The U.S. Postal Service on Tuesday implemented the second phase of revised delivery standards intended to improve operational efficiency and reduce transportation costs.
The agency said it is expanding the areas where surface transportation schedules are reduced from regional processing centers to post offices more than 50 miles away in an effort to eliminate inefficient trucking trips.
The regional transportation optimization began April 1 with the addition of an extra day to expected delivery times for First-Class mail originating from remote post offices and zip codes. The Postal Service is also streamlining the network of regional processing centers. The aim is to better fill trucks by consolidating mail on fewer trips.
The Postal Service estimates the two initiatives will improve productivity and save $36 billion over 10 years in transportation, mail and package processing, and real estate costs.
Other touted benefits include customers knowing service expectations for various products based on five-digit zip codes, where before service levels were mapped out by three digits, and allowing the Postal Service to provide two-to-three day turnaround service within a larger region.
Meanwhile, Sundays and holidays are no longer counted in transit service measurement when accepted on the day prior. Previously, an item mailed on Saturday with a two-day service standard would be delivered on Monday. With Sunday no longer counted as a work day, a two-day delivery should reach its final address on Tuesday.
Network overhaul
Historically, service standards and network development have revolved around letter mail. Over the last 30 years, single-piece First-Class mail has declined by more than 80% — from 57 billion pieces in 1997 to 11.7 billion pieces in fiscal year 2023. And pre-sort volumes from large customers have declined 22% over the same period to 33.2 billion.
At the same time, the Postal Service has seen parcel volumes triple to 6.7 billion pieces over a 10-year period ending in 2023, according to agency figures.
With the sharp drop in mail density and rising parcel volumes, network costs skyrocketed from $7 billion in 2011 to more than $11 billion in 2021. That year the Postal Service launched its Delivering for America transformation strategy. The shift in volume mix has also generated costs in processing facilities and more wait time, with most processing concentrated during the evening hours after daily collections are completed.
The U.S. Postal Service in 2021 had 427 facilities, many of them operated by contractors or under short-term leases, functioning in an uncoordinated manner. Under the transformation agenda initiated by former Postmaster General Louis DeJoy, the agency is moving to standardize operations by downsizing the network to 250 facilities — 60 regional processing and distribution centers, and 190 local processing centers that sort letters, flats and parcels for final-mile delivery.
The U.S. Postal Service can’t make the network changes without the new service standards, explained Greg White, executive manager of strategic initiatives during a March webinar. The changes reduce local transportation costs by consolidating drop-off and pick-up activities in the morning for sites that are far from processing plants.
Post offices within 50 miles of a regional processing center will continue to have mail dropped off in the morning, with the truck returning to the hub and then making another round-trip in the afternoon. For delivery units further away, the Postal Service is condensing the two round-trips into one morning trip to pick up volume from the previous day and bring it back to the plant.
Currently, trucks are only running 20% to 30% on backhauls to the plant from remote locations, said White.
In addition to reducing transportation costs, the change spreads volume from the crowded night shift to the daytime, allowing the agency to better balance the workload, staffing, and equipment, and improve productivity.
White said the agency will also enhance network speed. Currently, all the volume is committed to leave the processing plant each night, no matter the distance to the post office. That means a lot of volume arrives early and the plant has to wait for mail from the far-off offices before the next outbound trucks can be filled, much like an airline sometimes holds a plane waiting for a connecting flight to arrive at the airport.
In Georgia, for example, the Howard and Newman post offices have the same service commitments despite being two hours and 20 minutes, respectively, from the Atlanta regional processing center. That means mail can’t be inducted into the network, for transport to places like Richmond, Virginia, until 6 a.m.
“As you’re waiting, you’re delaying 80% of your volume for 20% of your volume,” White said. “So what we are flipping to with the service center change is saying, ‘Take that 80% and go.’”
The new process speeds up the middle mile by about four hours, as well as allowing for faster local routing. That translates to First-Class mail having a much greater two, three-and four-day reach, meaning plants can serve destination cities further away. Under the previous system, for example, plants had to be within three hours of each other — say Norfolk and Richmond, Virginia or Washington, D.C. and Baltimore — to achieve two-day delivery. Now, the distribution center in Norfolk will be able to dispatch a truck to Baltimore, or other destinations within a seven-hour range, for second-day delivery.
As part of the network restructuring, the Postal Service is also building a network that integrates mail and packages. In the past, many facilities only handled one product or the other. The organization is also collapsing redundant networks — for contract motor carriers, national distribution centers, retail outlets, Priority Mail Express — into one network that runs between regional processing and local processing centers. Streamlining benefits include aggregated volumes, reduced separations and handling, less downtime and improved truck utilization.
The Postal Service has already exited about 30 terminal handling service locations, which connect shipments to airports and carriers like UPS, and 40 parcel support annexes on short-term leases, White said.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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