The U.S. Postal Service is planning large-scale network changes that will expedite transportation for some mail near its major processing facilities while slowing it down for volume coming from rural post offices.
The potential overhaul follows sweeping operational shifts the financially struggling agency has already made in recent years under Postmaster General and CEO Louis DeJoy to reduce costs, some of which have led to on-time delivery issues.
The new batch of changes could challenge small businesses, which often rely on local post offices for shipping, operating far away from the Postal Service's regional processing and distribution centers. However, the agency maintains that even slowed-down volume will still reach its end destination within existing delivery timeframes.
Agency officials outlined the proposal to the public during a virtual presentation last week. Here’s what shippers should know.
What does the Postal Service plan to change?
The crux of the overhaul will occur in the first leg of the Postal Service's transportation process, when parcels move from post offices to nearby processing plants.
The Postal Service is proposing to consolidate its current morning and afternoon dropoff and pickup activities at some rural post offices into one morning transportation route that goes to processing plants.
"This allows us to eliminate that second type of transportation in a lot of cases, or allows us to avoid having to pay those suppliers to wait for those afternoon volumes to be picked up and brought back to the plants," said Stephen Hagenstein, the Postal Service's executive director of logistics modeling and planning, during the presentation.
The change would only affect volume at post offices in ZIP codes more than 50 miles away from the Postal Service's nearest regional processing and distribution center, or RPDC. The agency plans to establish about 60 RPDCs throughout the country under its 10-year "Delivering for America" transformation plan.
As of May 20, the agency had 13 of these facilities already operating or scheduled to start operations soon.
USPS advances network overhaul across the country
The afternoon transportation cuts would be an evolution of a pilot program the Postal Service has been running in select areas of the country, known as the Local Transportation Optimization initiative.
The Postal Service has deployed this program in Richmond, Virginia. The agency's Office of Inspector General said in an August report that "service performance decreased significantly in the weeks following implementation," although it noted that a prior audit couldn't isolate the program's impact from other possible operational factors.
How will this affect delivery speeds?
The changes would impact end-to-end volume, or parcels collected by a local post office before going to a processing plant. Destination entry mail and packages, or those injected directly into the Postal Service's distribution facilities by the likes of consolidators, won't see any changes under the proposal, said Keith Weidner, deputy general counsel for the agency, during the presentation.
For end-to-end volume, one additional day will be added for pieces that originate in a ZIP code more than 50 miles from the Postal Service's nearest RPDC.
Parcels from ZIP codes closer to those facilities won't experience that slowdown, and some may even reach their destination faster. The network overhaul will allow the Postal Service to bolster its speeds between originating plants and destination plants, as the agency will be able to bring all its volume into processing facilities earlier in the day, Hagenstein said.
"No longer will we have to wait for those volumes from those far out ZIP codes," Hagenstein said. "We'll have the volume available earlier in the day, and really all we'll be waiting on is that last bit of volume from those offices that are currently within 50 miles. This will enable significant processing benefits, processing efficiencies, and allow us to dispatch into the network earlier."
The majority of market dominant volume — or Postal Service products with no direct competitor — won't see any changes to service standards following the plan's implementation, said Gregory White, executive director of operations, integration and performance excellence. However, he noted that single-piece First-Class Mail products will experience the largest negative impact in service standards.
One quarter of First-Class Mail would see delivery speeds change under USPS plan
Even though transit times are slated to change for some shipments, they will remain within the Postal Service's existing delivery timeframes for its Ground Advantage (two to five business days) and First-Class Mail (one to five business days) services, according to officials.
When will the initiative take effect?
Any proposed changes would not be initiated until 2025 to avoid disrupting operations during the November election and the peak holiday shipping season, according to Weidner.
The Postal Service will weigh public feedback before filing a formal request for an advisory opinion from the Postal Regulatory Commission on the changes, Weidner said. As of Tuesday morning, a request has not yet been submitted.
According to an Aug. 22 notice to the commission, the Postal Service said its delivery service standards wouldn't change sooner than 90 days after filing that request. However, it added that it "may implement discrete aspects of the operational initiatives during this period consistent with the fact that they are currently being piloted, but any changes would be limited in scope."
Why does the Postal Service want to make these adjustments?
The proposed changes are projected to save the agency between $2.8 billion and $3.3 billion a year, money it needs to meet cost and service goals while becoming more financially sustainable, Weidner said.
"What this is doing is improving our cost of performance, and therefore putting us in a position where we can better maintain affordable rates for the American people," Weidner said. "But to do that, to cut costs, have affordable rates, we have to change the unsustainable status quo."
The agency reported a $2.5 billion net loss for the third quarter of fiscal year 2024, which ended June 30, extending a trend seen over multiple quarters.
Eliminating some rural transportation is a cost-savings target, as the overall use of the agency's retail network of post offices has declined over the years. The amount of retail volume the Postal Service receives has dropped by about 80% since 1997, Hagenstein said. Maintaining that service for shrinking activity has led to an underutilized and costly local network, he added.
The changes would also enable the Postal Service to be more competitive in certain key portions of its package business, which it believes is crucial to reaching financial stability, according to a notice the agency filed Aug. 22.
