Processing Facility Consolidations Resume in January 2015

Submitted by Darin Marks, Resource Director, Production Solutions

As the Postal Service’s mail volume and revenue continued to decrease in the late 2000’s they were forced to analyze the efficiencies of their operations; including the number of processing facilities, equipment and employees. In August 2011, the Postal Service introduced Network Rationalization; which would originally consolidate the number of processing facilities from 508 to 200. The Network Rationalization was a two phase process to begin in 2012 and finalize in 2014.

Phase I of the Network Rationalization started in July 2012 and finalized in October 2013. The Postal Service concluded Phase I with 141 consolidations; which reduced the total number of processing facilities to 367. The Postal Service has stated that Phase I has generated an annual savings of $865 million.

Phase II was originally scheduled to begin in February 2014, however Phase II was postponed due to conflicting legislation in Congress; which is still unresolved. Without new legislation in effect, the Postal Service announced in June 2014 that they would resume with Phase II in January 2015. Phase II of the Network Rationalization will consolidate another 82 processing facilities by Fall 2015; which is estimated to generate another $750 million in annual savings.

So, what does this all mean to you? The Postal Service has stated that service standards for Standard Bulk Mail (non-profit and commercial) will not be affected once Phase II is implemented. If anything, as with Phase I, we may see that in-home windows are tightened as processing centers are consolidated. This is due to the fact that as the network shrinks, the volume of mail from a single mailing will be processed at a reduced number of facilities. Therefore, there will be less of a variance of when mail is processed and delivered versus a larger network; which increases the variance of processing time; thus causing a larger in-home window.

The most significant change with Phase II is that First Class mail that typically delivered overnight may now take an additional day depending on the entry and destination points. Currently First Class mail is delivered in 2.14 days and after Phase II the Postal Service estimates that it will average 2.25 days for delivery.

The good news is that besides First Class Mail, the Postal Service and mailing industry foresees very little service disruptions in 2015, as Phase I was implemented well and the service disruptions were negligible. Furthermore, the Postal Service has now completed 141 consolidations and has had an extra year to prepare for the additional 82 consolidations.

For more information and documentation on Phase II of Network Rationalization visit, http://about.usps.com/news/electronic-press-kits/our-future-network/ofn-phase-2-faqs.htm and/or https://ribbs.usps.gov/importantupdates/2015NetworkConsolidationletter.pdf .