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.