7. Evolve to an Efficient, Customer-Focused Network

The costs of excess capacity in processing and transportation undermine the Postal Service‘s ability to deliver efficient and cost-competitive services. Continuing developments in technology, fluctuations in mail volume, and changes in mail preparation and deposit require ongoing network adjustment. The Postal Service will continue to modify its network, as it has for the last 30 years, and will explore alternatives concurrent with new requirements associated with changes in service standards.

A new concept, in the initial evaluation stage, would create a time-definite surface network to support the distribution and transportation of Standard Mail, Periodicals, and Package Services mail. The Postal Service is conducting research to better understand industry best practices and capabilities for such a network. The concept includes consideration of options to revitalize the Bulk Mail Center network to keep it efficient, affordable, and responsive to evolving needs.

The consolidation of operations improves productivity, increases mail density in containers, and achieves better utilization of processing equipment and transportation capacity. Local offices will continue to review operations for Area Mail Processing opportunities. Airport Mail Centers (AMCs) are usually located on expensive airport property. This year, some of the non-core operations such as mail assignment were transferred from AMCs to processing plants. This year over 40 air-stops with commercial air and cargo suppliers were standardized with additional AMCs to be standardized in 2008. Advanced technology will continue to change the infrastructure of facilities, such as the consolidation of remote encoding centers and centralized forwarding sites.

Ease International Regulated Transportation Rates

The Postal Service continues to pursue the deregulation of air transportation rates for the transportation of international and military mail, including the authority to contract competitively for such transportation in the open market. In its proposal this year for the Federal Aviation Administration reauthorization bill, the Administration supported such a transfer of authority and explained that its “rate-setting responsibilities in this area are no longer in sync with the realities of air and mail transportation.” In particular, the Administration proposal would repeal the requirement that the Postal Service file international mail contracts in advance, as well as the Department of Transportation‘s authority to set the rates for international air transportation of mail. Deregulation would significantly reduce international transportation costs.

Improve the Purchase, Repair, and Disposition of Facilities

Significant improvements to all facilities policies and procedures in coordination with standardization in processes will positively impact the construction, repair, and purchase of facilities. The new Facility Condition Assessment program will reduce repair costs through more focused, routine, and standardized building assessments that identify small problems before they become more costly.

A new and streamlined facility prioritization process using operational data and weighted by factors relevant to today‘s business strategy will establish a national ranking of projects for matching against available funding. In 2007, the Postal Service completed multiple revenue-producing real estate transactions with more future opportunities identified.

Modified building design standards using industry best practices are on target to reduce construction costs by 25 percent for major facilities, and 10 percent on smaller customer service facilities from the 2005 baseline. A new workroom space standard, based on new equipment implementation, will support significant cost avoidance on new customer service facility projects. Cost savings have already been realized in the new Oklahoma City major facility and in all new customer service construction projects started in 2007.

Submit Reports to Congress on Network and Workforce Changes

As required by the new law, the Postal Service in June 2008 will submit to Congress its initial plan to meet service standards, including any network changes required. It must also submit an annual plan each December. These plans will describe the changes to be made in the processing, transportation, delivery, and retail networks to allow the Postal Service to meet performance goals.