Sunday, September 30, 2012

Has USPS Targeted the Wrong Plants for Closure?

The U.S. Postal Service's plan to reduce its mail-processing network by half has a major flaw, according to a Postal Regulatory Commission opinion released Friday: The plan would tend "to move processing assignments from more productive plants to less productive plants."

USPS goofed in assuming that consolidating mail sorting into larger plants would improve productivity, according to the PRC's advisory opinion on the Postal Service's ambitious Network Rationalization plan. In fact, larger plants historically have tended to process fewer mail pieces per workhour than smaller ones, the PRC's analysis finds. (Five-Day Delivery and Reduced USPS Service Standards Could Face Legal Barrier explores another issue addressed in the lengthy advisory opinion.)

"Shifting volume from less productive to more productive plants, without changing operating windows or service standards, would increase productivity by 18 percent, and save $1.3 billion in direct mail processing costs," the ruling says.

That's more than the $968 million USPS projects that its plan will save in mail-processing costs, and the PRC believes that projection is overly optimistic because of questionable assumptions.

Thursday, September 27, 2012

Redrawing the Map: A Look at USPS' Network Rationalization Plan

The U.S. Postal Service has been consolidating its mail-processing operations for several years, but it wasn't until I saw a recent postal official's presentation that I realized even more dramatic changes may be ahead.

The USPS's Network Rationalization Plan, opposed by some postal unions and not-in-my-district Congress members, would cut the number of processing centers nearly in half by 2015 -- from 461 this year to 232 in 2015. That's down from 673 in  2006 and 599 in 2009. (See also Has USPS Targeted the Wrong Plants for Closure?.) 

As the maps below show, the impact would be especially dramatic in certain regions. Several states -- including Mississippi, Kansas, and Arizona -- would go from having six or more facilities to only one.

Monday, September 24, 2012

Going Paperless Doesn't Mean Going Green, The New York Times Proves

Perhaps we can finally say goodbye to those simplistic "Go green, go paperless" promotional campaigns.

There's nothing particularly green about the massive data centers that store the internet's data, The New York Times revealed this past weekend after in-depth investigation. Data centers waste electricity and spew pollutants in a way that "is sharply at odds with its [the information industry's] image of sleek efficiency and environmental friendliness," the lengthy but clearly written "Power, Pollution, and the Internet" says.

"The industry has long argued that computerizing business transactions and everyday tasks like banking and reading library books has the net effect of saving energy and resources." But data centers use more electricity than the paper industry, according to the The Times.

Among other highlights of the article:
  • "Most data centers, by design, consume vast amounts of energy in an incongruously wasteful manner, interviews and documents show. Online companies typically run their facilities at maximum capacity around the clock, whatever the demand."
  • "The pollution from data centers has increasingly been cited by the authorities for violating clean air regulations, documents show. In Silicon Valley, many data centers appear on the state government’s Toxic Air Contaminant Inventory, a roster of the area’s top stationary diesel polluters."
  • Data centers use "only 6 percent to 12 percent of the electricity powering their servers to perform computations. The rest was essentially used to keep servers idling and ready in case of a surge in activity that could slow or crash their operations."
  • Most of the data are created by consumers. "With no sense that data is physical or that storing it uses up space and energy, those consumers have developed the habit of sending huge data files back and forth, like videos and mass e-mails with photo attachments."
Related articles:  

Friday, September 21, 2012

What's the Future for the Paper Industry? Depends

The paper market's long-term decline has now spread to the fictional Dunder Mifflin Paper Company: "The Office" had the worst premiere in its nine-year history last night.

The episode had the show's second-lowest audience ever, attracting "just 4.32 million viewers, down 46 percent among 18–49-year-olds from its premiere last year," reports In other words, the once-hot comedy centered around a dysfunctional paper company (Aren't they all dysfunctional?) is dropping as fast as newsprint demand.

It's not just newsprint that's shaky. A deal to restart the NewPage supercalendered machine in Port Hawkesbury, Nova Scotia fell through today (Sept. 22 update: and then was resurrected); its shaky status means that North America's only world-class, magazine-quality paper machine is in danger of being shipped to another continent or scrapped. And North America's second-largest player in the magazine category (Verso Paper) is at a competitive disadvantage not because it may be on the verge of bankruptcy reorganization but because several competitors have already been through or are in the Chapter 11 debt-cleansing process.

Declining demand means fewer paper machines are needed, but fortunately some of the idled machines are being put to good use. Several that once made copy paper have been converted recently to producing fluff pulp, the main ingredient in diapers.

Here's how to understand the trends: The bad news for pulp and paper companies is that Baby Boomers are reaching senior-citizen status, leaving fewer dinosaurs in the workplace who still print out their emails to read them. The good news is that the aging of the Baby Boom means more people on the continent are incontinent, which is boosting demand for hygiene products that rely on fluff pulp.

Related articles:

Thursday, September 20, 2012

Environmental Impact of Paper Goes Way Beyond Cutting Trees

Almost any discussion of paper manufacturing's environmental impact focuses on cutting trees and protecting forests. But five news reports in the past week provide a reminder of other environmental issues surrounding paper making:

  • An Environmental Protection Agency study of a former paper Montana paper mill found “potentially dangerous levels of dioxins, heavy metals and other hazardous chemicals,” according to the Missoulian. The results could lead to the former Smurfit Stone property becoming a Superfund site, as well as concerns about what would happen if a levee on the property failed.
  • The site of an abandoned paper mill in Tennessee has been proposed as a Superfund site because of PCB and dioxin contamination. 
  • A trial began this week on charges that a lawyer duped buyers of a New York paper mill by not disclosing it had been declared a Superfund site. (Are you noticing a pattern here?) 
  • International Paper received regulatory approval for an extensive upgrade of the wastewater treatment plant at its Bogalusa, LA mill. A failure of the plant under previous ownership last year caused a discharge of black liquor, an especially nasty and infamous pulp byproduct, killing hundreds of thousands of fish and fouling the Pearl River. 
  • A power outage last week at a Glatfelter mill in Pennsylvania caused the release of 6,000 gallons of pulp and contaminated water into a nearby stream. 
Regardless of how it sources its fiber, can a paper company be considered green if it fouls waterways, spews high levels of toxins and greenhouse gases into the air, uses carcinogenic additives, or reveals as little as possible about its environmental impact? No, not when there are competitors using best practices to minimize emissions, operating mills that are nearly carbon neutral, switching to safer materials, and going way beyond what the law requires in reporting their environmental practices and measurements.

Related articles:

Wednesday, September 19, 2012

Courier Express and Postal Observer Lives Again

After announcing last week it would shut down and going offline for a few days, respected postal blog Courier Express and Postal Observer is back in business.

"The outpouring of support made me realize that I could not stop," publisher Alan Robinson told Dead Tree Edition today.

The blog came back to life yesterday with an in-depth look at FedEx's latest quarterly earnings report, which noted that the private carrier has become more reliant on the U.S. Postal Service to deliver its parcels. That kind of original, spin-free analysis makes Alan's work so important at a time when everyone has an opinion about USPS (and they're usually shaped by the mainstream media's uninformed reporting or by political half truths).

Welcome back, Alan.

Friday, September 14, 2012

Farewell to Courier Express and Postal Observer

Please see the Sept. 19 update, Courier Express and Postal Observer Lives Again.

In messages to his Twitter followers last night, respected postal commentator Alan Robinson announced that he will be shutting down his Courier Express and Postal Observer blog tomorrow.

"Courier Express and Postal Observer will come to end on September 15th as I am not renewing my hosting agreement," he wrote. "Wish everyone who works on issues well as I am done for now. I have to take care of myself and writing takes too much time."

"I love writing but I cared too much about readers and not myself; I dug a hole worse than usps," he explained to one follower. "I'm also very frustrating watching the USPS constrict itself as that is what can pass Congress; makes no business sense."

It's fitting that his (apparently) last article for the blog shows that "the House is unlikely to tackle any significant legislation before the end of the fiscal year." It's vintage Alan, digging into the dry details of government and using his extensive knowledge and contacts to tell us what it all means.

Also vintage Alan was his Twitter exchange yesterday with Rep. Dennis Ross, an influential Florida Republican, about the battle between the Tampa Bay Rays and Alan's beloved Orioles. Alan managed not to gloat too much when the Orioles pulled out a victory in the 14th inning.

The blog describes Alan as "Executive Director of the Center for the Study of the Postal Market, is editor of the Postal Journal, and President of Direct Communications Group. In the few hours of the day he isn’t thinking about the postal market, he enjoys listening to the Baltimore Orioles baseball games as it appears that the day has come that they will finish the season with a winning record."

He also advocates for research funds and better education regarding digestive diseases and oral cancer.

Some people consider me a postal expert, but I'm an amateur in comparison with Alan. I will miss his blog and have invited him to write guest articles for Dead Tree Edition if the writing and commenting bug ever hits him again.

Wednesday, September 12, 2012

Verso Changes Course -- Why?

Only three weeks after Verso Paper’s CEO said acquiring NewPage was the key to its future, Verso announced it no longer wants to buy its rival. Why the sudden change of heart?

In a mid-August interview with The (Memphis) Commercial Appeal, Verso CEO David J. Paterson said that the company’s key strategy is acquiring ailing companies “to get the cost reductions we can't get on our own.” NewPage, which is in Chapter 11 bankruptcy reorganization, is Verso’s only publicly announced target.

But last week Paterson issued a statement saying, “After careful analysis, we believe it is in the best interests of our company and its stakeholders to focus on the many other opportunities for Verso, including internal growth projects and other potential strategic alternatives.”

Verso's new tack is something of a mystery. Chip Dillon, a long-time forestry industry analyst, announced yesterday that his Vertical Research Partners is dropping coverage of Verso because the company’s future is so unclear. He sees “the restructuring of Verso’s debt as inevitable” but is not sure how or when that will happen.

Among the possible reasons that Verso is no longer courting (or stalking) NewPage: 
  • Hard to get: Verso’s latest move may be a negotiating ploy to wrest a better deal out of NewPage. 

Monday, September 10, 2012

USPS Could Save $1 Billion By Combining Delivery Operations, Study Says

The U.S. Postal Service could save about $1 billion annually by closing nearly 10,000 postal facilities that house both retail and carrier functions, according to a study released today.

A plan presented by the USPS’s Office of Inspector General would mean fewer clerks and postmasters but increased labor costs for letter carriers.

"These consolidations [would] reduce facility space costs by $817 million and support labor costs by $566 million, but they also come with additional carrier travel costs of $374 million to obtain the net cost reduction of $1 billion.”

“The greatest opportunities for facility consolidation are with the highest-density ZIP Codes where the space per route is high and other units are nearby,” the report says. That’s in apparent contrast to the Postal Service’s own approach to closing post offices, which critics claim overwhelmingly focuses on sparsely populated rural areas.

The OIG’s elaborate costing model shows that “delivery support” performed by clerks and postmasters is most efficient in offices with at least five carrier routes.

Equivalent to 7,000 employees
“The model predicts a significant potential savings of 13.6 million delivery support labor hours,” the report says. Those labor savings, roughly the equivalent of 7,000 full-time employees, “are associated primarily with the consolidation of labor hours of small office postmasters and clerks at the smaller delivery units.”

Wednesday, September 5, 2012

Postal Service Trial of '100 Percent Street Time' Fails

The U.S. Postal Service recently experimented with “100 Percent Street Time” – assigning some carriers only to prep mail and others only to deliver – then abandoned the project because it didn’t save money. But the concept is not completely dead.

Yesterday’s Dead Tree Edition article, 8 Reasons USPS Productivity Is Declining: The Employees Speak Out, erred when it stated that nothing more has been heard “about a 2010 USPS proposal to have some carriers making deliveries all day."

In fact, in a report with the nap-inducing title of City Delivery Route Optimization Pilot Initiative, the USPS Office of Inspector General revealed two weeks ago that the Postal Service canceled a months-long 100 Percent Street Time experiment on June 30.

The OIG agreed with the cancellation because "there is an unfavorable business case for proceeding with the pilot. For the eight sites we reviewed during the pilot, office and street workhours increased with no efficiency improvements."

Workhour savings did not occur
“Area and district officials stated that workhour savings did not occur due to the learning curve for carriers casing multiple routes,” the OIG report said. “In both phases [the first in areas served by Flats Sequencing System machines, the second in non-FSS areas], casers received assistance from deliverers to complete casing duties timely.”

“Our review found an increase in carrier street workhours and overtime, amounting to no savings in both phases of the pilot. Management expected to expand street time by creating full-time street assignments and anticipated more consistent delivery times through reductions in overtime and delivery inconsistencies associated with splitting routes among several carriers in the unit.”

“Management stated that increased workhours and overtime were due to carrier sick leave, increases in office time, errors in Carrier Optimal Route adjustments, vacant routes, and some carriers protesting the concept by deliberately performing less efficiently, and lack of management oversight at the unit level.”

“Carriers filed grievances for out-of-schedule premium pay due to time worked outside of their regularly scheduled workday, which may result in additional pay to these carriers.”

More labor flexibility needed
“There is potential for the pilot concept to achieve significant savings if the Postal Service had more workforce flexibility built into the labor agreement,” citing one district where the experiment saved $611,000 on an annualized basis because of an unusually flexible workforce.

“The Postal Service could maximize workhour savings by using part-time letter carriers for office assignments and full-time carriers for street assignments.”

With that concept, part-time casers would start work at 6 a.m. and spend an average of 3 hours and 15 minutes casing mail for several carrier routes. After that, they might help carriers make deliveries. “Deliverers” would start work between 8:40 and 9 a.m., load up their trucks, and spend an average of 7½ hours making deliveries.

The concept raises some questions, some of which Dead Tree Edition asked back in 2010, such as:
  • Who can case a route more efficiently, a person who delivers the route regularly or a specialized caser who has never seen the route? 
  • Other than requiring fewer delivery vehicles, how would the concept save money? In other words, how would divvying up the work differently actually change the number of hours required to do the work? (There might be savings from using more part-time carriers, but that doesn't require splitting the roles of caser and deliverer.)
  • Do postal officials think deliverers on walking routes would be able to handle a full shift on the street without their productivity suffereing? How about on peak-volume days when that “average” of 7 ½ hours might become 10 or more? 
  • How would other USPS operations (such as processing and distribution centers) be affected if mail has to be at the delivery units by 6 a.m.? How would service be affected?

Tuesday, September 4, 2012

8 Reasons USPS Productivity Is Declining: The Employees Speak Out

News that the U.S. Postal Service’s productivity has taken a turn for the worse comes as no surprise to many USPS employees, especially letter carriers.

Many postal workers responded to last week’s article, USPS Productivity Has Declined This Year, about USPS delivering fewer mail pieces per work hour than it did a year ago. From the comments, on Dead Tree Edition and on other sites, come eight reasons for the USPS’s declining productivity:
  1. Longer hours: “Perhaps if we weren't so short staffed and didn't have endless OT being forced upon us, our productivity would be better,” wrote one of several letter carriers who blamed declining productivity on fatigue caused by longer routes and work days. USPS statistics back up claims from the front line that overtime is increasing among carriers.

  2. More street time: Not only are carriers working longer hours, automation has resulted in them spending more of their day actually delivering mail rather than preparing it for delivery. “I know I am nowhere near as fresh at hour 10 as I am when the day starts after walking in 90 plus heat and full humidity.” Automating the sequencing of mail had been contributing to rising productivity the past few years, but how much of those gains are being lost to burnout? (Which may be why we've heard nothing more about a 2010 USPS proposal to have some carriers making deliveries all day while others prepped mail full time. Aug. 5 update: Oops! USPS recently experimented with the concept, as discussed in Postal Service Trial of '100 Percent Street Time' Fails.)

  3. Flats Sequencing System: And then there’s the issue of what happens when automation doesn’t do what it’s supposed to do. “The billion-dollar wonder flat trashing machines are a nightmare on the street,” wrote one carrier. The huge machines’ erratic performance sometimes result in carriers spending just as much time preparing the mail, or even more, but now have more addresses to serve than in the past because of the expected productivity gains from FSS. Last winter, that led to many carriers delivering mail after dark – definitely not a high-productivity environment.

  4. Shortage of postal clerks: “There are 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,” said one employee. “For every one minute of delay on the workroom floor each morning, you lose (1) x the number of carriers,” noted another. “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.”

  5. More delivery points: “Adding millions of delivery points every year will always increase delivery costs,” wrote one commenter, “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.”

  6. More parcels: “Parcels definitely take more time” than letters, noted one carrier. The Postal Service’s growing parcel business, coupled with the declining letter business, means fewer mail pieces can be delivered per work hour.

  7. Management: The complaints about USPS having “too many supervisors who supervise the supervision of supervisors” are nothing new. But many employees believe that USPS’s recent downsizing efforts have focused too heavily on unionized employees and not enough on supervisors and administrators who never "touch the mail.”

  8. Morale: Cutbacks, increased labor-management disputes, and USPS’s insolvency are discouraging postal workers and sapping their productivity, several have said. One put the situation succinctly: “Good news---> high morale---> high productivity. Bad news ---> low morale---> low productivity.”