At this month’s MTAC meeting, I had the chance to speak with mailers about the actions being taken and proposed by the Postal Service in light of their current budget challenge.
Now the Mailer’s Technical Advisory Committee certainly attracts organizations who have a vested interest in the future of mail, including corporations, service bureaus and industry players like Pitney Bowes. But what struck me the most as we listened to a series of reports, updates and strategies – people are thinking about the USPS as a business.
Perhaps the recent economic turndown, in which many industries experienced cutbacks and shortfalls, has led to more understanding ears. But as postal officials take steps to make sure no stone or pebble goes unturned – you could see heads nodding. Everyone seems to get that we’re talking about an entity with revenues and costs and at the end of the day, it all has to work. Let me share some of initiatives that came up…
Flats Sequencing Systems
The USPS is looking to be more flexible. Originally, the USPS planned to roll out new equipment so they could automatically put flats in walk sequence, a move that could save carriers two hours a day and millions of dollars. Now, flats volume is down 14% this year (on top of an 11% decline last year) and planned sites no longer have the density to justify these football-field sized systems. While the roll-out is still moving ahead, the USPS is redirecting when and where these systems will be installed.
Network Distribution Centers
Postal officials are also re-looking their core distribution model. The biggest change is the conversion of Bulk Mail Centers (BMC’s) to Network Distribution Centers (NDC’s), which reworks decades-old logistics and workflow to leverage more efficient centralized distribution centers. Moving from BMCs to NDCs will save $300 million.
HR22
While some of the changes appear to be accounting adjustments, they greatly impact cash flow, which is essential for payroll and day-to-day operations. One of the most critical initiatives is H.R. 22, now in Congress, which would allow the USPS to pay for healthcare benefits for current retirees out of its Retiree Health Benefit Fund – which currently hovers around $32 million – instead of its operating budget. If passed, it would save the USPS an average of $3.5 billion per year over the next eight years.
5 Day Delivery
The proposal that is garnering the most press these days involves a move to five day delivery. Eliminating Saturday delivery (the most likely choice) would save the USPS nearly $3.2 billion. Clearly, there are issues and obstacles involved – but none of the mailers who heard these updates went into panic mode. In some ways, there was a sober understanding that business is business. Under the current plans, Post Office would remain open, delivery to PO Boxes would continue, and remittance mail would be available via PP Boxes and Caller Service. Approvals from Congress, the PRC and affected unions would all be required, so stay tuned.
This covers just a few of the dozens of programs discussed (we’ll cover Move Update and the Intelligent Mail® barcode in separate posts), but hopefully this will give you a flavor of what’s in store. Interestingly, with improvements and work hour reductions equivalent to 60,000 full time positions, the existing efforts have already generated year-to-date savings of $5.9 billion – with 96.3% of all First-Class Mail reaching its final destination in three days or less.
If you have any questions about these planned initiatives, jot a note in the comments below. Meanwhile, we’ll continue to keep you posted.
Management ranks were dramatically increased during the late 90’s and early 2000’s. The increase directly corresponded with the period of irrational exuberance that the country was engaged in at the time.Mail volume numbers had been exaggerated for years and businesses were being created out of thin air to produce unnecessary things for people to buy with borrowed money that they couldn’t pay back.Now the party is over and Mr. Potter and the boys would have the public believe that the sky is falling down.This is a lie.During the 70’s, 80’s, and 90’s the Postal Service inflated mail volume figures to justify the introduction of mail processing equipment.Enough equipment was acquired to supply private mail processing concerns.Now that those businesses have the equipment the Postal Service can close it’s mail processing facilities and lay off employees.Postal officials will still control the distribution.Storage processing and transportation will be private.Postal Officials will be in position to be the only full time employees soon because they intend to replace the carriers with part time workers.Managers will be getting kickbacks from mail processing companies and trucking companies.Many managers will set up their own companies with the inside information that they obtained from their tenure with the service.This is how UPS made such tremendous strides.Jon Potter is proposing the elimination of Saturday delivery.The number of U.S. addresses grows by 1.5 million each year.The acknowledged reason for postal loses is because of the loss of mail due to the companies that have gone out of business as a result of the recession.Put John Potter and the other postal officials and managers on contract along with the equipment manufacturers and the mass mailers who deal primarily with advertising mail.Give them three rears.If they can’t demonstrate that a profit can be made from the type of mail that they have conspired to promote, terminate the contract and get some new managers.The carriers are needed.They should be full time employees.Carriers and clerks are the front line of homeland security.As full time employees they have an eye on the community that cannot be acquired any other way.Put the Postal Service on the stock exchange and let the clerks and carriers be the primary stock holders along with the public.
I read about this on a different blog and couldn’t fully see the implications, but this post is much clearer. Cheers!