APPLICATION ARTICLE

THE POTENTIAL IMPACT OF NETWORK RATIONALIZATION Phase Two of the United States Postal Service’s® “Network Rationalization” is set to be completed this year. During this phase, the USPS® hopes to make the organization leaner by re-organizing roles and equipment within the network. Eighteen mail sorting facilities across the country are scheduled to be consolidated by November 2021 in hopes of boosting the organization’s efficiency. Postmaster General DeJoy believes closing the facilities is financially necessary for the USPS to fiscally break even within the 10year timeframe. However, there are speculations that these closures will only raise prices more quickly and slow mail delivery without helping the Postal Service’s financial situation. This kind of restructuring is nothing new to the USPS. In 2015, the USPS paused changes after 141 facilities were closed during the first phase of consolidation, which began in 2012. The Postal Service said that consolidating the postal sorting facilities is not expected to delay Express Mail® or Priority Mail® and will not result in layoffs. Instead, the Postal Service will look to repurpose the 18 facilities facing consolidation “…for package processing, given the increase in package volume.” The Postal Service said it is also working to boost efficiency by

purchasing 138 package processing sorters and leasing 45 annex facilities near mail facilities, which will, in theory, alleviate package overflow issues. How will restructuring the network affect First-Class Mail® service? According to the USPS, the average time it takes First-Class Mail to reach its destination will increase slightly from an overall average of 2.14 days to an overall average of 2.25 days. In terms of cost, the USPS does not foresee any increases in charges attributed to this change. The Postal Service is taking the necessary steps to stabilize the costs associated with processing and transporting the mail. These changes, however, are projected to save the Postal Service over $3.5 billion in the next five years or approximately $750 million per year in savings. One way the USPS seeks to reduce costs is by shifting more of its mail volume away from air transportation contractors, which leadership says have limited schedules and limited capacity to deliver mail. How will restructuring affect transportation? It is expected that the Postal Service will be able to better optimize transportation across the board. The transportation network will be realigned to meet the needs of the realigned mail processing

network, meaning more ground transportation as opposed to air. The USPS aims to decrease air transportation by 43% for First-Class mail, which means letters sent within the continental United States could take a maximum of five days to be delivered instead of the current limit of three days. What impact will network rationalization have on mailers? It is crucial for mailers to understand the impact that a reduction in facilities as well as transportation optimization may have on mail delivery. Any increase in the time it takes for a mailpiece to reach its destination can necessitate an adjusted production timeline. If a piece that used to reach a recipient’s mailbox in three days now takes five, mailers will need to consider beginning production earlier in order to fulfill their customers’ desired in-home dates. This will become especially important if, as predicted, the rationalization is completed in November 2021 – as the industry is in the midst of the busy holiday mailing season. First and foremost, having a complete, correct, and current address remains paramount to ensure predictable delivery to the recipient. With mailpieces taking longer to reach their destinations, a renewed focus on data quality can serve to mitigate additional delays caused by out-of-date addresses. Finally, tracking mailpieces remains a vital method for mailers to understand where their pieces are in the system and when they are predicted to be delivered. Investing in additional data quality and/ or tracking tools will not alleviate the impact of a changed network, but they can provide actionable information for mailers.

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