[Federal Register Volume 76, Number 183 (Wednesday, September 21, 2011)]
[Proposed Rules]
[Pages 58433-58436]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-24149]
=======================================================================
-----------------------------------------------------------------------
POSTAL SERVICE
39 CFR Part 121
Proposal To Revise Service Standards for First-Class Mail,
Periodicals, and Standard Mail
AGENCY: Postal Service\TM\.
ACTION: Advance notice of proposed rulemaking; request for comments.
-----------------------------------------------------------------------
SUMMARY: The Postal Service seeks public comment on a proposal to
revise the service standard regulations contained in 39 CFR part 121.
Among other things, the proposal involves eliminating the expectation
of overnight service for First-Class Mail and Periodicals, and, for
each of these classes, narrowing the two-day delivery range and
enlarging the three-day delivery range. One major effect of the
proposal would be to facilitate a significant consolidation of the
Postal Service's processing and transportation networks.
[[Page 58434]]
DATES: Comments must be received on or before October 21, 2011.
ADDRESSES: Written comments should be mailed to Manager, Industry
Engagement and Outreach, United States Postal Service, 475 L'Enfant
Plaza, SW., Room 4617, Washington, DC 20260. Comments also may be
transmitted via e-mail to industryfeedback@usps.com. Copies of all
comments will be available for inspection and photocopying at the
Postal Service Headquarters Library, 475 L'Enfant Plaza, SW., 11th
Floor North, Washington, DC 20260, between 9 a.m. and 4 p.m., Monday
through Friday.
FOR FURTHER INFORMATION CONTACT: Anthony Frost, Industry Engagement and
Outreach, 202-268-8093; or Emily Rosenberg, Network Analytics, 202-268-
5585.
SUPPLEMENTARY INFORMATION: The Postal Service's processing and
transportation networks were developed, over many decades of growing
mail volumes, largely to achieve service standards for First-Class Mail
and Periodicals, particularly their overnight service standards. In
Section 302 of the Postal Accountability and Enhancement Act of 2006,
Congress found that the Postal Service's networks were larger than
necessary and directed the Postal Service to consolidate its
infrastructure to better align with changing conditions. Since then,
the Postal Service has vigorously pursued operational consolidation
opportunities to reduce excess capacity in its networks.
During the same time period, however, mail volumes have declined
substantially, such that the Postal Service's processing and
transportation networks exhibit more excess capacity in relation to
current and projected mail volumes than previously anticipated. As a
result of the sharp revenue declines associated with falling volumes,
as well as other statutorily mandated costs, the Postal Service has
experienced significant financial losses for the past four years.
Unfortunately, further network consolidations (beyond those that have
already been performed or are currently under study), which are
necessary to align the Postal Service's infrastructure with current and
projected mail volumes and to bring operating costs in line with
revenues, will for the most part be unachievable without a relaxation
of certain service standards for First-Class Mail, Periodicals, and
Standard Mail. The Postal Service is therefore exploring a proposal
(the Proposal) to revise these service standards.
I. Proposed Service Standard Revisions
The Postal Service established its current service standards for
market-dominant products on December 19, 2007, in accordance with 39
U.S.C. 3691. The service standards for First-Class Mail, as set forth
in 39 CFR 121.1, range from 1 to 3 delivery days for mail that travels
within the contiguous United States, and 1 to 5 delivery days for mail
that originates or destinates in Alaska, Hawaii, or the U.S.
territories. One aspect of the Proposal would be to revise 39 CFR 121.1
such that the service standards for First-Class Mail that travels
within the contiguous United States would become 2 to 3 delivery days.
Similarly, the service standards for First-Class Mail that originates
or destinates in Alaska, Hawaii, or the U.S. territories would become 2
to 5 delivery days.
In other words, the Postal Service would eliminate the expectation
of overnight service for First-Class Mail, narrow the two-day delivery
range, and enlarge the three-day delivery range. These changes would
apply to all First-Class Mail, including letters, flats, and
parcels.\1\ The potential impact of the Proposal on First-Class Mail is
illustrated below:
---------------------------------------------------------------------------
\1\ As the Postal Service stated when it established the current
service standards, ``there are finite limits in the level of service
standard differentiation that can be effectively managed on the
workroom floors of a complex logistical network.'' Modern Service
Standards for Market-Dominant Products, 72 FR 72221 (Dec. 19, 2007).
Therefore, any service standard revisions adopted by the Postal
Service will continue to apply at the class level.
Proportion of First-Class Mail Volume by Service Standard
------------------------------------------------------------------------
Current Proposed
(percent) (percent)
------------------------------------------------------------------------
1-day.............................. 41.5 0
2-day.............................. 26.6 50.6
3-day.............................. 31.6 49.1
4-day.............................. 0.3 0.3
5-day.............................. <0.1 <0.1
------------------------------------------------------------------------
Because service standards for a portion of Periodicals are linked
to First-Class Mail service standards, the Postal Service would revise
the Periodicals service standards as well. As specified in 39 CFR
121.2, the service standards for Periodicals presently range from 1 to
9 delivery days within the contiguous United States. Under the
Proposal, the service standards for both end-to-end and destination-
entry Periodicals within the contiguous United States would be revised
to a range of 2 to 9 delivery days.
The substantial consolidation of the mail processing network made
possible by the above service standard revisions would result in the
elimination of some facilities at which Standard Mail users currently
enter mail. In particular, it is possible that Area Distribution
Centers (ADCs) would no longer be available for entering mail.
Therefore, it is possible that the Proposal could require a revision to
the current service standard for end-to-end Standard Mail entered at
ADCs, as set forth in 39 CFR 121.3(a)(2). The exact nature of this
revision is presently unclear.
In addition, although the service standards for other Postal
Service products would not be revised, all Postal Service products
could experience changes in specific 3-digit ZIP Code origin-
destination pairs' transit times. The changed transit times would
remain within the current ranges set forth in each product's service
standards.\2\
---------------------------------------------------------------------------
\2\ While competitive products' service standards are not
published, the transit times for competitive products would remain
within the overall ranges that are marketed for those products (such
as 1-2 delivery days for Express Mail, and 1-3 delivery days for
Priority Mail).
---------------------------------------------------------------------------
II. Changes to Mail Processing and Transportation Networks
If the Postal Service were to revise service standards as described
above, it could significantly improve operating efficiency and lower
the operating costs of its mail processing and transportation networks.
To meet overnight service standards for First-Class Mail, processing
facilities currently initiate their primary and secondary sortation
[[Page 58435]]
cycles well into the evening and early morning hours. In particular,
processing facilities generally run their Delivery Point Sequencing
programs (DPS) between 12:30 a.m. and 7 a.m. DPS is the sortation of
the next day's destinating letter- and flat-shaped mail pieces into the
precise order in which they will be delivered on carrier routes. After
mail is run through DPS, it is transported to delivery units, where it
is taken by carriers for delivery. The processing window for DPS
operations is set late in the night so that all originating First-Class
Mail collected from a processing facility's overnight service area on a
particular day can reach the facility before DPS is run that night.
This is done to ensure that the portion of the originating First-Class
Mail that destinates in the facility's service area is run through DPS
that night and delivered by carriers the next day, fulfilling that
mail's overnight service standard. Thus, the arrival time of First-
Class Mail with an overnight service standard largely dictates the
start time for DPS processing.
By eliminating overnight service standards for First-Class Mail,
and thus eliminating the need for processing facilities to wait into
the night for mail collected during the day to reach the facilities,
the Postal Service could move the time for its primary and secondary
sortations to much earlier in the day. Under the Proposal, the Postal
Service would institute earlier critical entry times and redesign its
network so that mail that needs to be processed on a particular day
would reach mail processing facilities by 8 a.m. Consequently, the
Postal Service could begin running DPS at noon. Thus, DPS could be run
for 16 hours (12 p.m. to 4 a.m.) instead of 6.5 hours (12:30 a.m. to 7
a.m.) each day.
The Postal Service could also reduce the amount of manual casing
that occurs at delivery units. Currently, some First-Class Mail Flats
and Periodicals whose zones are processed on the Flats Sequencing
System (FSS) arrive at mail processing facilities too late to be sorted
by FSS. Because some of these mail pieces have an overnight service
standard, they are sorted on the same night to the carrier route level
and then transported to delivery units. As a result, these pieces
require manual casing at delivery units. Under the revised service
standards, such pieces would arrive at processing facilities in time
for the next day's FSS sortation, thereby eliminating manual casing of
such pieces at delivery units.
The Postal Service believes that, with the longer processing
windows and other changes described above, it could consolidate mail
processing operations from over 500 locations currently to fewer than
200 locations, resulting in lower facilities costs and significant
labor workhour savings.\3\ It could also reduce the total amount of
machinery needed to run DPS, on a national level, by approximately one-
half. This would allow for greater reliance on machinery that incurs
lower maintenance costs.
---------------------------------------------------------------------------
\3\ The effects of the Proposal would be limited to the
approximately 460 Processing and Distribution Centers, Customer
Service Facilities, Logistics and Distribution Centers, Surface
Transfer Centers, and associated Annexes. The Proposal should not
affect Network Distribution Centers, Air Mail Centers, Remote
Encoding Centers, and International Service Centers.
---------------------------------------------------------------------------
In addition, the Postal Service could improve the efficiency of its
transportation network. To meet the current service standards, a large
proportion of the Postal Service's mail trucks operate at low levels of
capacity. With a reduced number of processing locations and longer
processing windows, the Postal Service could reduce the number of mail
trucks it needs and ensure that more of those trucks operate at higher
levels of capacity.
The Postal Service believes that the consolidations and reductions
described above would result in an infrastructure that better aligns
with current and projected mail volumes and would lead to significant
cost containment opportunities.
III. Effects of the Proposal
The Postal Service has listed briefly below several major effects
that the Proposal may have:
The reduced availability of locations at which drop ship
discounts may be applied could require changes to commercial mailers'
transportation networks. For national mailers, this could result in
cost savings, given that they would transport mail to fewer locations.
For regional and local mailers, the reduced availability of business
mail entry units and drop ship locations could cause additional costs,
if they have to transport mail over longer distances.
Commercial mailers who use products that have zone-based
pricing may experience price changes, if the locations at which they
currently enter mail are eliminated and the nearest available locations
are within different 3-digit ZIP Codes.
Commercial mailers of First-Class Mail, Periodicals, and
Standard Mail who seek to have their mail reach recipients on specific
delivery days may have to restructure their production cycles to align
with the changed critical entry times and reduced number of entry
points.
While some commercial mailers could effectively maintain
same-day processing and overnight delivery by restructuring their
production cycles to align with the changed critical entry times, this
would not be possible for retail First-Class Mail customers, because
mail pieces dropped off at blue collection boxes and other retail
collection points before 8 a.m. would not be collected and transported
to processing locations in time for same-day processing.
The longer processing windows could enhance the
reliability of the Postal Service in meeting the revised service
standards.
IV. Request for Comments
The Postal Service requests comments on all aspects of the
Proposal. In particular, the Postal Service solicits comments on the
effects that the Proposal could have on senders and recipients of
First-Class Mail, Periodicals, and Standard Mail, as well as any
potential effects on users of other mail classes. Mail users are
encouraged to comment on the nature and extent of costs or savings they
might experience as a result of the changes described in this notice,
as well as any additional possible benefits they foresee. Comments
explaining how mail users might change their mailing practices or
reliance on the mail if the Proposal is implemented also are
encouraged. The provision of empirical data supporting any cost-benefit
analysis also would be useful. In addition, the Postal Service seeks
suggestions on how to modify the Proposal to better serve mail users.
Further, the Postal Service requests mail users' views regarding the
application of the policies and requirements of title 39 of the U.S.
Code, particularly sections 101, 403, 404, and 3691, to the Proposal
and to service standard revisions generally.
The Postal Service intends to consider comments received in
response to this notice as it determines whether and how to amend its
service standard regulations. This request for comments is being
pursued in concert with other customer and public outreach activities,
through mailer and other organizations, and through consultation with
individual customers and groups of customers. If the Postal Service
should decide to move forward with the Proposal, it will publish a
proposed rule in the Federal Register and solicit public comment. It
also would request an advisory opinion from the Postal
[[Page 58436]]
Regulatory Commission pursuant to 39 U.S.C. 3661(b).
Stanley F. Mires,
Attorney, Legal Policy & Legislative Advice.
[FR Doc. 2011-24149 Filed 9-20-11; 8:45 am]
BILLING CODE 7710-12-P