Wednesday, August 29, 2012

USPS Productivity Has Declined This Year

Despite downsizing and other efficiency measures, the U.S. Postal Service’s productivity levels have decreased in the past year.

USPS delivered fewer than 139 mail pieces per work hour in July, a 3.7% decrease from the July 2011 level of 144 pieces, according to preliminary numbers the service released Tuesday. The agency’s net loss for the month was $1.327 billion, nearly $300 million more than planned and more than $500 million worse than last year.

The productivity trend for the full fiscal year (starting October 1) isn’t much better. USPS has delivered 143 pieces per work hour so far in FY2012, down 2.5% from the same 10 months of FY2011.

Mail volume declined more than 4% versus a year ago. But the number of employees has only dropped by about 2%, and they are working more overtime this year.

One key to the lower productivity is delivery costs: Personnel costs for both “city delivery” and “rural delivery” are slightly higher so far this year, despite the drop in mail volume. Delivery costs are more sensitive to the number of delivery points, which are increasing, than to total mail volume.

Many of the Postal Service's proposed efficiency improvements, such as eliminating Saturday delivery and reducing the number of post offices, have been stymied by Congressional inaction.

Related articles:


Liam Skye said...

"One key to the lower productivity is delivery costs: Personnel costs for both “city delivery” and “rural delivery” are slightly higher so far this year, despite the drop in mail volume."

This is complete nonsense. You expressed productivity as pieces delivered per work hour. Personnel costs as not included in that figure. The truth of the matter is that the delivery costs have absolutely nothing to do with productivity.

D. Eadward Tree said...

Liam, you are correct that personnel costs did not affect the productivity numbers. But the personnel costs related to delivery provide a hint regarding why productivity is declining: Despite handling fewer mail pieces, USPS hasn't been able to bring its personnel costs for delivery down. Assuming average compensation rates are virtually unchanged, that means carriers are delivering fewer pieces per work hour.

Anonymous said...

One of the widespread causes is the excessing of distribution clerks. For every 1 minute of delay on the workroom floor each morning, you lose (1) x the number of carriers. We have about 60 routes. We've had one clerk excessesd, one moved to the 'Concierge' position, etc. We lose the equivalent of 50-60 man hours nearly every day.
But we save on the clerk side!!!!!!!

Liam Skye said...

Mr. Tree, yes I agree that examining delivery costs can be instructive but I think the true causal relationship is found in your point that the number of delivery points is steadily increasing. Adding millions of delivery points every year will always increase delivery costs, while increasing volumes (or decreasing volumes) will have little effect on delivery costs because most of the delivery cost (the cost of servicing a delivery point) is fixed while the marginal cost of delivering a mailpiece is darn near negligible in comparison to the fixed cost. In other words, the cost is in having the carrier walk up to the door; whether he is carrying 8 pieces or 3 pieces doesn't affect the cost of making that delivery.

While this holds true for letters, the cost of delivering parcels can affect the cost of delivery to a much greater degree - so does any delivery that requires the carrier to ring the doorbell, e.g. postage due, COD, Signature Confirmation, etc. Since the prices of these services are adjusted to the costs of providing them, it would be necessary to examine their revenues to determine if both the declining deliveries per hour and increased delivery costs are not simply the result of successful marketing of this type of service. I wish I knew the figures offhand, but I don't. It would sure be interesting to look them over.

Anonymous said...

the facts are obvious folks.usps management, donahoe and company , are not competent enough business people to successfully run a lemonade stand much less a 70 billion dollar company. this has been the case for a long time but is only more apparent with the increased scrutiny from massive losses. unfortunately, no senate bill and no house bill addresses the main reason for postal losses and THAT IS THE INCOMPETENCE, FRAUD, AND WASTE THAT U S POSTAL SERVICE MANAGEMENT IS RESPONSIBLE FOR.

Anonymous said...

Volume is not dropping near as bad as is stated. They have just stopped counting everything that we have to work. Packages,spurs,certifieds,large flats and more. They are now throwing large letters into the parcells so they arent counted either. This is the only company that cant really tell you how many pieces they actually deliver. Their delivered piece count is only off the machines. They are clueless how many other pieces they have. Just an estimate. So mail volume dropping by what ever percentage you want to say is just a guess. Yes first class is dropping but everything else has picked up. But you wont be told that. Counter productive to what they want in the grand scheme of things.

Anonymous said...

Some key indicators from the report:

Mail volume continues its steady slide- first class is down 6.3% from last July, while standard is down 3.4%.

Shipping revenue is up significantly, but is still a relatively small contributor (17%) to total revenue.

Salaries and benefits for employees dropped 2.8% from July 2011.

The report shows that total “expenses” year to date climbed by 9.9% from last year, but that increase is almost entirely due to the USPS double counting the PAEA charges. (The FY 2011 PAEA charges that the USPS reported last year also appear on this years reports, even though no actual payments have been, or will be made).

Actual operating expenses year to date are down by 1%, more than offsetting the 0.7% decline in actual revenue.

Anonymous said...

Management is more concerned about hitting MSP points than about delivering the mail piece to the correct address. Probably redelivering pieces that were mis-delivered rushed by runners.

Anonymous said...

Liam--you lump rural carriers as part of the increase in costs--YET, rural carriers are on evaluated time (meaning--they get no more money if they work more hours are not) They have an incentive to get done and doing it efficiently and going home under alloted time, not like city carriers, clerks and the amount of micromanagement is the major problem with the loss of production!!

Anonymous said...

The reason overtime for carriers is up because offices are short staffed and open positions are pivoted on a daily basis.

Anonymous said...

We are tired. We are not robots. Do you think we can keep up with the machines forever? We have been worked like slaves for the past 3 years. There is a hiring freeze with many injured workers out. We are very tired.

Anonymous said...

Duh you think 4 dollar a gallon gas doesn't have an effect on the increased delivery costs but the dam oil companies are loving it while the rest of us all suffer from them just getting richer!

Anonymous said...

Increasing street time just increases the cost of delivering the mail. The billion dollar wonder flat trashing machines are a nightmare on the street.

Anonymous said...

There are also fewer clerks processing mail. It takes longer to get the mail to the carriers, so it takes longer for them to get it to the street. There are definitely days when they have to come back to the station to pick up mail that was ready late.

Anonymous said...

If, in fact, USPS personnel costs have actually gone up despite dramatic cuts to the workforce numbers, it is only because of increased workload on fewer employees causing higher rates of costly injury an illness, greater use of overtime, and an aging workforce. The USPS hasn't hired letter carriers, for instance, in about six years. Senior carriers, many of whom now cannot afford to retire, earn considerably more than those who, if the service were hiring, would be hired to replace them.

Anonymous said...

After 30 years as a carrier, I can only say "Dead Tree" needs to carry mail to vouch for employees' responses.
The USPS is well known to be "Over Administrated", far too many non-productive management positions. They have spent the Congressional 6 Billion on retiring AND replacing the dead weight in mangt. Replacing dead weight with MORE dead weight is not saving. The last 4 years the USPS has violated every Contract agreement, every Labor Law, and worked craft up to 12 hour days everyday without let up. They have refused sick to go home, disabled to see doctors, and threats and insults. Is it any wonder the employees are burnt out?s

Anonymous said...

I've been getting more parcels and SPRs, which takes more time to scan and dismount on my curbline route.

I also get at least 4-5 bad barcodes everyday that causes me to have to key-in the numbers manually with up to 30 characters each.

PMG Donahoe says our "shipping" is up 9.5 PERCENT over the past year in this video -

FedEx and UPS brings in pallet loads of parcels they don't want to deliver. I would think they are reducing their employee's overtime, and they may recoup some of the difference in reshipping these USPS at our local rate as a small profit.

In other words, we're spending more time scanning and delivering extra parcels and SPRs than before. This would be a reasonable explanation for the SMALL drops of 3.7% and 2.5% in "production" from last year.

You cannot count pieces of mail, and consider all of them equal in trying to figure "productivity."

Here's why... Let's use an extreme scenario.

Let's say for a route with 600 delivery points you took out 3,000 DPS letters on Monday, and nothing else. On Tuesday, you take out 3,000 cased flats and letters, and nothing else. On Wednesday 3,000 circs (5 sets), On Thursday, 3,000 SPRs, and on Friday, 3,000 parcels that require scanning, dismounts, and a lot of signatures on some of them.

OK... you're taking out 3,000 pieces per day, which is an equal amount right? Shouldn't every day require the same amount of time to deliver them? Why?

Now, Dead Tree... which day would YOU say would have the worst productivity numbers on a per-piece basis?

While this scenario will never happen, I hope it points out the fact that mail does not all work the same when a carrier is out on the street.

Parcels definitely take more time. SPRs are next, because you have to reach for the scanner, scan the piece, press the enter button to record the event, and press the enter button again for the zip code. If you've ever used a USPS scanner, you know they don't run like greased lightning.

Using the scanner during the day is a job unto itself. On a heavy day, I have seen over 80 items entered into my scanner plus 12 MSP scan points.

Everything we do takes time. If parcels and SPR numbers continue to increase, it will show us as delivering fewer pieces per work hour, but with obvious reasons why.

We at the USPS should be glad to get some of the parcel trade back. Unless Congress lets us change our business model, and branch into other areas, what else can we regain back from FedEx and UPS?

Anonymous said...

Productivity will decline further with the declining morale of those whose lives will be turned upside down with excessing and excessing into other crafts, no VER no work, no Incentives no APWU dues.