As the United States Postal Service struggles to find the path to financial stability, mailers are wondering how network optimization—the term used by the USPS to describe downsizing production capacity—will impact their ability to enter mail conveniently and efficiently. After decades of infrastructure and network expansion to keep pace with America’s increasing mail volume, the USPS now finds itself with too much of everything—too many mail processing facilities, pieces of equipment, vehicles, and employees.

Consider this sobering statistic: according to the USPS, from FY 2001 through the end of FY 2010, mail volume for first class mail declined by almost 23 billion pieces, or 42 percent. Simultaneously, automated mail processing equipment meant increased efficiency, while large mailers responded to financial incentives by entering mail closer to the final delivery point; bypassing USPS processing and transportation locations. The predictable result was significant excess processing capacity at many postal facilities. Clearly, some processing facilities will have to be closed if the USPS wants to hit its target of reducing operating costs by $20 billion by 2015 and returning to profitability. (The current plan calls for reducing the number of mail processing facilities from 460 today to fewer than 200 by 2013.)

Area Mail Processing Study

Between September 2011 and February 2012, the USPS conducted an Area Mail Processing (AMP) study of 264 processing facilities for consolidation and possible closure. These studies look at any of the following:

• consolidating originating operations (canceling and sorting locally generated mail at a facility close to where the mail originates),

• destination operations (sorting and preparing mail received from more distant areas for local delivery), or

• both. The intent is to more efficiently use equipment, facilities, staff work hours, and transportation.

When the study results were announced, 223 facilities were selected for consolidation, 35 were slated to remain open, and six will be the subject of further study. A list of affected facilities and study results can be viewed at about.usps.com/streamlining-operations/area-mail-processing.htm.

Because of objections to some closures by several US Senators, the USPS delayed implementation until after May 15, 2012, and reassured mailers that

• there will be no changes to retail services and business mail acceptance at any of the AMP study facilities,

• DSCF (Destination Sectional Center Facility) discounts can still be claimed in the near term for mail entered at BMEUs (Business Mail Entry Units) scheduled for closure, and

• there will be no major consolidations during the fall mailing season, including the election mailing period.

Modifying Delivery Standards

The ability to complete the consolidation depends in part on a non-binding advisory opinion by the Postal Regulatory Commission (PRC) to grant a modification of delivery standards; that is, the amount of elapsed time between mail entry and delivery to the intended recipient. Current delivery standards are:

• Priority Mail: 1-3 days

• First-Class Mail: 1-3 days

• Periodicals: 1-9 days

• Package Services: 2-8 days

• Standard Mail: 3-10 days

With fewer processing plants, the overnight delivery standard for first class will change to two to three days and the standard for periodicals to two to nine days. In other words, people will no longer receive first class and periodical mail the day after it is mailed. The USPS predicts that the average customer will not notice this change.

The USPS asked the PRC to expedite consideration and issue its opinion by mid-April 2012 so consolidation could start just after the May 15 moratorium expires. However, the PRC has indicated that the earliest date for a decision is July 10, 2012.

Impact of AMP and Delivery Standards on Mailers