office of Inspector General noted that there was insufficient data collection to ascertain whether claimed savings actually were occurring. The Postal Service has made lofty estimates of how much it will save from RTO and the upcoming network and transportation changes, so it will need to do more that claim savings over the remainder of the fiscal year to demonstrate that it’s living up to its promises.
The more important result – and the hardest claim to support – will be regarding service. Though the Postal Service can manipulate how it counts days to optimize the measurement of its performance, the real indicator will be in the experience of ratepayers, especially those whose mail originates from places impacted by RTO.
Citizens in the majority of the country who are losing afternoon collections may not care whether the USPS wants to include the day delay in how it measures service, but they will care if mail service takes even longer than now.
If those ratepayers become sufficiently frustrated with experienced service, the Postal Service’s self-serving puffery in its many writings won’t matter. The hundreds of millions of Americans not within the mailing industry or the USPS don’t care about Louis DeJoy or his Plan, only that they get timely service for the mail they send and expect. Lacking that, they – as voters and constituents – will complain to their representatives, which will not bode well for the USPS. For better or worse, we’ll see some results soon enough.
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