Behind the USPS Network Consolidation

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The volume of First Class mail this year is expected to be nearly half of what it was in 2007, before the great recession. The USPS cites this decline as one of the primary justifications for the consolidations they plan to roll out early next year, notes this article in Dead Tree Edition.

“A lot of ink has been spilled discussing and cussing the U.S. Postal Service’s plan to close 82 mail processing centers next year. But the three images below tell the story in a nutshell,” D. Eadward Tree writes.

The images he refers to are part of a presentation from the USPS made to mailers. The slides show the drop in single piece First Class letters; a map of the plants expected to close; and a graph that shows the declining number of USPS processing plants.

We find it interesting that the decisions to close these plants seem to be justified by First Class volume declines, when in fact that is only a small part of the story.

While many blame the advent of digital for much of this decline, that is not necessarily the case.

“The USPS delivered 35% less First-Class Mail in 2013 than they did in 2004,” writes Mark Fallon in The Berkshire Company blog. “The most significant drop in mail volumes occurred during the Great Recession (2009-2011). The USPS saw a loss of over 19 billion pieces of First-Class Mail during this time period, representing 60% of the decline for the entire decade,” he writes, noting that the rates of decline have slowed dramatically.

“In 2012 and 2013, there was only a 5% and 4% drop in First-Class Mail volumes respectively. The first 2 quarters of 2014 shows the trend continuing, with only a 4% reduction in volume. Significantly, Workshare mail [when companies presort their mail by ZIP Codes, and then receive a discount from the USPS; i.e. a huge part of USPS’s business core] is down only 3%, with the 2nd quarter of 2014 having almost the same number of pieces as 2013.”

All this focus on First Class mail leaves us wondering what will happen to the bulk mailers in the system. Many are already concerned that the remaining processing centers are saturated and struggling to deliver on their promise now. Will the continued closures cause more havoc for businesses that rely on the mail?

“Physical mail remains a critical link between businesses and their customers….The USPS must remain committed to accepting and delivering physical mail in a cost-effective, customer-centric and timely manner.” Fallon continues.

What do you think? Can the USPS keep up with the business customers that feed its machine?