July MTAC Focused on Network, Price Issues

It was announced at MTAC that, in response to concerns over the original date for implementation of the January 2023 rate change, “pre-release” of information needed for software changes would be on January 8, with
new prices taking effect on January 22.


 

On July 26-27, members of the Mailers Technical Advisory Committee assembled at USPS Headquarters for their mid-summer quarterly meeting. As is customary, the Postmaster General was the first speaker on Tuesday afternoon. Working without a script, PMG Louis DeJoy first asked attendees what they’d like to hear about – getting predictable answers: network changes and price increases in January and after.

Network

Speaking first about recent organizational changes, he noted that Kelly Abney, recently named Chief Logistics Officer and EVP, would be speaking after him and would “not be taking any questions” because “we need to give him some time to settle into his new position.” DeJoy believes “it’s doable” to “get 20% out of network transportation” by better practices and efficiency.

DeJoy asserted that “logistics was a mess” and that the USPS “failed for the last ten years to recognize the evolution in logistics.” Separating it from processing operations allowed Chief Operations and Distribution Officer and EVP Isaac Cronkhite to better focus on work “within the four walls.” “We have to run our plants better,” DeJoy said, adding that “on the operational side we had really poor performance.”

He mentioned he’d met with field operations executives to lay out “concepts” for network changes, deliberately avoiding specifics to forestall premature speculation.

DeJoy did mention a model that had “63 places around the country that all the traffic should flow through” but that the final number of major facilities is “not going to be 63 for a lot of reasons,” including capacity and “imbedded infrastructure that’s valuable.” The final number “could be 75” but in any case would be “less than the 320 that we sort through now.” Mail would then go “to 150 places before it goes to where its delivered.”

Repeating the need for better logistics, DeJoy stated that “the cubic volume we move is 65% packages, the rest is mail. 58% of trucks move with air. Everything that goes on before it gets there [processing] is a total mess.” Again he was confident that he could “get 20% out of it” [transportation cost].

Delivery

Part of the PMG’s Plan for network changes involves the role of the current processing and distribution centers. In some cases, as processing machines are relocated, the available space would be used to consolidate delivery operations into sortation and delivery centers housing “four to five hundred carriers.” DeJoy had stated previously that the current number of about 19,000 delivery units could be reduced to about 11,000 through these consolidations.

Such facilities would be equipped with “high volume package processing equipment” that could handle up to 25,000 pieces per hour. With such a capability for “regional entry,” “Who wouldn’t want to move next to that kind of distribution system?” DeJoy asked rhetorically.

Vehicles

DeJoy reported that he met with the Environmental Protection Agency the previous Friday about the Postal Service’s order for electric delivery vehicles. He blamed a “lack of being specific [in] messaging” for criticism that the USPS wasn’t buying enough EVs. DeJoy noted the lack of infrastructure to support charging stations at many delivery units but that the planned SDCs at major facilities would be properly equipped. As a result, as network changes are implemented, the USPS can “adjust the order” and “announce new buys.”

Other matters

In the course of his remarks, DeJoy touched on a variety of other subjects.

  • Purchasing. The USPS “didn’t have a [supplier] strategy” and was paying too much for a “less than mediocre outcome.” 
  • Staffing. Processing plants “are pretty well staffed” but there are “carrier issues in terms of hiring, especially for rural carriers.” DeJoy stated that the USPS “expects to attrit over 200,000 people over the next ten years” and that he “can use attrition to be employee-friendly as we move things around.”
  • Peak season. 2022 will be “a light lift” compared to past years.
  • Marketing Mail. DeJoy has asked EVP Steve Monteith to “bring ideas to the table” for ways to “potentially drive growth for Marketing Mail.”
  • Manuals. DeJoy complained that “we’re being administered to death” with “close to 900 manuals” and rules “from the 1940s.” Instead, he wants just “50 handbooks.”
  • July 2023. When asked what he could say about a July 2023 price increase, DeJoy cheerfully said “you’re going to get one” and that he’s probably “not allowed to say anything” further. He added that “our costs go up” and that “I gotta do it.”

Critics

As usual, DeJoy couldn’t avoid showing his scorn for persons and organizations that don’t enthusiastically support his Plan, berating their concerns as “resistance” and dismissing them as “irrelevant.”

“Some of us have not had a good time, I’ve had lot of resistance.

“While I always need to be accessible ... I’m not going to put my people in places where we feel the organization is not welcome.

“I look at some of these places and some of these speakers that have irrelevant conversations ... they’re irrelevant people in terms of what we’re doing [but they] actually command an audience and get a byline.

“There’s nothing I can do about that nor should I but there is one thing I can do: I can not advance it.

“I am looking for support for this transformation, not interference. If you’re going to interfere at least be right, be relevant, be current, be somewhat accurate.

“That’s just one just man’s opinion but that’s the man who’s in charge of the organization.”

DeJoy has complained before about industry speakers who talk about the Postal Service, arguing that the subject should be reserved for presenters from the USPS – who presumably would present sanctioned messages supportive of his Plan.

Abney

New Logistics EVP Kelly Abney spoke after DeJoy. He explained his over thirty years’ experience in logistics, having worked at Walmart, Sears/K-Mart, and XPO Logistics (where he worked with Louis DeJoy).

He also explained that his new organization consolidated logistics activities previously split under other functional groups. VP Transportation Strategy Peter Routsolias had been under eCommerce and Business Solutions EVP Jaqueline Krage Strako, and VP Logistics Robert Cintron had reported to (then titled) Logistics and Processing Operations EVP Isaac Cronkhite.

 

Abney stated that

“The Transportation and Logistics group is tasked with leading the strategic design of a world-class transportation network and developing cost- and service-enhancing processes to enable optimization and execution through Postal Service plants and delivery operations. This new organization will: lead the redesign of the surface transportation network; reduce air transport; improve carrier management; and deploy a state-of-art logistics platform.”

Colin

Next, EVP and Chief Retail and Delivery Officer Dr. Joshua Colin spoke about the data that’s generated by his organization and how it enables line-of-sight visibility to the carrier level about workload, performance, and timely delivery.

 

Colin explained that the use of the metrics presented on the data dashboard has facilitated reductions in delivery failures and reduced hours per delivery route.

Cronkhite

Following Colin was EVP and (now titled) Chief Processing and Distribution Officer Isaac Cronkhite. After summarizing the 2021 peak season, he described measures and plans for this year’s peak period. 

  • Complement. About 10,000 employees have been converted to full-time status, and about 29,000 temporary workers will be added beginning in October.
  • Equipment. 46 additional package processing machines and additional material handling equipment has been deployed during 2022, yielding a total daily package processing capacity of 53 million items.
  • Space. Parcel support annexes will continue to be used; 24 have been requested for 2022. 10.5 million square feet of space has been added to support processing and distribution operations.
  • Transportation. STC management plans have been established, including an STC peak readiness tracker and contingency plans for staffing and routing; supplier communications have been improved.
  • Overall. Maintain or improve on all 2021 peak successes, including days to deliver; make early assessment and fulfillment of customer MTE needs; request early notification for additional peak volume pickups; implement improved system to return wood pallets to customers.

Reblin/Johnson

VP Innovative Business Technology Gary Reblin and VP Enterprise Analytics Jeff Johnson presented next.

Reblin reported that Informed Delivery has “over 48 million users and has reached 27.2% national saturation of eligible delivery points.” Informed Delivery has two new campaigns available for mailers: Package Campaigns, “a new channel for businesses to reach and retarget their existing customers,” and Outbound Packages, under which “Informed Delivery will enhance package visibility by automatically populating outbound packages to the daily digest email.” The service also has added new capabilities to imbed images, coupons, and greetings in the recipients Informed Delivery feed.

Johnson stated that to enlarge the volume of mail in measurement, a new “DMU Start-the-Clock process has been successfully deployed at eight mailer locations. It is estimated that the DMU Start-the-Clock process will bring about 77 million additional pieces of First-Class Mail into measurement. Also, a new tool has been made available through the Business Customer Gateway to report service performance measurement exclusion by CRID. There have been 66 distinct users from 61 separate mailers during the past three months.

Modifications to carriers’ mobile delivery devices now enable them to modify five data elements within an existing Change-of-Address order; set or remove vacant indicators; and make corrections to business indicators.

Barber/Cintron

Last were VP Processing and Maintenance Operations Mike Barber and VP Logistics Robert Cintron.

Barber expanded on Cronkhite’s earlier presentation about preparations for the 2022 peak season.

Cintron spoke about measures being taken to assure a steady supply of MTE during peak and explained that the fourteen MTE Service Centers from which MTE will be supplied are in Atlanta, Chicago, Kansas City (KS), Jacksonville, Los Angeles, Martinsburg (WV), Temperance (MI), Milwaukee, Minneapolis, Philadelphia, San Francisco, Seattle WA, Springfield (MA), and Dallas.

Regarding Logistics, Cintron added that, for peak, key strategies include the strategic use of data, leveraging the STC network, and air network planning for demand and diversions.
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