Postal Regulatory Commission Issues Advisory Opinion on Network Rationalization
November 9, 2012
On September 28, the Postal Regulatory Commission released their long awaited Advisory Opinion on the Postal Service’s Mail Processing Network Rationalization plan. Initial Postal Service estimates for net savings as a result of this plan were $2.1 billion, and were later revised to $1.6 billion. The Commission found that cost savings could be as low as $46 million annually. The closures would ultimately impact 229 of 461 processing plants. The revised plan, designed to reduce Congressional opposition, would utilize a slow roll out to preserve current service standards, for now. MPA has been supportive of efforts to downsize plant levels to properly reflect future volume levels.
The Commission urged the USPS to communicate these changes to mailers as soon as possible and highlighted that the resulting volume loss from changes in service standards remains an unknown variable. The Postal Service initially estimated a reduction of $500 million due to lost volume, but the methodology used to calculate that number could not be recreated and the Postal Service later conceded that there were problems with the estimate.
The full text of the PRC’s Advisory Opinion may be found here: Advisory Opinion on Mail Processing Network Rationalization Service Changes