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.”

By reducing the number of combined retail/delivery units from about 24,000 facilities to only 14,000, the plan would tend to lengthen the distance between delivery units and carrier routes. That would add an estimated 3 million hours to the 10.7 million hours currently devoted annually to carrier travel.

Such consolidations would enable large mailers to dropship their mail more efficiently, the OIG notes.

Increased automation and declining mail volume have resulted in excess space devoted to delivery in most post offices, the report says.

“On average, delivery functions occupy 366 square feet per carrier route” but only 130 to 180 are needed, according to the OIG. That creates an opportunity to close high-cost post offices and to move their delivery functions to lower-cost facilities nearby.

The OIG’s model “assumes that retail services in closed delivery units can transition to other existing retail units.”

The reduced facility costs would come from a combination of eliminated rent on leased facilities and from creating opportunities for USPS-owned facilities to be sold, rented out, or used for other purposes. The OIG model does not attempt to account for any revenue losses from having fewer locations that serve customers, nor does it seem to assume any savings from consolidating retail operations.

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Anonymous said...

My momma always used to say "Stupid is as stupid does".

Anonymous said...

Where is the VER, or early retirement incentives ? what downsizing apparently neither the USPS nor the APWU want anyone to leave, plain stupidity, no business sense at all!

Anonymous said...

I worked for the USPS in many offices on Cape Cod, Barnstable County MA. I argued for years that a number of offices should be closed but due to the high number of rich and influential people living there it never happened. Here are just a few examples
Town of Barnstable, population 45k, 11 post offices
Town of Harwich, population 12K, 5 post offices
Town of Orleans, population 6k, 3 post offices
Each one is a separate facility, a postmaster and in many cases one or more supervisors. No post office is further then 2 miles from next post office. In just these 3 towns you could reduce the number of facilities from 19 to 3, eliminate, 16 Postmaster and numerous supervisor, and have minimum impact on customer service.

Anonymous said...

I just printed this article out, on paper. To my dismay, it printed out 3 pages of text and 21 more blank pages...

Now it might be my computer, software, printer but it might also be The Dead Tree edition website.

Anonymous said...

They only close the Post Offices in the Poorer neighborhood where people don't have the means to travel to other offices. Or rural Post Offices where people would have to plan a weekly trip to the Post Office because it is 50 miles away. Closing Post Offices and processing plants will amount to about 2 to 3% of the USPS budget, that is what I read., plus they lie about there savings.
They figured closing my home office would save $1.5 million a year. How? Everyone would still work at another office including management and they would have to pay 3 more years on the lease and building services but 2 carrier routes would become full time because of travel time.
These are the same people who will send a 9 ton truck 15 miles to drop off 15 to 20 letters after the carriers have left so our Supervisor has to drive them out to the carriers. The same people who are closing our processing plant owned by the USPS and shipping the machinery and mails to 2 leased buildings 75 miles away. Could it be that District HQ is more important than the savings and mail delivery. Our plant is fairly new and has done the mail for District and other SCFs during Christmas when they couldn't handle it. Now USA todays and Wall Street Journales have turned into USA yesterday and historical newpapers.
Good luck and you have more faith than I will or have had in my 40 years at the USPS in management actually doing the RIGHT thing for the Service and the Employees!

Anonymous said...

Just wondering how much will the rent be for the new facilities in order for the carriers to work out of? Is that factored in?

Anonymous said...

Consolidating carriers from multiple zip codes into one facility is the way to go. Efficiencies from having more employees to cover vacant routes, more vehicles to cover breakdowns and supervisors focusing only on delivery operations. Retail operations also would not suffer by pulling all employees out back making customers wait ridiculous amounts of time for service. This idea needs to be implemented right away!

Anonymous said...

In Yuma AZ our postmaster wastes money just about everyday sending out a supervisor to the streets in hopes of catching carriers doing sometime wrong so they can be fired. So far in the last 2 months we lost 3 carriers. In stead of harassing carriers make that supervisor carry mail to cut down on all the overtime!

Anonymous said...

FedEx and UPS don't have big facilities in every town to house their drivers and all their equipment. Drivers are centrally housed allowing small retail stores to be opened just about anywhere. The Postal Service should adopt this model also to save much needed funds.