USPS has provided a pointed response to the Postal Regulatory Commission’s (PRC) recently published Advisory Opinion on the organization’s proposed service standard changes as part of its Delivering for America (DFA) plans, which the commission states have significant problems, especially in rural areas.
Postal service proposal
USPS’s DFA proposal calls for operational changes to create a nationwide network of regional processing distribution centers (RPDCs) and local processing centers (LPCs) that consolidate and reduce transportation lanes among facilities. It further plans to implement its regional transportation optimization (RTO) initiative nationally. The postal service estimates that these two initiatives will enable it to improve productivity and efficiency and achieve annual cost savings of between US$3.6bn and US$3.7bn once the initiatives are fully implemented. The postal service is also seeking to revise its service standards to align with these operational initiatives.
Postal Regulatory Commission analysis
At the end of January 2025, the Postal Regulatory Commission issued an analysis of the Postal Service’s Delivering for America initiatives proposing nationwide changes to mail service. While the commission acknowledged the challenges the postal service faces are significant, and change is essential, the commission found that the postal service is irreversibly changing its network without laying a foundation for success.
First, the commission asserted that the postal service’s plan depends on defective modeling and does not appear to be ready for implementation. According to the Postal Regulatory Commission, the modeling methodology did not address variations in the postal network – such as the daily changes in the volume and type of mail that enters the network – and the postal service worsened the impact of its modeling methodology by not integrating transportation and processing models.
The Postal Regulatory Commission then went on to say that USPS relies on overly optimistic and unsubstantiated financial projections for cost savings that are not likely to improve the financial health of the postal service. In particular, the commission pointed to USPS’s total projected cost savings, which if fully realized, represent approximately 4.4% of the postal service’s financial year 2024 operating expenses of US$81.8bn.
Thirdly, the commission argued that the postal service’s proposal has significant negative impacts on rural communities throughout the USA. Specifically, the report said that rural communities will experience disproportionate downgrading of service standards when analyzed by zip code pairs (mail sent from one zip code to another) and that Single-Piece First-Class Mail (such as individual letters and postcards, the type of mail most likely to be used by a household), 49.5% of zip code pairs will experience downgraded service.
As a result of these conclusions, the Postal Regulatory Commission urged USPS to “reconsider whether the speculative, meager gains from this proposal outweigh the certain downgrade in service for a significant portion of the nation.” It also encouraged the postal service to consider the concerns and recommendations outlined in the Advisory Opinion as it continues to develop and implement the proposed changes. Further, the commission advised the postal service to closely monitor the impact of its changes on mail products and rural communities.
USPS response to PRC’s Advisory Opinion
In response, Louis DeJoy, Postmaster General, wrote to Michael Kubayanda, chairman of the Postal Regulatory Commission. In the letter, he said, “I must say that I was confounded by the commission’s dismissal of cost savings of nearly US$4bn a year as ‘meager’ while characterizing service standard changes that are carefully designed and modest in impact within the current service standard day ranges as a ‘severe degradation’ in service that must be avoided at all costs.
“That said, we have fully analyzed and evaluated your Advisory Opinion, and likewise, carefully considered the commission’s recommendations. In that regard, while there are many elements of the Advisory Opinion with which we could not agree, we found some areas of common ground that we can and will adopt in our ongoing effort to ensure that the American people and businesses will have a well-functioning and financially sustainable postal service that will provide high-quality service to our customers for decades to come, and still within the day ranges of our current service standards.”