The Postal Service continuously monitors and adapts its processing and transportation networks as customer mailing patterns change, mail volume fluctuates, and new technologies become available. For example, single-piece First-Class Mail volume, which requires a high degree of processing, is down 10.4 percent from 2008. In that same period, the volume of mail presorted by customers or entered at destination facilities increased as a share of total mail. Ongoing adjustments to such changes are essential to maintain optimal network performance.
In December 2008, the Postal Service provided Congress with its first annual update of the Network Plan, as required by the Postal Act. The plan highlighted three integrated elements of the optimization effort: closure of airport mail centers (AMCs); consolidation of redundant mail processing operations; and transformation of the bulk mail center (BMC) network.
Nine AMCs were closed in 2009, with operations relocated to other facilities. These closures avoid the unnecessary expense of maintaining facilities on expensive airport property. They also reflect the shift of more mail from air to surface transportation, which can substantially reduce cost without compromising service performance.
Consolidation of outgoing and/or incoming mail processing operations among one or more plants is considered when service objectives can be met and operational efficiency improved. Following Area Mail Processing (AMP) Guidelines, 64 AMP projects were initiated. Of those, 21 were approved by year end, with a total annual savings of $51 million expected.
The transformation of BMCs into Network Distribution Centers (NDCs) is underway. The network handles Standard Mail, Periodicals, and Package Services. The NDC network enables changes in mail preparation that will consolidate transportation and allow mail to bypass operations. Surface Visibility data is guiding the resolution of service issues. Key preparation steps include creating new holdouts at local Post Offices, updating retail software, changing transportation, rearranging platform operations, changing schemes, and updating staffing and schedules to match workload.
In addition to producing service gains, especially with Periodicals, the changes are reducing costs through improvements in mail preparation and containerization, improved trailer loading and dispatch, and the consolidation of transportation. NDC implementation was accelerated from 18 to 5 months and was scheduled for completion in late November 2009. An estimated $280 million in annual savings is expected when fully implemented.
Other optimization activities include consolidation of remote encoding centers (RECs), retail units, and district administrative offices. Improved addressing and recognition technology continue to reduce the need for RECs, specialized facilities where operators key in address information for mail that is illegible or otherwise poorly addressed. Three RECs were consolidated this year, leaving three in operation. One of the remaining RECs is scheduled to close in 2010.
Retail revenue declined again this year (-8.3 percent) and transactions were down 5.5 percent. Managers continued to make good use of Point of Sale transaction data to adjust schedules and reduce workhours. Yet despite changes in customer use, the postal retail network has remained largely unchanged from the time when virtually all retail business was generated in Post Offices. The Station and Branch Optimization and Consolidation Initiative is aligning retail resources with the preferences of today’s postal customers as more postage is paid online, at kiosks, and at grocery stores. Area teams are leading an analysis of opportunities, focusing on stations and branches reporting to EAS-24 and above postmasters. The analysis considers customer traffic, availability of options, employee impact, excess space, and savings potential. On July 2, the Postal Service requested an advisory opinion from the PRC.
