Section 201 of S.1789, The 21st Century Postal Reform Act, purports to save overnight delivery. However, a closer look at the language of this section of the bill shows that an overnight delivery commitment will truly be available to fewer customers than most members of the Senate think. In particular, First Class single-piece mailers will see little benefit from the delivery standard provisions in S.1789 that were designed to ensure overnight service as they are unlikely to tender their mail to the Postal Service before the critical entry time required to ensure delivery overnight.
The Geographic Reach of Overnight Service is Now Significantly Less
The current S.1789 limits next day service to mail that originates and destinates in the same processing facility. My home in Silver Spring, MD is served by the Suburban Maryland mail processing plant. So under S.1789,mail I send to the county courthouse in Rockville will receive overnight service as Rockville and Silver Spring are served by the same processing plant. Mail that I send to downtown D.C. which is equally far is only required to be delivered in 2 days as destination sortation is done in a different mail processing plant.
The impact is a bit easier to see graphically. The following map has the 3-digit zip codes that get overnight service from Silver Spring MD currently. Under the Senate bill, overnight service will clearly be limited to following map shows the overnight service areas from my zip code currently, The blue area is the current geographic area that receives overnight service from Silver Spring Maryland. Under S.1789, overnight service will be limited to destinations with the first three digits of the zip code being 208 or 209, or the areas with the red check marks. This chart assumes that the Suburban Maryland mail processing facility remains open. [ The assumption is made based on the list of plants that will remain open and will be consolidated that was provided to Senate staff.]
Similar examples can be seen in other areas where the geographic area where overnight delivery is available is reduced. For example. Mail originating at the Brooklyn mail processing plant, mail currently processed at plants in Brooklyn and Staten Island, will have an overnight commitment in Brooklyn and Queens but a 2-day commitment to the other boroughs of New York City. Currently all mail destined within New York City from Brooklyn is delivered in one day. The mail processing plants that serve the Boroughs of the Bronx, Manhattan, and Queens face a similar distribution pattern where mail within the borough is overnight and mail to other parts of the city requires 2 days.
Critical Entry Time Determines When the Clock Starts
Only mail that enters a Postal Service processing facility before the facility’s critical entry time will get the overnight service that the Postal Service is required to offer. The law gives the Postal Service full flexibility regarding how it defines critical entry times. This allows it to continue to use the modifications to plant operating plans that are a core part of the Network Optimization Initiative.
Given that the Postal Service has no restrictions on setting critical entry times, mailers and postal employees should expect that the Postal Service will go ahead with the change in plant operating plans and critical entry times that it has described in its most recent presentations on the Network Optimization Initiative. Single-piece mail will have to arrive at a processing plant by early morning to get next day service to points served by the plant. Presorted mail will have later critical entry times depending upon the amount of origination sortation that is required.
The critical entry times may be slightly later than mailers expected under the Network Optimization Initiative,, because the lower volumes of originating and destinating mail volume at each plant will reduce processing time in each plant. They will still be much earlier than they are in current plant operating plans in order to optimize labor and equipment utilization.
Alternatively, the Postal Service could keep these critical entry times at the times that were expected if the Network Optimization Initative had been implemented to allow transportation of mail to nearby facilities in order to expand overnight service available for mail tendered early in the day. For example, if the Postal Service wanted to maintain overnight mail throughout the Washington Metro area from the Suburban Maryland plant or New York City wide overnight delivery from Brooklyn, critical entry time would likely still need to be as early as expected under the Network Optimization Initiative.
At this point, it would appear that the Postal Service is more likely to choose to have later critical entry times than a broader area that has First Class mail delivery.
Impact on Mailers
The impact on mailers depend on what they mail and whether they can adjust their use of mail to meet critical entry times the Postal Service sets and the number of processing plants that remain open that would have closed otherwise. To the extent that it allows the Postal Service to delay critical entry times, it will increase the probability that a mailer can adjust its printing and preparation schedule to meet the new critical entry times to get the best service offered to the Postal Service. The impact of keeping processing plants open is less clear as while, overnight service is easier to get in areas served by a processing plant that was scheduled for consolidation, the geographic scope of overnight service for mail arriving early in the day at plant that were expected to survive is less than if the Network Optimization Initiative was implemented.
Single Piece First Class Mailers
Single-piece First Class mailers get the least protection from S.1789′s provision on overnight service. Single-piece first class mailers tender their mail to the Postal Service at their home mail box, office, a blue box, or their nearest Post Office. As the Postal Service’s financial challenges will likely force it move critical entry times earlier in order to optimize both equipment and labor, mail collections during the day will have little chance of arriving at a plant prior to the cost-optimized critical entry times. Therefore, nearly all single-piece First Class mail effectively will have a two-day local service standard as nearly all single-piece First Class mail collections will be too late to get the mail to the processing plant before the plant’s critical entry time. This means that single-piece mailers have to think of First Class mail as a two or three-day service and billers need to expect that payments will take a day longer to arrive from households and small businesses due to the change in critical entry times.
While 2-days is supposed to be the service standard required by S. 1789, the bill allows the Postal Service to provide delivery in three days if two-day delivery is not feasible. While technically it is feasible to serve any point in the United States in two days from the time the mail is tendered to the Postal Service if mail is flown, having a nationwide two-day service standard from tender time is not feasible due to the prohibitive cost. Therefore, it is likely the Postal Service will limit 2-day delivery of First Class single-piece mail to those cities where mail can be transported by truck and delivered in two days after it is tendered. Given the changes in critical entry times, and the Postal Service’s interest in minimizing more expensive air-transportation of mail, the geographic area with two-day delivery from any particular origin will likely be smaller than it is now.
The Postal Service has posted maps for service time for First Class mail from all zip codes. These maps provide a fair indication as to the geographic range of two day and three day service for single-piece First Class mail from the time it is tendered to the Postal Service. Below are two maps. The first is what I would expect the two and three-day service area for single Piece mail from Silver Spring Maryland will be like when the Postal Service implements the changes that S.1789 allows. [As there is little information about whether these maps are based on actual truck routes, mailers have little idea as to whether they represent what will actually happen or not. As the Postal Service expands its use of network routing optimization models they would ideally provide this information to mailers on a regular basis for all classes of mail.]
The following map the current service commitment for First Class Mail from Silver Spring. The larger 2-day service area primarily reflects the impact of later critical entry times than the Postal Service is expected to eliminate when it puts in place the new plant operating plans.
First Class Bulk Mailers
The impact on First Class bulk mailers depend on the location of their recipients. If their recipients are almost all within an existing plant’s service area, then S. 1789 will likely improve the chance that their mail will receive overnight service.
If their mail is delivered across a broader geographic area, First Class Bulk Mailers may find that the S. 1789 makes their service worse to locations not in the originating plant’s service area unless they drop their mailing in multiple locations. This could have the unintended affect of creating greater interest in drop-shipping First Class mail and/or hybrid mailing in order to get better service. It could also raise the issue of drop-shipped and /or hybrid mail discounts for First Class mail. [It is possible that this will not happen but given the Postal Service's cost constraints, I believe that this is the most likely scenario]
Bulk Mailers that have a significant portion of their mailing getting two day service now that will get three day service in the future, may find that they need drop-shipping or hybrid mail to get two-day service that they desire.
The Postal Service is likely to have to develop an acceptance process for drop-shipped First Class bulk mail even if there is no drop-ship discount for First Class mail. Mailers and the Postal Service should begin talking about this through MTAC or other informal channels.
Periodical Mailers are likely to see the greatest benefit from S.1789′s overnight service protections. They will likely see minimal changes in service they now receiving assuming that their printing schedule can accommodate earlier critical entry times. S.1789 will be most beneficial for weeklies that need to serve communities outside of the cities that would have retained plants under the Network Optimization Initiative.
Small weekly periodicals that serve a metropolitan area that has multiple mail-processing plants may find that S.1789 increases their transportation costs in order to get the same service they now receive from the Postal Service as they may need to drop copies to be delivered to addresses in a metropolitan area to all of the area’s plants rather than a smaller number under the Postal Service’s current operating plan. This may cause some issues at mail acceptance if the periodical mailer currently drops all issues at one processing plant and now will have to drop mail at multiple plants to get the same level of service.
The impact on Standard Mailers depends on whether the recipients of the mail they send all have addresses within the service area of one plant or multiple plants. As with First Class Mail, efforts to limit plant closings will help mailers with recipients with a single plant’s area and in particular recipients whose recipients are in cities that would have had a plant close. The limitation on plant closing will likely hurt mailers with a broader geographic range or recipients as drop shipping costs will not go down as much as they would have under the Network Optimization Initiative.
Section of S.1789 Dealing With Delivery Standards
SEC. 201. MAINTENANCE OF DELIVERY SERVICE STANDARDS
(a) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘plant service area’’ means the geographic area served by a single sectional center facility, or a corresponding successor facility, as designated by the Postal Service; and
(2) the term ‘‘continental United States’’ means the 48 contiguous States and the District of Columbia.
(b) INTERIM MAINTENANCE OF STANDARDS.—During the 3-year period beginning on the date of enactment of this Act, the Postal Service—
(1) shall maintain the service standards de- scribed in subsection(c);
(2) may not establish a new or revised service standard for market-dominant products under section 3691 of title 39, United States Code, that is in- consistent with the requirements under subsection (c); and
(3) shall include in any new or revised over- night service standard established for market-dominant products under section 3691 of title 39, United States Code, a policy on changes to critical entry times at post offices and business mail entry units that ensures that any such changes maintain meaningful access to the services provided under the service standard required to be maintained under sub- section (c).
(c) SERVICE STANDARDS.—
(1) overnight STANDARD FOR FIRST-CLASS MAIL AND PERIODICALS.—
(A) IN GENERAL.—Except as provided in subparagraph (B), the Postal Service shall maintain an overnight service standard that provides overnight service for first-class mail and periodicals that—
(i) originate and destinate in the same plant service area; and
(ii) enter the mails before the critical entry time established and published by the Postal Service.
(B) AREAS OUTSIDE THE CONTINENTAL UNITED STATES.—The requirements of sub- paragraph (A) shall not apply to areas outside the continental United States—
(i) in the case of mail that originates or destinates in a territory or possession of the United States that is part of a plant service area having a sectional center facility that— (I) is not located in the territory or possession; and (II) was not located in the territory or possession on January 1, 2012; and
(ii) in the case of mail not described in clause (i), except to the extent that the requirements are consistent with the service standards under part 121 of title 39, Code of Federal Regulations, as in effect on January 1, 2012.
(2) TWO-DAY DELIVERY FOR FIRST-CLASS MAIL.—The Postal Service shall maintain a service standard that provides that first-class mail not delivered overnight will be delivered within 2 delivery days, to the maximum extent feasible using the network of postal facilities maintained to meet the requirements under paragraph (1).
(3) MAXIMUM DELIVERY TIME FOR FIRST- CLASS MAIL.—
(A) IN GENERAL.—The Postal Service shall maintain a service standard that provides that first-class mail will be delivered—
(i) within a maximum of 3 delivery days, for mail that originates and destinates within the continental United States; and
(ii) within a maximum period of time consistent with service standards under part 121 of title 39, Code of Federal Regulations, as in effect on January 1, 2012, for mail originating or destinating outside the continental United States.
(B) REVISIONS.—Notwithstanding sub- paragraph (A)(ii), the Postal Service may revise the service standards under part 121 of title 39, Code of Federal Regulations for mail de- scribed in subparagraph (A)(ii) to take into ac- count transportation conditions (including the availability of transportation) or other circumstances outside the control of the Postal Service.