November 27, 2015
For over four years, from 2011 to 2015, Lucy and Lina Blair traveled through Michigan’s Upper Peninsula photographing each and every one of its 134 post offices. It was a way to bring them to each town in the U.P. so they could get to know their region better. They’ve put together a book of the photos, and they've shared many of them on Flickr. There’s also a nice story about their project on the Stateside radio show, here. (Scroll over the image at the top to begin a slideshow.)
When Lucy and Lina began their project, the Postal Service was talking about closing thousands of post offices, twenty of them in the U.P. As it turned out, post offices didn’t up getting closed, but about 85 of the U.P. post offices had their hours reduced under POStPlan.
The U.P.’s only mail processing center is still in danger. The Iron Mountain P&DF in Kingsford has already seen some of its mail moved to Green Bay, but the major part of the consolidation was supposed to happen this past summer. That plan is currently on hold, along with about 80 other consolidations around the country.
Lucy and Lina started out thinking that photographing post offices was simply something to do as as they explored the U.P., and they weren't really thinking about post offices per se. But as they talked to people going in and out of their post office, they grew to understand just how important the post office is in a small town. As Lucy writes in the introduction to their book, post offices "are crucial to the connectivity of rural towns."
“Right or wrong,” writes Lucy, “the environment of the USPS is changing in the Upper Peninsula, and Lina and I feel lucky to have captured that evolution between 2011 and 2015. These pictures show that change, but they also show the wonderful simplicity and beauty of the communities from De Tour to Ironwood. I hope they also show, in a way, our gratitude to live here and call this beautiful place home.”
November 16, 2015
Reliable. It seems like a simple and straightforward word. It conveys, if not a very specific meaning, at least a pretty concrete sense of satisfying expectations. In some contexts, like certain forms of statistics and technical applications, reliable and reliability refer to the overall consistency of a measurement or the accuracy of the data being measured.
But when we're talking about the postal system, the word reliable means much more than mere consistency. The reliability of the mail goes to the heart of what we expect of the postal system, especially a public postal network based on a promise of universal service. But what does reliable mean in this context?
For example, if for years it took two days for your mortgage payment to be delivered to the bank, but now that service standards have changed it consistently takes five days, would that be considered reliable? The Postal Service seems to think so, and it has produced marketing surveys showing that customers care less about the speed of delivery than they do about knowing the mail will arrive when the Postal Service says it will (even if that’s days later than in the past).
Or, to take another example, the news is filled with stories about people complaining that their mail is arriving much later than it used to. We might all agree that such anecdotes aren’t as reliable as scientific data, but if a system designed to measure performance ignores customer feedback or shunts complaints off into some nebulous customer satisfaction index, aren’t we missing an opportunity to identify problems?
The issue of reliability in the postal system involves a host of related questions:
If we choose a narrow and technical means to measure performance, is it enough to say the network is providing reliable service, regardless of other evidence?
Should we just look at a statistical measure and check to see if the results have the proper p value and demonstrate some acceptable probability of being accurate, and then conclude that the network is reliable and give ourselves a pat on the back and move on?
If we replace a longstanding, well accepted, relatively straightforward, and externally conducted system for measuring on-time performance with a new system that’s conducted internally using complex statistical sampling, how will it affect customers’ perception of the reliability of the mail?
Can the success or failure of a public postal network be defined by simple statistical measurements? What happens when the measuring becomes an end in itself?
A shift of focus
For almost ten years now, we have been defining the success or failure of the Postal Service by an arbitrary concept of profit and loss that is based on the false premises of the 2006 Postal Accountability and Enhancement Act (PAEA). These values may be suitable for a corporate entity, but they are not appropriate for a public infrastructure. Now the chickens have come home to roost.
In response to the mandate of PAEA to act like a business and focus on the bottom line, the Postal Service has focused on a two-pronged strategy — cutting costs and shifting the focus of the institution.
To cut expenses, the Postal Service has reduced service standards, closed facilities, eliminated hundreds of thousands of good jobs, and become more and more dependent on part-time workers and cheap temporary labor.
As damaging as these cuts have been, the shift in the institution’s focus has had even more destructive consequences. We have witnessed the transformation of a public network with a mission of universal service into a corporatized delivery company that treats this mission as an unwanted burden.
Lately many members of Congress have been raising questions about the Postal Service’s on-time delivery performance. What percentage of the mail is being delivered within a particular service standard (two-days or three-to-five)? Are rural areas getting worse performance than urban and suburban areas? What measuring systems are being used to determine the percentages?
Rather than focusing on such questions, we should be talking about what the reliability of the mail really means. Rather than worrying about the numbers, we should be looking at how the mistaken assumptions and false premises embedded in PAEA have undermined the public mission of the Postal Service.
But here we are. If we can’t fix the ills of PAEA, if we can’t acknowledge that constant cost cutting and abandoning the basic principles of universal service together lead logically to deteriorating service, then maybe we can at least learn something from the recent focus on service performance measurement.
November 12, 2015
It’s been clear for a long time that the Postal Service is in the process of privatizing itself by shifting processing operations to companies like Pitney Bowes through the workshare system and contracting out billions of dollars of work to private corporations (over $12 billion in 2014). The Postal Service has also been working to privatize its retail operations by creating a vast network of alternative retail channels.
This transformation of the retail system is the subject of a revealing and recently unearthed PowerPoint presentation entitled “Retail Channel Strategy." The presentation was prepared as a "discussion document" for the Postal Service by McKinsey & Company back in March 2012. It's about how the Postal Service could save billions a year by shifting its retail business from low-traffic post offices to alternatives like private retailers, self-service kiosks, and digital platforms.
The presentation is dated a month after the Postal Service published its five-year plan, "Plan to Profitability," which was prepared by several other consulting firms, based on previous work by McKinsey (as discussed in this previous post). The five-year plan indicated that the Postal Service would save $2 billion a year thanks to changes in its retail operations, but it provided no details about how that could happen.
The McKinsey presentation explains how. It shows that putting postal counters in 1,500 Staples stores is just the beginning. The ultimate goal is to create 12,000 to 22,000 new retail partner outlets by 2020 and thereby cut business at USPS post offices in half.
The leaders of the Postal Service have consistently denied that they are interested in privatization, but what else do you call it when the goal is to drive customers from post offices to private retailers?
Demonstrating financial stewardship
According to the McKinsey presentation, traditional post offices are not a cost-efficient way to bring in revenue. The Postal Service, it says, would demonstrate “financial stewardship by optimizing the network to migrate customers to the lowest-cost channels,” i.e., private retailers, automated kiosks, and online sources like USPS.com and Stamps.com.
The presentation says it costs 47 cents to bring in a dollar at a post office, while it costs 20 cents at a postal counter in a private retailer, 15 cents at a contract postal unit, 8 cents at a kiosk, and 2 cents at USPS.com. By shifting over to these less expensive channels and introducing other changes, says the presentation, the Postal Service could save $2.6 billion a year by 2020.
The presentation also sets a specific goal for migrating revenues from the post office to alternative channels. In 2011, 65 percent of retail revenues came in through post offices, and the remaining 33 percent came in from the alternatives. By 2020, the presentation says that 67 percent of retail revenues could flow through alternative channels. That would cut business at post offices in half.
This goal would be accomplished primarily by creating 12,000 to 22,000 new retail partner outlets. The presentation describes “multiple options” for these new partnerships.
One format is called “store-in-store.” That’s when there’s a “postal outlet located in a dedicated space at a partner retailer, operated by a dedicated staff (employed by the partner), offering a full set of postal products and services.” This is the model that was initially used for the Staples initiative.
A second type of retail partnership is called “over the counter.” That’s when USPS products and services are “sold through existing retailer space (retail till or customer service desk) leveraging existing retailer staff (not dedicated to USPS activities).” This sounds a lot like the Approved Shipper Program adapted to big box retailers, which is essentially what the Staples counters turned into when the program expanded after the pilot phase.
The presentation indicates that at the beginning of fiscal year 2013 (October 2012) the Postal Service planned to launch pilots with four to six retail partners, involving 150 outlets, in order to demonstrate these formats. It then planned to expand to 2,000 outlets by the third quarter of 2013.
As it happened, the Postal Service did almost that, but it took a little longer and involved fewer partners. The Staples pilot began in November 2013 with dedicated postal counters in 82 stores, and then in October 2014 it expanded to 1,500 stores under a variation of the Approved Shipper Program (which allows the counters to sell non-USPS products).
The presentation also mentions a couple of other retail partnership formats, both of which use automated machines.
November 10, 2015
The Postal Service has released its on-time performance reports for the fourth quarter of the fiscal year (July 1 – Sept. 30, 2015).
Compared to the third quarter, on-time performance for most types of mail has improved, but performance remains significantly down from the same period last year (SPLY) — before the changes in service standards and operations at processing plants went into effect on January 5, 2015.
For example, during the third quarter of FY 2015, single-piece First Class mail (SPFC) had an on-time performance record of 78.1 percent for 3-to-5 day mail. During the fourth quarter, 81.9 percent of this mail was delivered on time, an improvement of almost 5 percent.
But compared to the same period last year, on-time performance for single-piece First Class mail with a 3-to-5 day delivery standard declined from 91.3 percent to 81.9 percent, a drop of 9.4 percent. That’s also well short of the target of 95.3 percent.
As seen on this table comparing Q4 2014 and Q4 2015 for 3-to-5 day SPFC mail, the districts with the biggest drop were Triboro (23.8%), Caribbean (22.6%), Colorado-Wyoming (15.2%), Houston (13.7%), and Northern New England (13.1%).
For presort First Class Mail with a 3-to-5 day service standard, performance is down from 94.8 percent for the SPLY to 91 percent for the fourth quarter of this year. Periodicals are down from 83.3 percent for the SPLY to 77.5 percent for Q4 2015. Periodicals and Package Services are also down from the third quarter, an indication that things aren't getting better for all types of mail.
Here’s a table summarizing the performance reports released yesterday:
|Service Performance: Percent On Time|
|Category||Q4 2015||Q3 2015||SPLY (Q4 2014)||FY 2015 Annual Target|
|Single Piece First Class|
|Presort First Class|
While the general public may not be looking at the numbers themselves, many people have been complaining that the mail is moving more slowly. The drop in performance results has also received a lot of attention from the media, the mailers, members of Congress, and the unions (the APWU has taken the PRC to court over the issue).
The watchdog agencies are also taking note. In August 2015, the USPS OIG issued a thorough report about the service problems and recommended a halt to plant closures until performance improves. A more recent GAO report also addressed the service performance issues.
The concerns about delivery speed have led the Postal Service to slow down the plant consolidations, and it’s even possible that Congress will tell the Postal Service to roll back the changes in service standards that took place at the beginning of this year. The House has already approved an amendment to restore the interim service standards that were in effect from July 2012 to January 2015. That would restore overnight delivery to local mail and shave a day off of some 3-5 day mail.
The Congressional Budget Office has estimated that it would cost $1 billion to restore the service standards, but that estimate seems to be mistaken, as explained in this previous post. The CBO apparently based its calculations on the notion that the House amendment would require the Postal Service to restore service standards to where they were before July 2012, which would mean reopening plants that closed in 2012 and 2013.
But the legislation would only restore the interim standards, which would simply mean returning to the way the plants were operating before January 5, 2015. Very few plants have closed since January, and it would probably be possible to restore the interim service standards with the current infrastructure and at a relatively modest cost. It's not as if the changes are saving very much money, since the estimated savings — about $750 million — were based on closing over 80 more plants and eliminating thousands of additional jobs, neither of which has happened, at least not yet.
Senator Carper's iPOST bill (Improving Postal Operations, Service, and Transparency Act of 2015) also has a provision (section 201) that would explore the feasibility of rolling back the service standards, and it seems to address the cost issues raised by the CBO. It directs the PRC to commission a study that would examine, among other things, "the resources needed, structural and operational changes needed, and market demand" for a return to the interim service standards.
The new performance reports can be found in pdf format on the USPS website here, and a more complete data set in spreadsheets can be downloaded from the PRC website here. (Previous reports can be found on the PRC website here.) For easier viewing, we’ve uploaded the PRC version of the Q4 reports to Google Docs, here.
It should be noted that the numbers in the two data sets aren’t exactly the same. For example, for single-piece First Class, the pdf version says 3-5 day mail had a performance of 81.9 percent; in the spreadsheet version shared with the PRC, it says 83.1 percent. It’s not clear why these discrepancies occur.