Initiative won’t save as much as projected, PRC determines.
A plan to close hundreds of postal facilities would not save as much as the U.S. Postal Service has projected, according to an analysis released Friday.
The Postal Regulatory Commission advised USPS to delay its Mail Processing and Network Rationalization initiative until it considers the report’s recommendations -- including alternatives that would avoid cutting back services such as overnight mail.
USPS has said the plan to close and consolidate 229 of 461 processing plants to match declining mail volumes would save approximately $1.6 billion. PRC estimated the plan’s savings could be as low as $46 million annually unless further measures were taken.
PRC said to achieve the $1.6 billion in savings, USPS would have to improve systemwide productivity by more than 20 percent: “The commission cautions that improvements of this magnitude are remarkably ambitious and involve some risk.”
The commission had difficulty replicating the Postal Service’s initial analysis of cost savings by adopting the initiative.
“In order to balance the risk of achieving projected savings with the risk of possible volume and revenue loss, the commission encourages the Postal Service to better measure potential volume losses associated with its multiple recent proposals for altering service,” PRC wrote.
Earlier this summer, the Postal Service proceeded with a phased implementation plan that included interim service standards until January 2014. That plan would preserve overnight first-class mail service and consolidate 140 plants.
“The commission believes that the phased implementation of MPNR provides an excellent opportunity for the Postal Service to study the effects of service standard changes, to inform its decisions on how to preserve as much of the current services as possible and to make adjustments before full implementation,” PRC chairwoman Ruth Goldway said in a statement Friday.
PRC’s advisory opinion included some alternative options for the USPS’ consolidation effort, including developing a plan to better inform customers of any services changes, establishing a transportation hub to be developed and made known to mailers.