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
Until the USPS begins to close facilities, mailers can continue operating as usual. The first impact of closures will be changes in postal destinations as shown in Labeling Lists. (Labeling Lists show the active 3- and 5-digit ZIP codes of origin and their destination locations.) Mail list management software vendors will make these changes, which may come more frequently than in the past.
Mailers will also need to make customers aware of changes in delivery standards since the elimination of overnight service for first class and periodical mail may affect the mailing schedule.
In with IMb, out with POSTNET
After at least two postponements for implementing the Intelligent Mail Barcode (IMb), the USPS has set announced the date for retiring the POSTNET code for automation discounts. As of January 2013, all mailers claiming automation discounts will be required to use IMb. Using a POSTNET barcode will only get non-automation presort discounts.
Between January 2013 and January 2014 mailers can use either basic or full service IMb. But beginning January 2014, full service IMb will be required for automation discounts and the IMb basic service will be retired.
The USPS has invented a new product to help companies with their marketing efforts. Called Picture Permit Imprint Indicia, the product is a redesign of the familiar presorted first class or standard mail indicia. With Picture Permit, a company can use the indicia area of the mail piece to advertise their brands. The indicia have been tested on more than one million first class mail pieces; additional test mailings are planned.
The indicia still must contain the class of mail, the permit number, city, and state (or name of the company using a company permit), but these elements can be arranged around the logo or other graphic. The image must print in color (black-and-white is not allowed because it failed the reflectance test) and the required text must be at least eight-point type and OCR readable. The mail piece must also use full service IMb.
The USPS has filed with the PRC for approval. If granted, the program was to be rolled out in late June 2012 for presorted first class letters and cards and standard mail letters. Using the Picture Permit will cost one cent more in postage per piece for first class and two cents per piece for standard mail.
Nancy DeDiemar is a former chairman of NAQP and Printer of the Year. She is the co-publisher of PrintTips (www.printips.com), a newsletter subscription service for printers. Contact her at Nancy91762@gmail.com.