USPS cuts expenses in many ways as it seeks to stay at break-even

October 10, 2013

Changes: What they mean to you

 

The National Newspaper Association representatives gathered a lot of information at the quarterly meeting of the Mailers Technical Advisory Committee in late August. Although we try to keep this monthly column oriented toward practical tips, some of those facts seemed worth sharing with NNA members as the U.S. Postal Service struggles with its finances.

Chief Operating Officer Megan Brennan presented these items during her operational update at the USPS Leadership Forum for Stakeholders.

A second graph with each item will explain the impact on newspapers.

1. 2,413 post offices, or “delivery units,” have been consolidated year-to-date, with 1,500 more planned by 2015. What this means is the carriers delivering mail are leaving from another, larger office in order to eliminate the overhead of carrier supervision, and because the larger office has space not fully utilized. A DDU is defined as the location where the carrier sorts the mail for delivery on the route. This is better known as Delivery Unit Optimization (DUO),

This requires newspapers to haul DDU mail to a different post office, in many cases, sometimes adding driving expenses to get the DDU discount and timely delivery.

 

2. 21,000 city delivery routes have been eliminated since 2006. Fewer pieces of mail per household allowed USPS to forge agreements with the National Association of Letter Carriers to make routes longer, moving parts of routes onto other routes. That accounts for 12,700 of them. Flats Sortation Sequencing in major urban areas accounted for another 4,400. A “traditional” process merged 3,200 more.

What this means to newspapers is that they must get regular updates to their addresses via the Coding Accuracy Support System, usually through their presort software vendor. Post offices should transfer mail within their DDU offices until the update is downloaded.

 

3. 145 processing plant operations have been consolidated in “Phase 1” of Area Mail Processing in 2013 after 46 were done in 2012. But 55 of those this year were accelerated from 2014. Then 85 more are to occur in 2014 in phase 2, unless Congress passes postal legislation to ease that. This means that delivery quality has gotten worse for most local-entry newspapers. 

NNA is working to finalize a “Hub” structure in which “Direct” containers (5-digit, carrier-route, or M5D with both) will be dock-transferred at the old SCF, now a “hub,” or in some cases a newly created Hub serving similar territories. Also, NNA has gotten approval for electronic subscriptions to count on the Statement of Ownership, allowing them to replace the mailing of distant subscribers.

 

4. USPS sold 23 pieces of property to raise $156 million in new revenues. With lots of post offices and processing plants being closed, the sale of that property helps the bottom line and forestalls the need for new revenue, or at least minimizes it.

Generally speaking, this sale of excess property benefits the Postal Service’s bottom line, and we should support it, as forestalling the size of a price increase should USPS seeking above-inflation hike.

 

5. Like many businesses, USPS is moving toward using part-time workers or paying new union employees less under contractual agreements. The USPS average rate for labor is at $1 per hour lower than it was last year.  There has been a 58 percent increase in “non-career” employees in core operations. In fact, the number of “non-career” employees has grown above 120,000, out of the nearly 500,000-person workforce.

Although this means lower costs as the situation demands, it also means fewer well-trained, long-term and knowledgeable workers, who may not understand the history, policies and rules on newspaper mail.

 

6. USPS is rolling out Lean Six Sigma continuous improvement processes to increase efficiency while maintaining or improving quality. The goal is to create work processes to decrease cycle time of mail handling and thereby handle more mail volume in fewer hours thereby increasing productivity. In a South Jersey plant test site, cycle time reduction was 56 percent for parcels, 24 percent for periodicals, 34 percent for other types of flats and 38 percent for letters. Volume increased about 11 percent, work hours decreased 2 percent and productivity increased 13.5 percent.

This is the kind of real change that will benefit USPS and the mailing customer, not just USPS’ bottom line. As mailers, we should applaud it and encourage it.

 

7. City delivery mode conversions have resulted in 119,600 fewer door deliveries, 952,000 more street-line box deliveries, and 1.41 million more centralized (cluster box) deliveries. This tally was from the last three years of household growth of 2.23 million deliveries. Some postal reform bills want to end door-to-door deliveries and even mailbox curb deliveries in favor or more centralization.

Although this change may be viewed as necessary, NNA is concerned that moving delivery further from houses may discourage people from picking up their mail on a regular basis and thereby reduce subscriptions to less-satisfied customers. Cluster boxes now exist mainly at apartment buildings and other multi-unit dwellings.  They are not beloved by postal customers.

 

Max Heath, NNA postal chair, is a postal consultant for Athlon Media Group (American Profile, Relish, Spry and Athlon Sports magazine) and Landmark Community Newspapers, LLC. E-mail maxheath@lcni.com.

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