U.S. Postal Service
USPS Needs to Clearly Communicate How Postal Services May Be Affected by Its Retail Optimization Plans Gao ID: GAO-04-803 July 13, 2004A key element of the ongoing postal reform deliberations before Congress is the U.S. Postal Service's (USPS) ability to carry out its mission of providing universal mail delivery and retail services at reasonable rates. Many are concerned that USPS's mission is at risk in the current operating environment of increasing competition and decreasing mail volumes. Preserving universal service, particularly in rural areas, is a goal of postal reform. GAO was asked to discuss (1) how USPS provides universal mail delivery services and access to postal services in both rural and urban areas; (2) what changes USPS is making or plans to make related to providing postal services, including changes that may affect rural areas; and (3) what are the major issues that have been raised related to how USPS provides postal services.
USPS provides its customers, regardless of where they live, with services that include mail delivery at no charge and access to retail services. However, differences exist in how, when, and where USPS provides these services. These differences have always existed due to the nation's geographic diversity and changes in technology, transportation, and communications. Universal postal service is not defined by law, but appropriations legislation requires 6-day mail delivery and prohibits USPS from closing small, rural post offices. Delivery and retail decisions are made primarily by local USPS officials with overarching guidance provided by national policies and procedures. Local decisions are based on cost and service factors, including the number and location of deliveries, quality of roads, employee safety, and mail volume. USPS has taken actions, and is planning future actions, to improve the efficiency of its delivery and retail networks. Overall, customers in urban and rural areas will probably not see significant changes in delivery services since most changes are focused on operational improvements. On the retail side, USPS plans to provide more cost-effective and convenient service by developing new, low-cost alternatives; moving stamp-only transactions away from post office counters; and optimizing its retail network. USPS's retail optimization involves tailoring services to communities' needs and replacing "redundant, low-value access points with alternative access methods." It remains unclear how customers in rural areas will be affected by these retail initiatives since most are planned for high-growth, high-density areas. Generally, postal customers are satisfied with the services provided to them. The issues that have raised the greatest concerns from customers include inconsistent mail delivery and the threat of post office closings or reductions in post office hours. Also, concerns have been raised about USPS's limited communication regarding its planned changes to its networks. USPS's retail optimization could be an opportunity for USPS to reduce its costs while improving customer service. However, USPS needs to provide additional transparency and accountability mechanisms to better communicate its retail optimization plans and raise stakeholders' confidence that decisions will be made in a fair, rational, and fact-based manner.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-04-803, U.S. Postal Service: USPS Needs to Clearly Communicate How Postal Services May Be Affected by Its Retail Optimization Plans
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Report to the Chairman, Committee on Governmental Affairs, U.S. Senate:
July 2004:
U.S. POSTAL SERVICE:
USPS Needs to Clearly Communicate How Postal Services May Be Affected
by Its Retail Optimization Plans:
GAO-04-803:
GAO Highlights:
Highlights of GAO-04-803, a report to the Chairman, Committee on
Governmental Affairs, U.S. Senate:
Why GAO Did This Study:
A key element of the ongoing postal reform deliberations before
Congress is the U.S. Postal Service‘s (USPS) ability to carry out its
mission of providing universal mail delivery and retail services at
reasonable rates. Many are concerned that USPS‘s mission is at risk in
the current operating environment of increasing competition and
decreasing mail volumes. Preserving universal service, particularly in
rural areas, is a goal of postal reform. GAO was asked to discuss (1)
how USPS provides universal mail delivery services and access to postal
services in both rural and urban areas; (2) what changes USPS is making
or plans to make related to providing postal services, including
changes that may affect rural areas; and (3) what are the major issues
that have been raised related to how USPS provides postal services.
What GAO Found:
USPS provides its customers, regardless of where they live, with
services that include mail delivery at no charge and access to retail
services. However, differences exist in how, when, and where USPS
provides these services. These differences have always existed due to
the nation‘s geographic diversity and changes in technology,
transportation, and communications. Universal postal service is not
defined by law, but appropriations legislation requires 6-day mail
delivery and prohibits USPS from closing small, rural post offices.
Delivery and retail decisions are made primarily by local USPS
officials with overarching guidance provided by national policies and
procedures. Local decisions are based on cost and service factors,
including the number and location of deliveries, quality of roads,
employee safety, and mail volume.
Postal Services Have Been Provided in Different Ways Over Time:
[See PDF for image]
[End of figure]
USPS has taken actions, and is planning future actions, to improve the
efficiency of its delivery and retail networks. Overall, customers in
urban and rural areas will probably not see significant changes in
delivery services since most changes are focused on operational
improvements. On the retail side, USPS plans to provide more cost-
effective and convenient service by developing new, low-cost
alternatives; moving stamp-only transactions away from post office
counters; and optimizing its retail network. USPS‘s retail optimization
involves tailoring services to communities‘ needs and replacing
’redundant, low-value access points with alternative access methods.“
It remains unclear how customers in rural areas will be affected by
these retail initiatives since most are planned for high-growth, high-
density areas.
Generally, postal customers are satisfied with the services provided to
them. The issues that have raised the greatest concerns from customers
include inconsistent mail delivery and the threat of post office
closings or reductions in post office hours. Also, concerns have been
raised about USPS‘s limited communication regarding its planned changes
to its networks. USPS‘s retail optimization could be an opportunity for
USPS to reduce its costs while improving customer service. However,
USPS needs to provide additional transparency and accountability
mechanisms to better communicate its retail optimization plans and
raise stakeholders‘ confidence that decisions will be made in a fair,
rational, and fact-based manner.
What GAO Recommends:
To provide convenient and cost-effective services, GAO is recommending
that the Postmaster General provide improved transparency and
communication to Congress and other stakeholders through additional
information related to its retail optimization initiative, including
the criteria USPS will use to guide its decisions; USPS‘s process for
involving stakeholders; the impact on customers; and the time frames
for implementation. USPS agreed to review its communication processes,
but not to specify its criteria or time frames.
www.gao.gov/cgi-bin/getrpt?GAO-04-803.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Mark Goldstein at (202)
512-2834 or goldsteinm@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Differences Exist in How USPS Provides Delivery and Retail Services:
Actions to Improve Delivery and Retail Services:
Key Issues Include Delivery Inconsistencies and the Uncertain Future of
Retail Network:
Conclusions:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Number of Post Offices by State, Year-end 2003:
Appendix III: Agency Comments from the United States Postal Service:
Tables:
Table 1: Key Events in Postal History, 1775-2004:
Table 2: Key Delivery Decisions Made by Local Officials:
Table 3: USPS Policies and Procedures for Establishing Carrier Routes:
Table 4: Information on Selected Route Types, Fiscal Year 2003:
Table 5: Post Offices, Stations, and Branches: Fiscal Year 1980 Compared
with Fiscal Year 2003:
Table 6: Customer Issues Documented by USPS, First 2 Quarters of Fiscal
Year 2004:
Figures:
Figure 1: Number of Post Offices per Capita Has Been Decreasing:
Figure 2: Rural Routes Cumulatively Have Grown at a Much Greater Rate
Than City Routes:
Figure 3: Rural Routes Are Becoming More Dense:
Figure 4: USPS's Different Modes of Delivery, Fiscal Year 2003:
Figure 5: Modes of Delivery, Fiscal Year 2003:
Figure 6: Overview of the Retail Network:
Figure 7: Retail Alternatives Moving Away from Traditional Post
Offices:
Abbreviations:
NALC: National Association of Letter Carriers:
NDCBU: Neighborhood Delivery Collection Box Unit:
NRLCA: National Rural Letter Carriers Association:
PRC: Postal Rate Commission:
USPS: United States Postal Service:
Letter July 13, 2004:
The Honorable Susan M. Collins:
Chairman, Committee on Governmental Affairs:
United States Senate:
Dear Chairman Collins:
The challenges facing the U.S. Postal Service (USPS)--that is, record
declines in mail volumes for some high-margin products, difficulties in
controlling costs and enhancing revenues, and increases in competition-
-are not temporary problems that will fade away. Nevertheless, a common
message voiced by many postal stakeholders is that although change is
needed to address these and other significant challenges, the concept
of universal postal service needs to be preserved. These stakeholders
believe that providing universal postal service is the cornerstone of
USPS's mission; is essential to the nation's communications network and
economy; and is vital to the American people, many of whom rely upon
the consistency of mail delivery and convenient access to the retail
postal network. The concept of universal postal service, however, is
not clearly defined in law and has evolved over time with changes in
technology, transportation, and communications. These changes are
continuing today, raising some concerns about how they may affect
future postal services--including those in rural areas. USPS has noted
that rural delivery continues to provide a vital link between urban and
rural America. Some Members of Congress have stated that post offices
are fundamental to the identity of small towns, providing them with an
economic and social anchor.
A key discussion point in ongoing postal reform deliberations in
Congress is USPS's ability to carry out its mission of providing
universal mail delivery and postal retail services at reasonable rates.
In April 2001, we reported on the financial, operational, and human
capital challenges that threaten USPS's ability to carry out its
mission in the 21ST century and remain self-supporting through postal
revenues. We placed USPS's transformation efforts and long-term outlook
on our high-risk list and recommended that USPS develop a comprehensive
plan to determine the actions needed to address its major challenges.
USPS issued its Transformation Plan a year later, which identified
steps to guide future USPS operations. This plan included specific
actions aimed at making the delivery and retail networks more efficient
and convenient for customers, including promoting more efficient
delivery routes and utilizing low-cost retail transactions. The
President also recognized the importance of USPS's role and mission and
established the President's Commission on the United States Postal
Service (the President's Commission) to examine USPS's future. The
President's Commission issued a report in July 2003 that put forward a
proposed vision for USPS and recommendations to ensure the future
viability of postal services.[Footnote 1] The report emphasized the
importance of maintaining 6-day-a-week, affordable, universal postal
service and acknowledged that USPS's mission is at risk in the current
operating environment of increasing competition and decreasing mail
volumes. In addition, Congress is also interested in maintaining a high
level of postal services for the American people and has held a number
of hearings recently on postal reform issues. We testified in November
2003, January 2004, and March 2004 about the information in the report
issued by the President's Commission, the challenges facing USPS in
carrying out its mission, and the key elements of postal
reform.[Footnote 2]
In response to your request, this report addresses three objectives:
(1) how does USPS provide universal mail delivery service and access to
postal services in both rural and urban areas; (2) what are the changes
USPS is making and planning to make related to providing postal
services, including changes that may affect rural areas; and (3) what
are the major issues that have been raised related to how USPS provides
postal services?
Our review of USPS's delivery and retail services is based upon an
analysis of USPS policies and procedures; the roles and
responsibilities of postal officials involved in making delivery and
retail decisions; delivery and retail data provided to us from USPS;
proposed changes in related documents, such as the Transformation Plan
and the President's Commission's report on the U.S. Postal Service; and
interviews with key postal stakeholders, including USPS officials,
representatives from employee unions and management associations, and
the Postal Rate Commission (PRC). We assessed the reliability of the
data provided to us from USPS and found them to be sufficient for our
purposes of providing a basic description of USPS's delivery and retail
networks. A more detailed discussion of our objectives, scope, and
methodology is included in appendix I. We conducted our review at USPS
headquarters in Washington, D.C., between June 2003 and June 2004 in
accordance with generally accepted government auditing standards. We
requested comments from USPS on a draft of this report, and its
comments are discussed later in this report and reproduced in appendix
III.
Results in Brief:
USPS customers are provided, regardless of where they live, with postal
services that include mail delivery at no charge and access to USPS's
retail services. Differences exist, however, in how USPS provides these
services, particularly in how, when, and where mail delivery service is
provided and how customers have access to the postal retail network.
For example, although most of USPS's customers receive delivery service
6 days a week, deliveries are made less frequently to businesses that
are not open 6 days a week, seasonal areas that are not open year-
round, and some customers in remote areas. Also, about 32 percent of
customers who receive carrier delivery receive mail at their front
doors; about 41 percent of customers receive it at curbline mailboxes;
and about 27 percent of customers receive it at centralized delivery
points that contain multiple receptacles in one location. Further, on
the retail side, there is no standard for customer access requirements.
Customers in more densely populated areas generally have access to
postal services at more locations than customers in less densely
populated areas. These differences have existed throughout the more
than 200 years of postal services in the United States and have
developed due to the nation's geographic diversity and changes in
technology, transportation, and communications. USPS's statutory
framework establishes general postal service policy but does not
specifically define USPS's universal service obligation or how USPS is
to carry it out. However, in USPS's annual appropriations acts,
Congress requires USPS to continue its 6-day-a-week delivery and rural
delivery service and prohibits the consolidation or closure of small
rural or other small post offices. USPS has interpreted its universal
service obligation by establishing a set of overarching national
policies and procedures that provide the basis for field staff, such as
postmasters who are in charge of post offices, to make decisions
related to the local provision of delivery and retail services. These
field officials, who are familiar with the daily operations of the
areas being served, make their decisions by considering such cost and
service factors as the number, location, and projected growth of
delivery points in the area; the quality of the roads and
transportation; employee safety; mail volume; projected costs and
efficiency; customer demand; and the type of service offered in nearby
areas.
USPS has taken actions, and is planning future actions, to improve the
efficiency and effectiveness of its delivery and retail networks. In
the delivery area, USPS is continuing efforts to make delivery
operations more cost-effective by utilizing efficient routes and
delivery locations (e.g., to curbline boxes). USPS also is implementing
several initiatives--such as standardizing its operations and deploying
new automation to reduce manual mail sortation--aimed at improving the
consistency of delivery time, reducing delivery workhours, and
increasing the number of deliveries per route. These actions will not
likely result in a noticeable change in delivery service for customers
in urban or rural areas because most of the changes are focused on
operational improvements. On the retail side, USPS has instituted a
strategy of providing low-cost retail alternatives that may decrease
reliance on post offices; moving simple transactions such as stamp
purchases away from post office counters; and optimizing its retail
network. USPS stated in its Transformation Plan that the objective of
its retail network optimization initiative is to tailor retail services
to the individual needs of communities and to replace "redundant, low-
value access points with alternative access methods." It is not clear
how customers in rural areas may be affected by these planned retail
changes, because most of USPS's initiatives are planned for high-
growth, high-density areas.
USPS survey data show that postal customers are generally satisfied
with the postal services provided to them; however, when customers have
raised issues, they generally involve inconsistent services on the
delivery side and the potential threat of post office closings or
reductions in post offices hours on the retail side. In addition,
customers, postal employees, and Congress have raised issues regarding
limited communication about USPS's plans to optimize its retail
network. Specifically, customers have raised issues about how their
access and convenience to services may be affected; employees have
raised issues about how their jobs and compensation may be affected;
and some Members of Congress are concerned about how USPS plans to make
decisions related to optimizing its infrastructure. USPS has also
raised concerns about legal requirements and practical constraints that
limit its flexibility to make changes to the postal network.
We agree that finding efficiencies in the retail network is important
for USPS and that USPS's retail optimization initiative could be an
opportunity for a "win-win" outcome for both USPS and its stakeholders.
Through improved communication and collaboration with affected
stakeholders, USPS could demonstrate that it wants to effectively
partner with its customers in communities, both urban and rural, to
provide more convenient and cost-effective services, while preserving
facilities needed to support universal postal service. We are
recommending that the Postmaster General provide improved transparency
and communication to inform Congress and other stakeholders of the
actions USPS plans to take regarding its retail optimization strategy,
including the criteria that will guide its decisions; the process that
will be used to involve postal stakeholders; the impact on customers,
including those in rural areas; and the time frames for implementing
all phases of its retail optimization initiative. In commenting on a
draft of this report, USPS concurred with "the spirit of the report's
findings" that improved transparency and communication are needed and
said it would be reviewing its process for communicating changes to the
retail network with its local districts and other stakeholders. USPS
also stated that the criteria used for retail decisions vary throughout
the postal network, and that it could not provide a time frame for
implementing all phases of the retail optimization initiative. We
believe that it is important to establish and communicate the criteria
it considers as the basis for its retail decisions to help stakeholders
feel confident that decisions are made in a fair, rational, and fact-
based manner. Furthermore, we believe that time frames can, and should,
be established for the different phases of USPS's retail initiatives in
order to not only provide postal stakeholders with information on when
these initiatives will be deployed, but also to help USPS and
stakeholders evaluate the performance of these initiatives in terms of
how they fit into the network optimization plans as a whole and their
impact on costs, rates, and mailers' business plans.
Background:
USPS is an independent establishment of the executive branch with a
mission to bind the nation together through the personal, educational,
literary, and business correspondence of the people. The Postal
Reorganization Act of 1970 reorganized the former U.S. Post Office
Department into the United States Postal Service. USPS's current legal
framework:
* requires it to break even over time and intended it to be self-
supporting from postal operations;
* requires it to provide a maximum degree of effective and regular
postal services to rural areas, communities, and small towns where post
offices are not self-sustaining; and:
* prohibits it from closing small post offices solely because they are
operating at a deficit, it being the specific intent of Congress that
effective postal services be insured to residents of both urban and
rural communities.[Footnote 3]
USPS's mission and role, and the processes used to carry out mail
delivery and retail services, have evolved over time with changes in
technology, transportation, and communications. Key events in postal
history are listed in table 1.
Table 1: Key Events in Postal History, 1775-2004:
Year: 1775; Event: Benjamin Franklin appointed first
Postmaster General under the Continental Congress--customers received
mail delivery at post offices.
Year: 1823; Event: Navigable waters designated post roads by
Congress.
Year: 1838; Event: Railroads designated post routes by
Congress.
Year: 1847; Event: U.S. postage stamps issued.
Year: 1858; Event: Street letter boxes installed.
Year: 1860; Event: Pony Express started.
Year: 1863; Event: Free city delivery instituted; postage
rates became uniform regardless of distance.
Year: 1901; Event: Number of post offices reached its peak at
76,945 offices.
Year: 1902; Event: Rural free delivery became permanent
service.
Year: 1907; Event: United Parcel Service founded.
Year: 1911; Event: First carriage of mail by airplane.
Year: 1913; Event: Parcel Post instituted.
Year: 1950; Event: Residential deliveries reduced from twice a
day to once a day.
Year: 1964; Event: Self-service post offices opened.
Year: 1970; Event: Postal Reorganization Act created the
United States Postal Service.
Year: 1972; Event: Stamps by Mail instituted.
Year: 1973; Event: Federal Express began operations.
Year: 1987; Event: Stamps by Phone instituted.
Year: 1990; Event: Easy Stamp allowed computer purchase of
stamps.
Year: 1992; Event: Stamps sold through ATMs.
Year: 1997; Event: Stamps Online instituted.
Year: 2004; Event: Automated Postal Center self-service
machines deployed.
Sources: USPS, [Hyperlink, http://www.fedex.com], [Hyperlink,
http://www.ups.com].
[End of table]
Most customers in the early development of the national post office had
to pick up their mail from a post office. The first step toward
universal delivery service was taken in 1863 when Congress declared
that free city delivery would be established at post offices where
income from postage was sufficient to pay all expenses of delivery.
Mail delivery service was gradually extended to smaller cities and was
later extended to rural areas in 1902. Advances in the delivery of mail
coincided with transportation improvements. Various transportation
modes developed throughout history have been used to transport mail,
ranging from stagecoaches in the 1700s; steamboats, trains, and the
Pony Express in the 1800s; and finally by airplanes, automobiles, and
trucks in the 1900s. Furthermore, advances in transportation were
particularly important in rural areas; rural delivery helped stimulate
road improvements to these areas because passable roads were a
prerequisite for establishing new delivery routes.
Throughout the nation's history, the post office has been a key
component in the provision of postal services. Post offices
proliferated throughout the 1800s as the United States' territory grew
and new postal routes were established. At the turn of the 20TH
century, the number of post offices reached its peak with nearly 77,000
offices, which was an average of 1 post office for every 1,000
residents in the country (see fig. 1).
Figure 1: Number of Post Offices per Capita Has Been Decreasing:
[See PDF for image]
[End of figure]
The number of post offices per capita declined throughout the 20TH
century, to an average of 1 post office for every 10,000 people in
2000. As transportation improved, it became easier for rural carriers
to deliver mail to a wider area, which decreased reliance on post
offices for being the primary delivery and collection point.
Furthermore, rural carriers provided retail services as part of their
routes, so customers did not have to travel to a post office for these
services.
Differences Exist in How USPS Provides Delivery and Retail Services:
Providing mail delivery and access to retail postal services is central
to USPS's mission and role. According to USPS officials, all USPS
customers are eligible for free mail service and most receive delivery
6 days a week. Furthermore, all customers have access to retail
services provided through the postal network, including the ability to
purchase stamps from post offices or other retail facilities.
Differences exist, however, in how USPS provides these services,
particularly in where, when, and how customers receive the mail and
have access to the postal network. These differences have always
existed and have evolved with changes in technology, transportation,
and communications. Delivery and retail decisions are made primarily by
local staff (i.e., district employees and local postmasters), with
overarching guidance provided by national USPS policies and procedures.
These local field staff consider such factors as the number and
location of delivery points in the area, the quality of the roads and
transportation, employee safety, mail volume, projected costs, and the
type of service offered in nearby areas. The following information in
this section provides an overview of the current USPS delivery and
retail networks, recent trends, and how decisions about delivery and
retail networks are made.
Overview of USPS's Delivery Services:
USPS's legal and statutory framework provides the basis for its
delivery services. For example, USPS is to:
* "provide prompt, reliable, and efficient services to patrons in all
areas and shall render postal services to all communities";
* "provide a maximum degree of effective and regular postal services to
rural areas, communities, and small towns where post offices are not
self-sustaining";
* "receive, transmit, and deliver throughout the United States—written
and printed matter, parcels, and like materials"; and:
* "serve as nearly as practicable the entire population of the United
States."[Footnote 4]
These provisions are considered key parts of universal service and
provide the general operational guidance for USPS. USPS has the ability
to establish delivery service within these broad provisions but by law
must operate in a break-even manner. A long-standing provision in the
appropriations acts for USPS requires the continuation of 6-day
delivery and rural delivery service.[Footnote 5]
According to USPS officials, delivery decisions are made at the local
levels. National policies outline overall operational guidance, but
discretion is provided to local officials, including area and district
managers and postmasters, to make delivery decisions in their
respective areas. These local officials--who, according to national
USPS officials, are most familiar with the area to be served--make
decisions related to the type, frequency, and location of delivery
service that will be provided to a given address. A summary of key
decisions is included in table 2, and additional information on each of
these decisions is provided in the following sections.
Table 2: Key Delivery Decisions Made by Local Officials:
Key decisions: Type of service;
Options: Carrier service or delivery to a USPS retail facility to be
collected by the customer;
Useful statistics: Approximately 86% of delivery points are served by
a carrier.
Key decisions: Frequency of service;
Options: 6 days a week or less than 6 days a week;
Useful statistics: Most deliveries are 6 days a week.
If carrier service is selected, the following decisions are made:
Key decisions: Type of carrier route;
Options: City, rural, or highway contract route;
Useful statistics: 67% of all routes are city routes. Rural routes,
however, have been increasing in the last 10 years, while the number
of city routes has recently declined.
Key decisions: Modes of delivery;
Options: Door, curbline, or centralized delivery;
Useful statistics: 41% of deliveries are to curbline mailboxes, 32% are
to the door, and 27% are to centralized boxes.
Source: USPS.
[End of table]
According to USPS, local officials select the delivery method that
provides service in the most efficient and cost-effective manner. They
consider such factors as the number and location of delivery points in
the area, the quality of the roads and transportation, employee safety,
mail volume, projected costs, and the type of service offered in nearby
areas. These local officials also are provided with specific manuals
that contain national guidance on establishing delivery service, as
well as on how to carry out these operations on a day-to-day basis.
Type of Service:
USPS customers are entitled to receive mail delivery service at no
charge in one of two ways: via mail carrier or via the customer
retrieving his or her mail at a designated postal facility. The
majority of USPS's residential and business deliveries are made by mail
carriers--about 86 percent in fiscal year 2003. Approximately 14
percent of USPS's deliveries are where customers travel to a USPS
facility, primarily a post office, to retrieve their mail. These
customers receive mail service either via box service or general
delivery pick up. Box service may be provided (1) at no charge to
customers who are not eligible for carrier service--this would
represent their free mail delivery service--or (2) at a fee to
customers to supplement their existing delivery service. Customers who
are not eligible for carrier delivery and whose retail facility does
not provide box service are provided with general delivery service
where they retrieve their mail from a post office counter at no charge.
While current mail recipients have access to mail delivery service at
no charge--the cost of delivery is borne by postal ratepayers--the
process by which customers are eligible for free delivery has recently
been clarified. In the 1996 Mail Classification Case before the PRC,
USPS proposed eliminating the fee for box service that it charged
customers who were not eligible for carrier delivery. At the time of
this case, USPS estimated that about 940,000 boxes would be offered
free of charge as a result of this policy. This proposal, however, did
not require USPS to offer a free box to all customers ineligible for
carrier delivery, such as those ineligible due to their proximity to a
postal facility (i.e., the quarter-mile rule).[Footnote 6] These
customers would only be allowed to receive general delivery service at
no charge. The PRC, in its ensuing recommendation, raised issues about
inequities regarding customer eligibility for free box delivery and
urged USPS to rectify them. USPS dropped the quarter-mile-rule
provision during the following 1997 rate case, and, as such, customers
ineligible for carrier service became eligible for free box service.
Frequency of Service:
According to USPS officials, most customers receive mail delivery 6
days a week, but there are customers who do not. These customers
include businesses that are not open 6 days a week; resort/seasonal
areas that are not open year-round; or areas that are not easily
accessible due to transportation constraints, such as remote areas that
may require the use of boats or airplanes to deliver the mail. For
example, mail is transported by mules for delivery in the Grand Canyon,
by snowmobiles for delivery in some areas of Alaska, and by boats for
delivery on islands in Maine and other states.
Type of Carrier Routes:
As previously stated, the majority of USPS customers receive carrier
service. Once it is determined that a customer is eligible for carrier
service, USPS determines the type of carrier route service that will be
provided. USPS has three primary carrier route categories--city, rural,
and highway contract routes--and has national policies and procedures
that contain the criteria used to establish, manage, and operate the
three types of routes. Excerpts from these policy and procedure manuals
are provided in table 3.
Table 3: USPS Policies and Procedures for Establishing Carrier Routes:
City delivery.
Establishment is considered when the following requirements are met:
* Within the area to be served there is a population of 2,500 or more
or 750 possible deliveries;
* At least 50 percent of the building lots in the area to be served
are improved with houses or business places. Where a house or building
and its yard or ground covers more than one lot, all lots so covered
are considered improved;
* The streets are paved or otherwise improved to permit travel of USPS
vehicles at all times, without damage or delay;
* Streets are named and house numbers are assigned by the municipal
authorities in accordance with Management Instruction DM-940-89-03,
Addressing Conventions;
* The street signs are in place and the house numbers are displayed;
* The rights-of-way, turnouts, and areas next to the roads and streets
are sufficiently improved so that the installation and servicing of
boxes are not hazardous to the public or USPS employees;
* Satisfactory walks exist for the carrier when required;
* Approved mail receptacles or door slots are installed at designated
locations.
Rural delivery.
Establishment of rural delivery service is considered when the
following requirements are met:
* Customer Density: A newly established route should serve an average
of at least one residential or business delivery per mile. On routes
of less than 10 miles, an average of at least six deliveries per mile
should be eligible for service before a route is established. Unusual
conditions such as the volume and type of mail should be considered;
* Minimum Workloads: In post offices with no existing rural delivery
service, the proposed route evaluation should reflect sufficient
workload to meet minimum rural carrier scheduling requirements
efficiently;
* Roads: Roads should generally be public and must be well maintained
and passable for delivery vehicles year-round. Rural delivery service
is not established over roads that are not kept in good condition,
that are obstructed by gates, or that cross unbridged streams that are
not fordable throughout the year. If travel over private roads is
proposed, the person responsible for road maintenance must provide a
written agreement to keep the road passable at all times. If these
conditions are not met, delivery can be withdrawn.
Highway contract box delivery.
Established after USPS solicits contracts for the transportation of
mail between post offices or other designated points where mail is
received or dispatched. These contract carriers are not USPS employees;
* Highway contract route advertisements and contracts state whether
box delivery, collection service, or other mail services are required
and specify the area to be served;
* In addition to usual box delivery and collection service on some
routes, carriers are required to provide retail functions, such as
selling stamps, delivering and accepting special service mail, and
accepting money order applications.
Source: USPS.
[End of table]
USPS's "rural" designation does not necessarily reflect geographically
defined rural areas, and there is no population threshold for a USPS-
designated rural or city route.[Footnote 7] Rural carrier routes
encompass a wide range of geographic areas and may cover both less-
densely populated areas generally considered to be rural as well as
suburban areas generally considered to be urban. A USPS rural route
such as one in Charlotte, North Carolina, or Jacksonville, Florida,
may cover a geographically defined suburban area and may contain a
similar number of delivery points as a city route. USPS officials
explained that many suburban areas met rural route criteria when they
were originally established. However, they also stated that although
the population may have grown in an area that now may be considered
suburban, USPS maintains existing operations in this situation. Thus,
it retains the rural route classification. A brief overview of these
route types is provided in table 4.
Table 4: Information on Selected Route Types, Fiscal Year 2003:
Type of carrier route: City;
Possible deliveries (millions): 84.7;
Routes: 164,975;
Average deliveries per route: 513;
Carriers: 229,404 (USPS employees).
Type of carrier route: Rural;
Possible deliveries (millions): 34.5;
Routes: 72,743;
Average deliveries per route: 474;
Carriers: Full-time: 61,611 (USPS employees);
Part-time: 56,451.
Type of carrier route: Highway contract;
Possible deliveries (millions): 2.2;
Routes: 10,065;
Average deliveries per route: 220;
Carriers: 5,864 (route is served by a contract employee).
Source: USPS.
[End of table]
City routes (67 percent of all routes) tend to be located in densely
populated areas with high concentrations of delivery points. As figure
2 shows, growth in city routes has stagnated since 1994 and has been
declining since 2000, while growth in rural routes continues.
Figure 2: Rural Routes Cumulatively Have Grown at a Much Greater Rate
Than City Routes:
[See PDF for image]
[End of figure]
Rural routes, accounting for only about 29 percent of all routes, are
the fastest growing type of route. Of the 1.8 million delivery points
added in fiscal year 2003, 1.2 million delivery points are located on
rural routes. Rural routes encompass a wide range of areas, with some
of the larger routes serving hundreds of delivery points and some
smaller routes having just 1 delivery per mile. Not only are rural
routes the fastest growing route type, the number of deliveries per
route (route density) is also increasing. Figure 3 shows that rural
routes with 12 or more deliveries per mile have been increasing at a
much faster rate than rural routes with fewer than 12 deliveries per
mile. Furthermore, as shown in table 4, the average deliveries per
route for city routes and rural routes are relatively similar, 513 and
474, respectively.
Figure 3: Rural Routes Are Becoming More Dense:
[See PDF for image]
[End of figure]
The remaining 4 percent of routes are highway contract routes (10,065
in fiscal year 2003), which serve areas that are not serviced by city
or rural routes. On some of these routes, deliveries are made along the
line-of-travel to individual addresses as mail is being transported
from one facility to another.
Modes of Delivery:
USPS has guidance to help determine the physical location where the
mail will be delivered. USPS works with local real estate developers
when determining the locations of delivery for new addresses and has
three general modes of delivery that specify the physical location of
the delivery: door, curbline, or a centralized unit that contains mail
receptacles for multiple customers. Figure 4 provides the number of
these modes of delivery as of the end of fiscal year 2003.
Figure 4: USPS's Different Modes of Delivery, Fiscal Year 2003:
[See PDF for image]
[End of figure]
Note: This figure includes the modes of delivery that are used on
carrier service. It does not include the nearly 20 million deliveries
made to USPS retail facilities (i.e., to post office boxes or general
deliveries).
Door delivery once was the norm in urban settings; however, USPS
changed its policy in 1978 to limit additional door deliveries to
further enhance delivery efficiencies (door deliveries remain the most
expensive mode of delivery). As a result, curbline delivery and
centralized delivery are the fastest growing modes of delivery.
According to USPS delivery officials, the only instance where new
delivery points would receive door delivery would be if the new
delivery point is established on a block that currently receives door
delivery. Centralized units include cluster boxes, Neighborhood
Delivery Collection Box Units (NDCBU), and apartment-style boxes.
Cluster box units are centralized units of individually locked
compartments, while NDCBUs are centralized units of more than eight
individually locked compartments. Between fiscal years 2001 and 2003,
the number of curbline boxes increased by more than 2 million; the
number of centralized boxes has grown by about 1.8 million; and the
number of other deliveries (primarily door), which are not available
for most new deliveries, decreased by almost 400,000.
Differences in Delivery Service Are Based on Cost and Service
Considerations:
According to USPS, it must balance the legal requirement to operate as
a break-even entity with the need to serve its customers in a
competitive environment. As such, the following cost and customer
convenience trade-offs are associated with each of the previously
discussed delivery decisions.
* Carrier service v. the customer collecting mail from a USPS facility.
If carrier service is provided, USPS incurs the cost of providing the
personnel and transportation to support these services, but most
customers receive their mail closer to their residences or businesses.
On the other hand, requiring customers to travel to their respective
post office to collect mail may be more inconvenient for the customer,
but USPS does not have to incur personnel and transportation costs
associated with carrier delivery.
* 6-day-a-week delivery v. something less than 6-day-a-week delivery.
According to USPS, the more days that delivery is provided, the higher
the cost of providing this service. On the other hand, customers,
Congress, and the President's Commission have noted the importance of
6-day-a-week delivery. USPS studied the impact of eliminating Saturday
delivery and found that the possible savings were not significant
enough to offset the potential risks that any reduction in delivery
days would have a negative impact on USPS's competitive position.
* City v. rural v. highway contract box delivery routes. Although the
delivery service provided on each of these routes is generally similar,
carriers on rural and highway contract routes provide retail services,
such as stamp sales, while city carriers do not. A USPS official stated
that there are significant cost differences between the different types
of routes. USPS estimated that the additional annual cost in fiscal
year 2003 for each city door delivery ($295) was more than twice as
expensive as rural delivery ($143) and over three times as expensive as
highway contract deliveries ($90). The USPS official stated that a key
factor in determining the total cost of a route is the carriers'
compensation systems, which differ for each group of carriers. The
systems for city and rural carriers are collectively bargained between
USPS and their associated unions--the National Association of Letter
Carriers (NALC) represents city carriers, and the National Rural Letter
Carriers Association (NRLCA) represents rural carriers. Generally
speaking, city carriers are compensated on an hourly basis, while rural
carriers are compensated on a salary basis. Agreements entered into by
these groups also establish duties and responsibilities for the
carriers and USPS management. Compensation for contract carriers are
established via the contract posted by USPS.
* Door v. curbline v. centralized modes of delivery. According to USPS,
the cost per delivery generally increases as the delivery is made
closer to the customer's door. Delivery to a customer's door is the
least efficient mode of delivery because the carrier has to dismount
from the vehicle. Deliveries to centralized units, such as cluster
boxes and NDCBUs, are the most efficient form of carrier delivery
because carriers can make multiple deliveries in one stop. The mode of
delivery to be provided is considered by USPS when determining the type
of service that will be used. For example, most deliveries on rural and
highway contract routes are farther away from the customer's front door
than deliveries on city routes. Figure 5 shows that most rural and
highway contract deliveries in fiscal year 2003 were to the curb rather
than at the door.
Figure 5: Modes of Delivery, Fiscal Year 2003:
[See PDF for image]
[End of figure]
USPS local officials select the delivery option that provides service
in the most efficient and cost-effective manner, and they consider
numerous cost and customer service factors when making these decisions.
This balance between cost and customer convenience is further
illustrated in our discussion of USPS's retail network.
Overview of USPS's Retail Services:
As part of meeting its universal service obligation, USPS is required
to do the following:
* USPS should serve as nearly as practicable the entire U.S. population
and provide postal facilities in such locations that give postal
patrons ready access to essential postal services consistent with
reasonable economies of postal operation.[Footnote 8]
* USPS should provide a maximum degree of effective and regular postal
services to rural areas, communities, and small towns where post
offices are not self-sustaining. No small post office shall be closed
solely for operating at a deficit, it being the specific intent of
Congress that effective postal services be insured to residents of both
urban and rural communities.[Footnote 9]
Historically, post offices, stations, and branches served as the
primary access points for providing postal services to most customers.
These facilities were located in towns and communities across the
country and provided key locations where mail could be collected and
delivered. Figure 6 illustrates the current network of these retail
facilities.
Figure 6: Overview of the Retail Network:
[See PDF for image]
Note: Branches are units of a main post office located outside the
corporate limits of a city or town, while stations are units of a main
post office located inside the corporate limits of a city or town.
Also, in small communities where the main post office has been
discontinued, a contract postal unit will be designated as the
Community Post Office.
[End of figure]
In addition to traditional brick-and-mortar retail facilities, USPS
currently offers retail services through other alternatives, such as
self-serving vending machines, ATMs, grocery and drug stores, and the
Internet. Figure 7 illustrates many of these retail alternatives.
Figure 7: Retail Alternatives Moving Away from Traditional Post
Offices:
[See PDF for image]
[End of figure]
Postal services available through these access points can include
purchasing stamps and postage, mailing packages, and sending money
orders. Differences exist, however, in how access to retail service is
provided to customers across the country. These differences (1) exist
in terms of what types of retail options customers have access to and
where these retail options are located and (2) are based on cost and
customer service determinations made by local USPS officials. This
section identifies access points currently provided by USPS, describes
differences in the network, and explains why these differences exist.
The wide variety of retail options currently offered by USPS differs
significantly from its original retail network. Changes in technology,
transportation, and geography diminished the need for a large network
of post offices, and the number of post offices per capita has
consistently declined since the early 1900s (see fig. 1). Table 5 shows
that over the last 20 years, the number of post offices, stations, and
branches has decreased by over 1,900 units. This decrease reflects
USPS's movement toward fewer "bricks-and-mortar" facilities.
Table 5: Post Offices, Stations, and Branches: Fiscal Year 1980
Compared with Fiscal Year 2003:
Facility type: Post offices;
FY 1980: 30,326;
FY 2003: 27,556;
Change: -2,770;
Percentage change: -9.1%.
Facility type: Classified branches and stations;
FY 1980: 4,109;
FY 2003: 5,796;
Change: 1,687;
Percentage change: 41.1.
Facility type: Contract branches and stations;
FY 1980: 3,346;
FY 2003: 2,777;
Change: -569;
Percentage change: -17.0.
Facility type: Community Post Offices;
FY 1980: 1,705;
FY 2003: 1,450;
Change: -255;
Percentage change: -15.0.
Facility type: Total;
FY 1980: 39,486;
FY 2003: 37,579;
Change: -1,907;
Percentage change: -4.8%.
Source: USPS.
[End of table]
USPS still has almost 28,000 post offices nationwide, and these post
offices remain a key access point for USPS's nationwide retail network.
USPS does not have specific standards for establishing post offices on
the basis of population density or distance between post offices. The
number of post offices and retail facilities compared with the
population of the area served differs throughout the country. Appendix
II provides information on the number of retail postal facilities in
each state, along with each state's population. For example, states
such as North Dakota and South Dakota that have a relatively low-
population density tend to have a lower ratio of people per USPS retail
facility (i.e., fewer than 2,000 residents for every USPS retail
facility). On the other hand, states such as Florida and California
that have a relatively high-population density tend to have a higher
ratio of people per USPS retail facility (i.e., about 15,000 residents
for every USPS retail facility).
Postal officials told us that customers of smaller post offices tend to
be more dependent on their post office for access to the postal
network. Survey data collected for the President's Commission showed
that rural customers reported visiting their post offices more often
than customers in urban areas. This issue of dependency is important to
note when considering retail access because USPS recognizes that
customer use of post offices versus other retail alternatives varies.
For example, according to USPS, many of the new retail alternatives,
such as consignment with private retailers such as grocery stores and
ATMs, have been deployed primarily in high-growth, high-population
areas (coincidentally, these areas are where many retail competitors to
USPS are located). Customers in these high-growth, high-population
areas may not be as dependent on a post office for meeting their daily
postal needs, and therefore they utilize these alternative methods of
accessing USPS's retail network.
Retail Decisions Are Based on Cost and Customer Access Considerations:
Differences exist throughout the postal network in terms of how and
where customers have access to USPS's retail network. USPS officials
stated that USPS's approach to the retail network requires a balance of
cost and service considerations and incorporates such factors as
customer demand, the population of the surrounding area, the post
office's physical location, mail volumes, costs, and revenues.
Many of USPS's retail alternatives are aimed at offering more
efficient, accessible ways of providing retail service, particularly in
high-growth, high-revenue areas. When deciding where to deploy these
alternatives, USPS officials told us that they consider both (1) the
location where a retail option is needed and (2) the type of retail
options that should be deployed. They also consider customer access
needs while balancing economy and efficiency concerns. For example, it
is more costly for USPS to provide retail service at a post office
counter than via its Web site--www.usps.com. Some customers, however,
may not have Internet service or may prefer going to their local post
office to conduct their postal transactions. Moreover, USPS has stated
that opening new post offices is considered only when area service
needs cannot be met through its current facilities or by less costly
alternatives. USPS has stated that whenever possible it establishes
contract postal units, which can provide equal service without the
costs associated with building and operating new post offices. These
units are privately owned and operated and, as such, are less
expensive. USPS opened 666 contract stations and branches in fiscal
year 2003.
Actions to Improve Delivery and Retail Services:
USPS faces the continuing challenge of providing high-quality postal
services while absorbing the costs associated with an ever-increasing
delivery network. USPS estimated that serving its new delivery points
in fiscal year 2003 would add roughly $270 million in annually
recurring delivery costs. At the same time, USPS's revenue per delivery
declined each year since fiscal year 2000. USPS and other stakeholders
have recognized these challenges, which have been highlighted as part
of USPS's Transformation Plan and the President's Commission's report.
USPS has taken actions, and is planning future actions, to deal with
these challenges and improve the efficiency and effectiveness of its
delivery and retail networks. These actions will include the following:
on the delivery side, emphasizing cost-effective routes and delivery
locations (i.e., to curbline boxes); and on the retail side, providing
low-cost alternatives and optimizing its retail network. The actions
planned in the delivery area may not result in a noticeable change of
service for people in rural areas. Customers in rural areas may
experience greater access to USPS's retail network via improvements to
[Hyperlink, http://www.usps.com], but actions to promote
other low-cost alternatives are primarily targeted toward customers in
high-growth, high-density areas. Furthermore, it is not clear how rural
customers may be impacted by USPS's efforts to increase efficiencies by
optimizing its retail network. This section provides an overview of the
actions that USPS is planning to take, in both the delivery and retail
areas, and what these actions are intended to achieve.
Actions to Improve Efficiency and Effectiveness in USPS's Delivery
Network:
USPS has high costs related to its nationwide infrastructure and
transportation network, which includes delivering mail 6 days a week to
most of the 141 million addresses nationwide. Achieving efficiencies in
this area is difficult because the network grows by approximately 1.7
million new addresses each year. Mail volumes have recently been
decreasing, and USPS is facing increasing per-piece delivery costs
since carriers must make deliveries even if they have fewer letters to
deliver. As previously discussed, USPS has already taken actions to
improve delivery efficiency, including promoting rural routes and
emphasizing curbline and centralized modes of delivery. These actions
are likely to continue in both suburban and rural areas.
USPS's initiatives for increasing rural delivery efficiency may not be
noticeable to rural customers because they relate to improving internal
USPS operations, rather than changing residential delivery. These
initiatives include sending managers through a training program to
ensure that they understand the basic concepts of managing rural
delivery; distributing electronic operations newsletters that provide
specific strategies for reducing rural workhours and raising awareness
of the need to focus on rural management; and implementing a rural time
review, which is a process to examine and analyze the timekeeping,
recording, and reporting process for rural delivery.
On a more comprehensive, nationwide basis, USPS has implemented
initiatives aimed at increasing the efficiency of the overall delivery
network. USPS has established a route optimization effort meant to help
determine the best way to route carriers. USPS hopes this effort will
lead to a reduction in workhours, vehicle mileage, and costs, while at
the same time improving safety. According to USPS, automation
improvements, such as the Delivery Point Sequencing of mail, will
increase efficiency by automating some of the mail sorting activities
that are currently done manually by mail carriers.[Footnote 10] This
automation would decrease the amount of time that a carrier would spend
sorting the mail and increase the amount of time that a carrier could
be out making more deliveries.
Actions to Improve Efficiency and Customer Access to USPS's Retail
Network:
Both USPS and the President's Commission have recognized that USPS
needs to adjust its retail network so that it provides the optimal
level of retail access at the lowest possible cost. The retail service
options available to rural customers will largely remain the same, with
the exception of rural customers who have access to the Internet
[Hyperlink, http://www.usps.com]. USPS officials stated
that USPS plans to deploy most other new retail alternatives in high-
growth, high-density areas, such as fast-growing suburbs. However, it
is not clear why some retail alternatives that offer greater customer
convenience, such as stamp purchases at grocery or other retail stores,
may not be provided to those in rural areas. Further, it is not clear
how rural customers may be impacted by USPS's retail optimization
efforts to close and/or consolidate retail facilities. In its
Transformation Plan, USPS stated that its planned efforts to improve
access to retail services for all customers while becoming more cost-
effective include three key initiatives:
(1) Create new, low-cost retail alternatives. USPS identified ways to
provide cost-effective services that improve customer convenience and
access by utilizing low-cost retail alternatives, such as the Internet,
ATMs, and supermarkets. According to USPS, most of the alternatives are
aimed at providing additional access to high-growth, high-revenue areas
where demand for services is more concentrated and will not be
available in less-populated areas. For example, many of the 666
contract postal units opened in fiscal year 2003 were in urban areas
such as Los Angeles, California, and Orlando, Florida. However, USPS
noted two alternatives that would be available to most customers,
including those in rural areas--the Internet, for customers with
access, and the recently implemented "Click-N-Ship" program. USPS's
Internet Web site is available to customers 24 hours a day, 7 days a
week, and was designed to handle most retail transactions that take
place in local post offices, such as printing shipping labels and
postage for packages, buying stamps, sending money orders, and filing
address changes. USPS's Click-N-Ship program allows customers to print
shipping labels for packages and pay for postage using their computers.
Customers can arrange to have their mail carrier pick up the package,
or they can leave it in a mail collection box or at their local post
office. This carrier pick-up service is currently available in urban
and suburban areas, and USPS and the NRLCA have recently agreed to
conduct a nationwide pilot that would test this program on rural
routes.
(2) Move stamp-only transactions away from the post office window. The
new, low-cost retail alternatives provide USPS with an opportunity to
increase the efficiency of postal transactions. In fiscal year 2003,
about one-third of the visits to USPS retail facilities included stamp
purchases, and over 130 million visits were for stamp-only purchases.
Smaller post offices tend to conduct a higher percentage of stamp-only
transactions. As indicated in its Transformation Plan, window service
at a post office is a relatively expensive way to provide stamp
purchases when compared with low-cost alternatives, such as providing
stamp purchases from ATMs, through the mail, from the Internet, or from
a grocery store. In addition, residents on rural and highway contract
routes can purchase stamps and other retail services from their mail
carriers. USPS has begun to promote the use of these alternatives for
postal transactions; in November 2002, USPS launched a national
campaign promoting alternative access to postal products to create
customer awareness of stamp-purchasing alternatives. Between fiscal
year 2002 and 2003, the number of stamp-only visits at postal
facilities decreased by about 25 million (a 16 percent reduction), and
the number of stamp transactions decreased by about 60 million (a 10
percent reduction).
(3) Optimize the retail network. As simple transactions such as selling
stamps and printing shipping labels are redirected to lower cost
alternatives, USPS plans to take actions to tailor retail services to
the individual community needs and provide the optimal level of retail
access at the least possible cost. USPS has established a nationwide
database of its retail network that includes about 150 data points for
each of its retail postal facilities, such as operating costs,
revenues, proximity to other retail points, number of deliveries, and
customer demographics. This database provides USPS with a baseline for
evaluating its network, from which it plans to first focus its retail
strategy on "underserved" locations. USPS then plans to focus on high-
revenue locations, most of which are located in urban and suburban
areas. Lastly, USPS will focus on "overrepresented" areas. The
Transformation Plan stated that USPS would replace "redundant, low-
value access points" with alternative access methods, but it did not
provide information on the specific criteria that USPS would use to
make this determination. It is unclear how post offices in rural areas
may be affected by this initiative, because, as USPS stated in its
Infrastructure and Workforce Rationalization Plan to Congress, "the
savings from closing small post offices are minimal, since the
potential savings in personnel and office rent are often more than
offset by the additional cost of rural delivery service needed in lieu
of post office box delivery." Another approach, recommended by the
President's Commission, would be for USPS to optimize its retail
network by assessing its "low-activity" post offices to determine if
they are needed to ensure the fulfillment of universal service. If USPS
determines that these post offices are needed, they should be retained,
even if they are not economical. If not, the President's Commission
stated that USPS should work with the affected community to consider
how to dispose of excess facilities.
USPS has begun taking actions to optimize its retail network by lifting
the self-imposed moratorium established in 1998 on closing post offices
and by adjusting post office hours. During fiscal year 2003, USPS
formally closed about 440 post offices and other retail facilities,
more than half of which USPS had placed on emergency suspension. A post
office can be placed on emergency suspension due to circumstances such
as a natural disaster, sudden loss of the post office building lease
when no suitable alternative quarters are available, or severe damage
to or destruction of the post office building. An emergency suspension
is one of three circumstances that may prompt USPS to initiate a
feasibility study to determine whether to close a post office. The
other two are (1) a postmaster vacancy and (2) special circumstances
such as the incorporation of two communities into one. USPS plans to
close 311 post offices in fiscal year 2004 that were placed on
emergency suspension between February 1983 and June 2003. An additional
65 post offices that were placed on emergency suspension between August
2002 and November 2003 are not scheduled to close. USPS has reported
that post office closures will continue, and that in a normal year
about 100 to 200 small, rural post offices are closed when the
communities in which these offices are located essentially disappear.
According to USPS, it has also adjusted hours at existing post offices
from time to time to reflect customer demand. Although USPS could not
provide information on the number of post offices where changes in
hours occurred in fiscal year 2003, it did provide a description of how
hour adjustments are made. According to USPS officials, postmasters are
responsible for establishing window service hours based on the needs of
the community within the funding resources. Officials noted that they
periodically assess the number of transactions and customer visits
throughout the day to determine the appropriate hours, and that hours
may be extended or shortened in response to customer demand. USPS
reported that its efforts to increase efficiencies in its retail area
have resulted in a decrease of almost 5 million workhours from fiscal
years 2002 to 2003.
Key Issues Include Delivery Inconsistencies and the Uncertain Future of
Retail Network:
USPS and the President's Commission both have recognized the need for
establishing a postal network that is capable of providing universal
service in an efficient and cost-effective manner. The actions
identified by USPS that were discussed in the previous section
illustrate that future service decisions are being planned with a focus
on increasing efficiency and customer service. According to surveys
conducted both by USPS and for the President's Commission, customers
are generally satisfied with the services provided by USPS. However,
when issues are raised by postal stakeholders, including Members of
Congress, customers, and USPS employees, they generally relate to
inconsistent delivery services and limited communication related to
planned changes to the retail network. USPS has also raised issues
about legal requirements and practical constraints that limit its
flexibility to make changes to the postal network. Progress toward
optimizing the postal retail network will require USPS to collaborate
and communicate more effectively with stakeholders in order to raise
their confidence that USPS's actions will result in improved customer
service and more cost-efficient operations.
Customer Satisfaction and Issues:
Data reflect that customers are generally satisfied with the services
provided by USPS. USPS customer satisfaction data showed that 93
percent of households nationwide continue to have a positive view of
USPS. USPS's Customer Satisfaction Measurement survey gathers
information from households and businesses throughout the country, and
the residential survey includes questions on such topics as mail
delivery service, retail options, time waiting in line at post offices,
and USPS advertising. A survey was also conducted as part of the
President's Commission's work to determine the public perception of
USPS. This survey reported that customers throughout the country,
including those in cities and rural areas, have a favorable view of
USPS.[Footnote 11]
Although it is reported that overall customer satisfaction is high,
when customers do raise concerns, many relate to inconsistencies in
delivery services and changes in access to retail services.[Footnote
12] For example, in the first 2 quarters of fiscal year 2004, USPS's
customer telephone system--Corporate Customer Contact--documented over
1.3 million calls that raised customer issues. As table 6 shows, these
issues fell into five general categories. The delivery/mail pickup
category contained the most customer complaints with over 88 percent of
the total customer issues. These calls included issues about late
deliveries, changes in the location of the customers' deliveries, and
misdeliveries.
Table 6: Customer Issues Documented by USPS, First 2 Quarters of Fiscal
Year 2004:
Category: Delivery/Mail pick-up;
Number of documented issues: 1,163,578;
Percentage of total documented issues: 88.0%.
Category: Personnel;
Number of documented issues: 106,684;
Percentage of total documented issues: 8.1%.
Category: Post office/Equipment;
Number of documented issues: 35,337;
Percentage of total documented issues: 2.7%.
Category: Retail;
Number of documented issues: 14,443;
Percentage of total documented issues: 1.1%.
Category: Web site/Contacting USPS;
Number of documented issues: 1,965;
Percentage of total documented issues: 0.1%.
Total;
Number of documented issues: 1,322,007;
Percentage of total documented issues: 100.0%.
Source: USPS.
[End of table]
We reviewed a sample of letters received by Members of Congress
involved in the oversight of USPS in 2002 and 2003. Of the 134 letters
that we reviewed, the most common delivery-related concerns pertained
to the mode of delivery that was used and mail arriving late or at
inconsistent times. On the retail side, the issues raised most
frequently were concerns about potential post office closings or
relocations. Several customers wrote that closing or relocating post
offices would make it difficult or inconvenient for them to access
retail postal services.
Congressional Issues:
In addition to constituent letters containing specific questions about
USPS operations, Congress has raised long-standing issues about the
basic provisions of universal service and retail access, particularly
to customers in rural areas. The Postal Reorganization Act contained
specific provisions requiring that effective postal services would be
ensured to residents of both urban and rural communities. Congress had
additional concerns about community involvement in decisions to close
or consolidate post offices. In 1976, it amended the Postal
Reorganization Act and established specific requirements for USPS when
attempting to close a post office, including that USPS must consider
the effects on the community served, the employees of the facility, and
economic savings to USPS that would result from the closure, as well as
provide notice to customers.[Footnote 13] This amendment sought to
involve communities in decisions, which would help to ensure that these
decisions were made in a fair, consistent manner. The amendment also
established an appeals process to the PRC to allow for independent
review of decisions to close or consolidate post offices. Congress has
long included language in USPS annual appropriations legislation
forbidding the closure or consolidation of small, rural post offices.
The closure requirements added by this amendment, however, did not
apply to postal facilities that were to be expanded, relocated, or
newly constructed, and Congress remained concerned that communities
were not sufficiently involved in decisions regarding their post
offices. In 1998, USPS responded to these concerns by establishing
regulations relating to the expansion, relocation, or new construction
of post offices that required local officials and citizens to be
notified, provided affected customers with a chance to provide
comments, and required USPS officials to consider this community
input.[Footnote 14] However, postal facilities placed in emergency
suspension were not subject to the post office closure or consolidation
requirements. A 1999 congressional hearing focused on USPS's closure
process when some stakeholders raised concerns that USPS might be using
its emergency suspension procedures to avoid post office closure
requirements. We issued a report on emergency suspensions in 1997 and
found that between the beginning of fiscal year 1992 through March 31,
1997, USPS had suspended the operations of 651 post offices, some of
which had been in suspension over 10 years.[Footnote 15] After USPS
lifted its 1998 moratorium on closures in 2003, USPS began to close
most of its suspended post offices.
Concerns remain about the extent to which customers are included in
retail decisions as evidenced by the fact that current Members of
Congress continue to introduce legislation related to USPS's process
for closing post offices and ensuring that communities are involved in
the decision-making process.[Footnote 16]
USPS Employee Issues:
Employee groups are concerned with USPS's attempts to make changes to
the postal network. For example, these groups have raised issues about
the perceived lack of communication from USPS about how it makes these
decisions. Carrier unions have also raised issues related to actions
taken by USPS to establish and categorize carrier routes. Carrier
compensation represents a significant portion of the total delivery
costs, which is a key consideration in USPS's delivery route decisions.
For a number of years, USPS, the NALC, and the NRLCA have had a
continuing dispute over the assignment of work jurisdictions for mail
delivery. These disputes pertain to the conversion of city delivery to
rural delivery, or vice versa, and the assignment of new deliveries
(whether a new route will be a city route or a rural route). There were
an estimated 1,300 disputes at the national and local levels related to
this issue at the end of 2003. USPS and the two unions established a
joint task force in May 2003 to expedite resolution of outstanding
city/rural jurisdictional disputes. Furthermore, additional disputes
regarding the process for conducting mail counts and route inspections
have also been raised. Mail counts and route inspections are key
factors in determining carrier duties and compensation, and thus total
delivery costs. Mail counts and route inspections are used to identify
the amount of mail sorted and handled by carriers during an average
workday and what determines the efficiency of the current route
structure.
USPS Issues:
USPS has raised issues about its lack of flexibility to make necessary
changes to its delivery and retail networks. Changes to USPS's retail
infrastructure are limited by both legal requirements and practical
constraints. As previously mentioned, USPS by law cannot close a small
post office solely because it is operating at a deficit. Furthermore,
Members of Congress and other stakeholders have often intervened in the
past when USPS has attempted to close post offices or consolidate
postal facilities. Proposed post office closures have provoked intense
opposition because local post offices are sometimes viewed as (1) a
critical means of obtaining ready access to postal retail services, (2)
a part of American culture and business, and (3) critical to the
viability of certain towns or central business districts. In regards to
its delivery network, USPS appropriations acts have included provisions
on 6-day-a-week delivery and rural mail service, and there is strong
stakeholder opposition to cuts in the frequency or quality of postal
services. The President's Commission agreed that USPS might need
additional flexibility as part of establishing the proper configuration
of a 21ST century postal network; however, the commission stated that
mechanisms are needed to ensure accountability and oversight.
Retail Optimization Communication Issues:
The Postmaster General has stated that without greater flexibility, it
may become increasingly difficult for USPS to continue achieving cost
savings, and that if USPS is unable to significantly restrain its
costs, it may have to reconsider universal service as it is provided
today. Although USPS faces some constraints to making changes, the
previous section of this report illustrates that there are actions USPS
could take to improve efficiency in the delivery and retail areas while
improving customer service. For example, low-cost retail alternatives,
such as the Internet, provide USPS with an opportunity to enhance
customer access nationwide, while at the same time offering cost-
effective and convenient ways to provide service. However, without more
information about how USPS will make decisions related to changing its
postal network, including closures or consolidations of existing
facilities, it is difficult for customers to understand how they may be
affected by these decisions. It is particularly important that
customers in rural areas, who may be more dependent on their local post
offices, are informed about how they may be affected by these
decisions.
We agree that actions are needed to restrain costs and that some legal
and practical restraints limit USPS's flexibility to make changes to
its network. However, USPS's communication with Congress and
stakeholders about what it intends to do and how it intends to optimize
its retail network is important so that stakeholders will have more
confidence in USPS's decisions. Stakeholders, who are a critical
component of implementing successful changes, have raised concerns
about potential changes to USPS's network. Specifically, as previously
mentioned, stakeholders have been concerned about a perceived lack of
communication throughout USPS's decision-making process. Examples
include insufficient information regarding potential changes such as
closing post offices or making adjustments to post office hours.
Furthermore, recent postal reform legislation reflects concerns about
the future provision of delivery and retail services. Both the House
and Senate postal reform legislation introduced in May 2004--The Postal
Accountability and Enhancement Act, H.R. 4341 and S. 2468--included
provisions that required a study of universal postal service and what
the future of universal service may entail. The Senate bill required
USPS to provide Congress with a discussion of potential changes to its
infrastructure, including its delivery and retail networks. This
proposed plan provides an opportunity for USPS to provide Congress with
additional information that will facilitate better understanding of
what USPS hopes to accomplish through its optimization efforts and how
it plans to make its decisions in this area.
We have previously reported on the importance of keeping Congress and
stakeholders informed throughout the decision-making process to
successfully transform the Postal Service.[Footnote 17] Last November,
we recommended that USPS develop an integrated plan to optimize its
infrastructure and workforce, in collaboration with its key
stakeholders, and make the plan available to Congress and the
public.[Footnote 18] USPS agreed with this recommendation and in
January 2004 presented its Infrastructure and Workforce Rationalization
Plan to the House and Senate oversight committees. The plan included a
section on improving its retail network by increasing access and
customer convenience in a cost-efficient manner. Although this plan
included a general discussion of initiatives that USPS is planning for
its retail and delivery network, it did not explain how USPS planned to
make decisions--that is, what specific criteria would be used as the
basis for USPS decisions. For example, USPS has discussed general
principles that it has established as a basis for its retail
optimization strategy as outlined in its Transformation Plan and
Transformation Plan Update. We previously discussed these principles,
and they included targeting underserved areas, particularly in high-
growth areas, and replacing redundant, low-value access points with
alternative access methods. However, the plan did not discuss how USPS
would define "underserved" areas for determining where new self-service
options are to be located, or "redundant, low-value access points" that
are to be replaced. It is not clear if USPS has consulted its
customers, including those in rural areas, in developing its network
optimization plans to determine their needs, their preferences on
retail alternatives, and which postal facilities may be needed to
provide postal services. Further, it is not clear if USPS's
optimization strategy related to removing redundant or excess postal
facilities would follow the existing process for closing post offices,
which essentially is a local decision in response to local
circumstances, such as a postmaster vacancy, lease expiration, building
damage, or an emergency. If such an incremental approach based on local
decisions is used to implement USPS's retail optimization strategy, it
is not clear that the implementation would lead to the desired result
of a systemwide optimal network overall.
Conclusions:
USPS's retail optimization strategy could be an opportunity for a "win-
win" outcome for both USPS and its customers, including those in rural
areas, in that USPS could reduce its costs while at the same time
improving access for its customers. According to USPS, it is already in
the process of providing its customers with greater access to its
services through a variety of new, more convenient alternatives. USPS
has also initiated efforts that have increased efficiencies and cut
costs and plans further actions in the future. However, many
stakeholders, including Members of Congress, are concerned about the
limited information and communication USPS has provided regarding its
network optimization plans and how customers will be affected by its
proposed changes. Without more information about how USPS will make
decisions related to changing the current postal network, including
closures or consolidations of existing facilities, it will be difficult
for customers to understand how they may be affected--particularly
those in rural areas who may be more dependent on their local post
offices.
Effective communication is needed to demonstrate that USPS wants to
partner with its customers in communities nationwide to provide more
convenient and cost-effective delivery and retail services and to
preserve post offices needed to support universal service. Improved
transparency and accountability mechanisms are also needed to raise
stakeholder confidence that decisions will be made in a fair, rational,
and fact-based manner. Such mechanisms could include a clear process to
ensure that key stakeholders are consulted and properly informed of
decisions that may affect them. Increasing communication and
collaboration with key stakeholders may also help facilitate better
understanding of the different challenges and needs facing USPS and its
customers in urban and rural areas, the rationale for decisions, the
cost implications related to budget and rate decisions, and the trade-
offs involved with actions to achieve a more efficient and effective
network.
Recommendation for Executive Action:
To facilitate USPS's progress in implementing its planned actions aimed
at improving efficiency in its postal network while increasing customer
service, we recommend that the Postmaster General provide improved
transparency and communication to inform Congress and other
stakeholders of the actions it plans to take regarding its retail
optimization strategy, including (1) the criteria USPS will use to make
decisions related to changing its retail network; (2) the process it
will use to communicate with postal stakeholders throughout the
decision-making process; (3) the impact on customers, including those
in rural areas; and (4) the time frames for implementing all phases of
its retail optimization initiative.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from the Acting
Vice President of Delivery and Retail for USPS in a letter dated June
30, 2004. USPS's comments are summarized below and reprinted in
appendix III. USPS officials also provided technical and clarifying
comments, which were incorporated into the report where appropriate.
USPS's letter concurred with "the spirit of the report's findings" and
acknowledged that USPS must continue to take steps to improve the
efficiency and effectiveness of its delivery and retail networks. In
response to the four specific provisions included in our
recommendation, USPS stated the following:
* The criteria used to make retail decisions vary because retail
optimization is a dynamic and evolving process, and the key to making
any postal decision is quality service to customers. There are,
however, specific criteria for certain elements of the retail network
(e.g., 300 books of stamps must be sold by the retailer each month in
order to participate in the consignment program).
* USPS will continue to advise postal stakeholders (e.g., congressional
staff, management associations, labor unions, and employees) of changes
that affect the retail network.
* It is USPS's policy to notify customers of changes that impact their
services. USPS will review how best to communicate those types of
changes to customers and develop a process for the field to notify
headquarters of changes in operating hours that could potentially
impact the community.
* The retail optimization initiative does not have a fixed time frame
because it is an evolutionary process. As such, USPS said that "it
would be impossible to provide a time frame for implementing all phases
of the retail optimization initiative."
We agree that the retail optimization effort is a dynamic and evolving
process, and that the actions described by USPS to improve
communication with its local districts and other stakeholders about
changes to the retail network are a step in the right direction.
However, even though there are constant changes in the retail network,
it is important for stakeholders to feel confident that USPS's retail
decisions are made in a fair, rational, and fact-based manner.
Therefore, we continue to believe that establishing and communicating
the criteria that provide the basis for USPS's retail decisions would
help to raise this level of confidence. Furthermore, although USPS says
it has not identified a fixed time frame for its retail optimization
efforts because it is an evolutionary process, this does not mean that
time frames for specific projects or initiatives are not needed. Time
frames can, and should, be established for the different phases of
USPS's retail initiatives to provide postal stakeholders with
information on when these initiatives will be deployed so that
interested parties, such as mailers, can determine the implications for
their own business plans. In addition, time frames are needed so that
USPS and stakeholders can evaluate the performance of these initiatives
and how they fit into the network optimization plans as a whole,
including the potential impact on costs and rates.
We will send copies of this report to the Ranking Minority Member of
the Senate Committee on Governmental Affairs, the Chairmen and Ranking
Minority Members of the House Committee on Government Reform and the
House Special Panel on Postal Reform and Oversight, Senator Thomas R.
Carper, the Postmaster General, the Chairman of the Postal Rate
Commission, and other interested parties. We will also make copies
available to others on request. In addition, this report will be
available at no charge on GAO's Web site at [Hyperlink,
http://www.gao.gov].
If you have any questions about this report, please contact me at (202)
512-2834 or at [Hyperlink, goldsteinm@gao.gov]. Key contributors to
this assignment were Teresa Anderson, Joshua Bartzen, and Heather
Halliwell.
Sincerely yours,
Signed by:
Mark L. Goldstein:
Director, Physical Infrastructure Issues:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
To meet our first objective, which was to provide information on the
U.S. Postal Service's (USPS) policies, procedures, and practices for
providing rural delivery services, and how they compare with those in
urban areas, we discussed USPS's basis for providing delivery and
retail services, the legal framework under which these decisions are
made, and the process used to carry out these decisions with USPS
officials. We supplemented this information with (1) USPS documents and
manuals describing letter carrier duties and the roles of USPS
officials in managing delivery services and (2) USPS operational
guidance for providing service, including establishing delivery routes
and locations of deliveries, retail alternatives, and services/
locations of these alternatives. Also, because USPS is subject to legal
and statutory considerations when making retail and delivery decisions,
we reviewed the applicable statutes that establish USPS's mission and
role as a provider of universal postal service and the collective
bargaining contracts established with its two sets of bargaining
employees--the National Rural Letter Carriers Association and the
National Association of Letter Carriers. We discussed USPS's current
policies and procedures with various USPS officials who were
knowledgeable about the retail and delivery networks, as well as with
letter carrier and postmaster representatives and Postal Rate
Commission officials. We obtained, reviewed, and analyzed delivery and
retail data pertaining to routes, delivery points, and retail network
from various sources, including USPS officials, the Annual Report, and
the Comprehensive Statement of Operations. We assessed the reliability
of data provided by USPS by reviewing the data for inconsistencies and
checking for duplicate or missing values. In those cases where we found
discrepancies, we worked with USPS to address the problems. We
determined that these data were sufficiently reliable for the purposes
of this report.
To meet the second objective, which was to discuss changes USPS is
making, and planning to make, related to providing postal services to
rural areas and the potential impact of these proposed changes, we
reviewed, analyzed, and discussed with USPS officials actions that were
planned as part of its Transformation Plan and its related updates,
growth plans, operational strategies, Infrastructure and Workforce
Rationalization plan, as well as the recommendations to USPS as part of
the President's Commission on the United States Postal Service (the
President's Commission) report.[Footnote 19]
To meet our third objective of identifying issues that USPS may need to
consider when making decisions related to providing postal services in
rural areas, we interviewed various USPS officials, such as retail and
delivery managers, customer contact representatives, and
administrators of the Customer Satisfaction Management Survey. To
gather additional information on stakeholder issues and preferences, we
interviewed representatives from the letter carrier and postmaster
groups, analyzed stakeholder comments raised before the President's
Commission, reviewed the Hart Study that was conducted on behalf of the
commission, reviewed USPS documentation related to its planned actions,
and examined newspaper reports of customer concerns about changes in
delivery and retail access.[Footnote 20] Due to the current legislation
proposed in both houses of Congress, we reviewed this proposed
legislation as well the pertinent legislative history of congressional
concerns in the delivery and retail areas.
To gain an additional understanding of customer issues with USPS, we
met with USPS Congressional Relations staff to gather information on
the types of written customer inquiries that are sent to Members of
Congress. These staff provided us with a sample of letters related to
retail and delivery issues that were sent to Members of Congress who
then forwarded these concerns to USPS for resolution. USPS established
categories for documenting these issues (e.g., delivery service,
delivery method, and retail service). We requested copies of letters in
selected retail and delivery categories that in 2002 and 2003 were sent
to Members of Congress who provided oversight of USPS. We analyzed
these letters and established our own set of delivery and retail
categories on the basis of information presented in the letters. We
felt it was necessary to establish our own set of categories because
some letters contained issues that were raised across categorization
areas.
[End of section]
Appendix II: Number of Post Offices by State, Year-end 2003:
State: AK;
USPS retail facilities[A]: Post offices: 184;
USPS retail facilities[A]: Classified stations and branches: 34;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 79;
USPS retail facilities[A]: Total USPS retail facilities: 297;
Population[B]: 626,932;
Residents served per retail facility[B]: 2,111.
State: AL;
USPS retail facilities[A]: Post offices: 558;
USPS retail facilities[A]: Classified stations and branches: 83;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 34;
USPS retail facilities[A]: Total USPS retail facilities: 675;
Population[B]: 4,447,100;
Residents served per retail facility[B]: 6,588.
State: AR;
USPS retail facilities[A]: Post offices: 582;
USPS retail facilities[A]: Classified stations and branches: 57;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 35;
USPS retail facilities[A]: Total USPS retail facilities: 674;
Population[B]: 2,673,400;
Residents served per retail facility[B]: 3,966.
State: AZ;
USPS retail facilities[A]: Post offices: 198;
USPS retail facilities[A]: Classified stations and branches: 97;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 147;
USPS retail facilities[A]: Total USPS retail facilities: 442;
Population[B]: 5,130,632;
Residents served per retail facility[B]: 11,608.
State: CA;
USPS retail facilities[A]: Post offices: 1,056;
USPS retail facilities[A]: Classified stations and branches: 721;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 351;
USPS retail facilities[A]: Total USPS retail facilities: 2,128;
Population[B]: 33,871,648;
Residents served per retail facility[B]: 15,917.
State: CO;
USPS retail facilities[A]: Post offices: 381;
USPS retail facilities[A]: Classified stations and branches: 88;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 64;
USPS retail facilities[A]: Total USPS retail facilities: 533;
Population[B]: 4,301,261;
Residents served per retail facility[B]: 8,070.
State: CT;
USPS retail facilities[A]: Post offices: 233;
USPS retail facilities[A]: Classified stations and branches: 91;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 26;
USPS retail facilities[A]: Total USPS retail facilities: 350;
Population[B]: 3,405,565;
Residents served per retail facility[B]: 9,730.
State: DC;
USPS retail facilities[A]: Post offices: 1;
USPS retail facilities[A]: Classified stations and branches: 61;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 10;
USPS retail facilities[A]: Total USPS retail facilities: 72;
Population[B]: 572,059;
Residents served per retail facility[B]: 7,945.
State: DE;
USPS retail facilities[A]: Post offices: 53;
USPS retail facilities[A]: Classified stations and branches: 17;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 4;
USPS retail facilities[A]: Total USPS retail facilities: 74;
Population[B]: 783,600;
Residents served per retail facility[B]: 10,589.
State: FL;
USPS retail facilities[A]: Post offices: 457;
USPS retail facilities[A]: Classified stations and branches: 377;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 271;
USPS retail facilities[A]: Total USPS retail facilities: 1,105;
Population[B]: 15,982,378;
Residents served per retail facility[B]: 14,464.
State: GA;
USPS retail facilities[A]: Post offices: 606;
USPS retail facilities[A]: Classified stations and branches: 153;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 72;
USPS retail facilities[A]: Total USPS retail facilities: 831;
Population[B]: 8,186,453;
Residents served per retail facility[B]: 9,851.
State: HI;
USPS retail facilities[A]: Post offices: 72;
USPS retail facilities[A]: Classified stations and branches: 32;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 21;
USPS retail facilities[A]: Total USPS retail facilities: 125;
Population[B]: 1,211,537;
Residents served per retail facility[B]: 9,692.
State: IA;
USPS retail facilities[A]: Post offices: 892;
USPS retail facilities[A]: Classified stations and branches: 34;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 112;
USPS retail facilities[A]: Total USPS retail facilities: 1,038;
Population[B]: 2,926,324;
Residents served per retail facility[B]: 2,819.
State: ID;
USPS retail facilities[A]: Post offices: 226;
USPS retail facilities[A]: Classified stations and branches: 19;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 37;
USPS retail facilities[A]: Total USPS retail facilities: 282;
Population[B]: 1,293,593;
Residents served per retail facility[B]: 4,587.
State: IL;
USPS retail facilities[A]: Post offices: 1,225;
USPS retail facilities[A]: Classified stations and branches: 190;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 96;
USPS retail facilities[A]: Total USPS retail facilities: 1,511;
Population[B]: 12,419,293;
Residents served per retail facility[B]: 8,219.
State: IN;
USPS retail facilities[A]: Post offices: 716;
USPS retail facilities[A]: Classified stations and branches: 77;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 64;
USPS retail facilities[A]: Total USPS retail facilities: 857;
Population[B]: 6,080,485;
Residents served per retail facility[B]: 7,095.
State: KS;
USPS retail facilities[A]: Post offices: 603;
USPS retail facilities[A]: Classified stations and branches: 44;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 111;
USPS retail facilities[A]: Total USPS retail facilities: 758;
Population[B]: 2,688,418;
Residents served per retail facility[B]: 3,547.
State: KY;
USPS retail facilities[A]: Post offices: 785;
USPS retail facilities[A]: Classified stations and branches: 56;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 71;
USPS retail facilities[A]: Total USPS retail facilities: 912;
Population[B]: 4,041,769;
Residents served per retail facility[B]: 4,432.
State: LA;
USPS retail facilities[A]: Post offices: 468;
USPS retail facilities[A]: Classified stations and branches: 75;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 36;
USPS retail facilities[A]: Total USPS retail facilities: 579;
Population[B]: 4,468,976;
Residents served per retail facility[B]: 7,718.
State: MA;
USPS retail facilities[A]: Post offices: 398;
USPS retail facilities[A]: Classified stations and branches: 234;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 54;
USPS retail facilities[A]: Total USPS retail facilities: 686;
Population[B]: 6,349,097;
Residents served per retail facility[B]: 9,255.
State: MD;
USPS retail facilities[A]: Post offices: 394;
USPS retail facilities[A]: Classified stations and branches: 110;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 44;
USPS retail facilities[A]: Total USPS retail facilities: 548;
Population[B]: 5,296,486;
Residents served per retail facility[B]: 9,665.
State: ME;
USPS retail facilities[A]: Post offices: 433;
USPS retail facilities[A]: Classified stations and branches: 20;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 44;
USPS retail facilities[A]: Total USPS retail facilities: 497;
Population[B]: 1,274,923;
Residents served per retail facility[B]: 2,565.
State: MI;
USPS retail facilities[A]: Post offices: 822;
USPS retail facilities[A]: Classified stations and branches: 140;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 252;
USPS retail facilities[A]: Total USPS retail facilities: 1,214;
Population[B]: 9,938,444;
Residents served per retail facility[B]: 8,187.
State: MN;
USPS retail facilities[A]: Post offices: 734;
USPS retail facilities[A]: Classified stations and branches: 90;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 153;
USPS retail facilities[A]: Total USPS retail facilities: 977;
Population[B]: 4,919,479;
Residents served per retail facility[B]: 5,035.
State: MO;
USPS retail facilities[A]: Post offices: 912;
USPS retail facilities[A]: Classified stations and branches: 119;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 105;
USPS retail facilities[A]: Total USPS retail facilities: 1,136;
Population[B]: 5,595,211;
Residents served per retail facility[B]: 4,925.
State: MS;
USPS retail facilities[A]: Post offices: 407;
USPS retail facilities[A]: Classified stations and branches: 42;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 51;
USPS retail facilities[A]: Total USPS retail facilities: 500;
Population[B]: 2,844,658;
Residents served per retail facility[B]: 5,689.
State: MT;
USPS retail facilities[A]: Post offices: 312;
USPS retail facilities[A]: Classified stations and branches: 14;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 55;
USPS retail facilities[A]: Total USPS retail facilities: 381;
Population[B]: 902,195;
Residents served per retail facility[B]: 2,368.
State: NC;
USPS retail facilities[A]: Post offices: 741;
USPS retail facilities[A]: Classified stations and branches: 149;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 81;
USPS retail facilities[A]: Total USPS retail facilities: 971;
Population[B]: 8,049,313;
Residents served per retail facility[B]: 8,290.
State: ND;
USPS retail facilities[A]: Post offices: 341;
USPS retail facilities[A]: Classified stations and branches: 7;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 52;
USPS retail facilities[A]: Total USPS retail facilities: 400;
Population[B]: 642,200;
Residents served per retail facility[B]: 1,606.
State: NE;
USPS retail facilities[A]: Post offices: 479;
USPS retail facilities[A]: Classified stations and branches: 38;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 65;
USPS retail facilities[A]: Total USPS retail facilities: 582;
Population[B]: 1,711,263;
Residents served per retail facility[B]: 2,940.
State: NH;
USPS retail facilities[A]: Post offices: 227;
USPS retail facilities[A]: Classified stations and branches: 20;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 26;
USPS retail facilities[A]: Total USPS retail facilities: 273;
Population[B]: 1,235,786;
Residents served per retail facility[B]: 4,527.
State: NJ;
USPS retail facilities[A]: Post offices: 520;
USPS retail facilities[A]: Classified stations and branches: 234;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 30;
USPS retail facilities[A]: Total USPS retail facilities: 784;
Population[B]: 8,414,350;
Residents served per retail facility[B]: 10,733.
State: NM;
USPS retail facilities[A]: Post offices: 286;
USPS retail facilities[A]: Classified stations and branches: 47;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 66;
USPS retail facilities[A]: Total USPS retail facilities: 399;
Population[B]: 1,819,046;
Residents served per retail facility[B]: 4,559.
State: NV;
USPS retail facilities[A]: Post offices: 85;
USPS retail facilities[A]: Classified stations and branches: 53;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 21;
USPS retail facilities[A]: Total USPS retail facilities: 159;
Population[B]: 1,998,257;
Residents served per retail facility[B]: 12,568.
State: NY;
USPS retail facilities[A]: Post offices: 1,513;
USPS retail facilities[A]: Classified stations and branches: 438;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 124;
USPS retail facilities[A]: Total USPS retail facilities: 2,075;
Population[B]: 18,976,457;
Residents served per retail facility[B]: 9,145.
State: OH;
USPS retail facilities[A]: Post offices: 996;
USPS retail facilities[A]: Classified stations and branches: 251;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 158;
USPS retail facilities[A]: Total USPS retail facilities: 1,405;
Population[B]: 11,353,140;
Residents served per retail facility[B]: 8,081.
State: OK;
USPS retail facilities[A]: Post offices: 576;
USPS retail facilities[A]: Classified stations and branches: 57;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 49;
USPS retail facilities[A]: Total USPS retail facilities: 682;
Population[B]: 3,450,654;
Residents served per retail facility[B]: 5,060.
State: OR;
USPS retail facilities[A]: Post offices: 332;
USPS retail facilities[A]: Classified stations and branches: 61;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 93;
USPS retail facilities[A]: Total USPS retail facilities: 486;
Population[B]: 3,421,399;
Residents served per retail facility[B]: 7,040.
State: PA;
USPS retail facilities[A]: Post offices: 1,711;
USPS retail facilities[A]: Classified stations and branches: 292;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 128;
USPS retail facilities[A]: Total USPS retail facilities: 2,131;
Population[B]: 12,281,054;
Residents served per retail facility[B]: 5,763.
State: RI;
USPS retail facilities[A]: Post offices: 51;
USPS retail facilities[A]: Classified stations and branches: 48;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 7;
USPS retail facilities[A]: Total USPS retail facilities: 106;
Population[B]: 1,048,319;
Residents served per retail facility[B]: 9,890.
State: SC;
USPS retail facilities[A]: Post offices: 360;
USPS retail facilities[A]: Classified stations and branches: 66;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 51;
USPS retail facilities[A]: Total USPS retail facilities: 477;
Population[B]: 4,012,012;
Residents served per retail facility[B]: 8,411.
State: SD;
USPS retail facilities[A]: Post offices: 338;
USPS retail facilities[A]: Classified stations and branches: 6;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 59;
USPS retail facilities[A]: Total USPS retail facilities: 403;
Population[B]: 754,844;
Residents served per retail facility[B]: 1,873.
State: TN;
USPS retail facilities[A]: Post offices: 533;
USPS retail facilities[A]: Classified stations and branches: 93;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 52;
USPS retail facilities[A]: Total USPS retail facilities: 678;
Population[B]: 5,689,283;
Residents served per retail facility[B]: 8,391.
State: TX;
USPS retail facilities[A]: Post offices: 1,409;
USPS retail facilities[A]: Classified stations and branches: 355;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 283;
USPS retail facilities[A]: Total USPS retail facilities: 2,047;
Population[B]: 20,851,820;
Residents served per retail facility[B]: 10,187.
State: UT;
USPS retail facilities[A]: Post offices: 176;
USPS retail facilities[A]: Classified stations and branches: 32;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 93;
USPS retail facilities[A]: Total USPS retail facilities: 301;
Population[B]: 2,233,169;
Residents served per retail facility[B]: 7,419.
State: VA;
USPS retail facilities[A]: Post offices: 809;
USPS retail facilities[A]: Classified stations and branches: 182;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 61;
USPS retail facilities[A]: Total USPS retail facilities: 1,052;
Population[B]: 7,078,515;
Residents served per retail facility[B]: 6,729.
State: VT;
USPS retail facilities[A]: Post offices: 270;
USPS retail facilities[A]: Classified stations and branches: 15;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 19;
USPS retail facilities[A]: Total USPS retail facilities: 304;
Population[B]: 608,827;
Residents served per retail facility[B]: 2,003.
State: WA;
USPS retail facilities[A]: Post offices: 443;
USPS retail facilities[A]: Classified stations and branches: 128;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 100;
USPS retail facilities[A]: Total USPS retail facilities: 671;
Population[B]: 5,894,121;
Residents served per retail facility[B]: 8,784.
State: WI;
USPS retail facilities[A]: Post offices: 718;
USPS retail facilities[A]: Classified stations and branches: 53;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 106;
USPS retail facilities[A]: Total USPS retail facilities: 877;
Population[B]: 5,363,675;
Residents served per retail facility[B]: 6,116.
State: WV;
USPS retail facilities[A]: Post offices: 759;
USPS retail facilities[A]: Classified stations and branches: 36;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 40;
USPS retail facilities[A]: Total USPS retail facilities: 835;
Population[B]: 1,808,344;
Residents served per retail facility[B]: 2,166.
State: WY;
USPS retail facilities[A]: Post offices: 176;
USPS retail facilities[A]: Classified stations and branches: 7;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 17;
USPS retail facilities[A]: Total USPS retail facilities: 200;
Population[B]: 493,782;
Residents served per retail facility[B]: 2,469.
State: Total;
USPS retail facilities[A]: Post offices: 27,557;
USPS retail facilities[A]: Classified stations and branches: 5,743;
USPS retail facilities[A]: Contract stations/branches
(and Community Post Offices): 4,180;
USPS retail facilities[A]: Total USPS retail facilities: 37,480;
Population[B]: 281,421,546;
Residents served per retail facility[B]: 7,509.
Sources: USPS, U.S. Bureau of the Census.
[A] There are 200 retail facilities in the following United States
territories that were not included in this analysis: American Samoa,
Federated States of Micronesia, Guam, Marshall Islands, Northern
Mariana Islands, Puerto Rico, Palau, and Virgin Islands.
[B] Population figures are from the 2000 Census. The average number of
residents per retail facility is an estimate and might be affected by
changes in population between 2000 and 2003.
[End of table]
[End of section]
Appendix III: Agency Comments from the United States Postal Service:
UNITED STATES POSTAL SERVICE:
William P. Galligan:
Acting Vice President, Delivery and Retail:
June 30, 2004:
Mr. Mark L. Goldstein:
Director, Physical Infrastructure Issues:
United Sates General Accounting Office:
Washington DC 20548-0001:
Dear Mr. Goldstein:
This is in response to your letter dated June 4 to Postmaster General
John E. Potter regarding GAO-04-803. Thank you for providing the Postal
Service the opportunity to review and comment on the draft report
entitled, "U.S. Postal Service: USPS Needs to Clearly Communicate How
Postal Services May be Affected by its Retail Optimization Plans."
We concur with the spirit of the report's findings and acknowledgement
that the Postal Service has, and will continue, to take steps to
improve the efficiency and effectiveness of its delivery and retail
networks.
Postal customers are provided, regardless of location, with services
that include free mail delivery and access to its retail services. It
has been our experience, and your report confirms, that postal
customers are generally satisfied with the vast array of services
provided to them.
The report recommends that the Postal Service provide improved
transparency and communication to inform Congress and other
stakeholders of the actions it plans to take regarding its retail
optimization strategy, including (1) the criteria Postal Service will
use to make decisions related to changing the retail network; (2) the
process it will use to communicate with postal stakeholders throughout
the decision process, (3) the impact on customers, including those in
rural areas, and (4) the timeframes for implementing all phases of its
retail optimization initiative.
We will address each recommendation individually:
Retail optimization is a dynamic and evolving process, therefore, the
criteria the Postal Service uses to make decisions related to changing
the retail network vary. As stated in your report, we look at a variety
of data, such as current population and projected growth, types of
postal purchases, business locations, etc. to provide a basis for the
areas and districts to determine if they need brick and mortar, stamps
on consignment, self service kiosks, a Contract Postal Unit (CPU), etc.
There are, however, more specific criteria for certain elements of the
network. For example, in order to participate in our consignment
program, 300 books of stamps must be sold per month and for the
Automated Postal Center (APC), part of the criteria used is that it
must be a high revenue generating location. The key to any postal
decision is quality service to our customers.
(2) We will reinforce the need for our local districts to advise
congressional staff of any changes that will affect their districts. We
will continue to advise our management associations, labor unions, and
employees through a variety of media and pursuant to contract
agreements of any changes that affect the retail network.
(3) It is our policy to notify customers of changes that impact their
services. In the few instances where an office is discontinued or
relocated, the process is very formal and structured. The process is
less formal, for instance, when there is a change in hours of
operation. We will review how best to communicate those type of changes
to our customers. We will also develop a process for the field to
advise us of changes in operating hours that could potentially impact
the community. The goal is to improve service to our customers at their
point of access, whether it is in the retail lobby, through their
carrier, or now even from their computer.
(4) The retail optimization initiative does not have a fixed timeframe
and is evolutionary and not a fixed timeframe solution. Therefore, it
would be impossible to provide a timeframe for implementing all phases
of the retail optimization initiative. New approaches and technology
are constantly evolving and have impact on the decisions that are made
in regard to the network. For example, APCs are rolling out to 2,500
locations between now and the end of the calendar year. We anticipate
tremendous results in terms of access and customer satisfaction, but
actual field performance and results will help us determine the impact
on the network and where these access point's best fit into the
network. In addition, the Postal Service has also expanded to the
internet through USPS.com to make it easier for customers to conduct
business by bringing postage purchases and other postal transactions
right to their computer. It is an example of how we are working to make
the Postal Service universally accessible to the American household,
now and in the future.
In conclusion, the network optimization initiative is not a fixed
formula, but an evolutionary process that is dependent on many factors
from customer preferences to the economy. The Postal Service is
committed to providing convenient access to the American people.
Sincerely,
Signed by:
William P. Galligan:
[End of section]
(543067):
FOOTNOTES
[1] The President's Commission on the United States Postal Service,
Embracing the Future: Making the Tough Choices to Preserve Universal
Mail Service (Washington, D.C.: July 31, 2003).
[2] U.S. General Accounting Office, U.S. Postal Service: Bold Action
Needed to Continue Progress on Postal Transformation, GAO-04-108T
(Washington, D.C.: Nov. 5, 2003); U.S. Postal Service: Key Elements of
Comprehensive Postal Reform, GAO-04-397T (Washington, D.C.: Jan. 28,
2004); and U.S. Postal Service: Key Reasons for Postal Reform, GAO-04-
565T (Washington, D.C.: Mar. 23, 2004).
[3] 39 U.S.C. § 101(b).
[4] 39 U.S.C. § 101(a), 39 U.S.C. § 101(b), and 39 U.S.C. § 403(a).
[5] For example, Transportation, Treasury, and Independent Agencies
Appropriations Act, 2004, Pub. L. No. 108-199, div. F, title IV, 118
Stat. 340 (Jan. 23, 2004); and 39 U.S.C. § 403 note. The provision
states that "6-day delivery and rural delivery of mail shall continue
at not less than the 1983 level."
[6] Under the quarter-mile rule, USPS exempted itself from providing
carrier delivery service to customers who reside within a quarter-mile
of noncity delivery post offices (within a half-mile for the smallest
post offices).
[7] USPS policies that establish city delivery state the following:
"The postal customer population may vary greatly from the general
census population because of different boundary interpretations and
designations."
[8] 39 U.S.C. §§ 403(a) & (b)(3).
[9] 39 U.S.C. § 101 (b).
[10] Delivery Point Sequencing is an automated process by which mail is
sorted according to the individual addresses on the delivery route.
[11] Peter D. Hart Research Associates, A Consumer Survey About the
U.S. Postal Service, May 2003.
[12] Concerns raised by customers through telephone calls or letters
are not necessarily representative of the concerns that the whole
population of customers may or may not have.
[13] 39 U.S.C. § 404 (b).
[14] 39 C.F.R. § 241.
[15] U.S. General Accounting Office, U.S. Postal Service: Information
on Emergency Suspensions of Operations at Post Offices, GAO/GGD-97-70R
(Washington, D.C.: Apr. 23, 1997).
[16] S. 1534, Rural Post Office and Community Preservation Act of 2003
and H.R. 3432, Post Office Community Partnership Act of 2003.
[17] U.S. General Accounting Office, U.S. Postal Service: Deteriorating
Financial Outlook Increases Need for Transformation, GAO-02-355
(Washington, D.C.: Feb. 28, 2002).
[18] GAO-04-108T.
[19] The President's Commission on the United States Postal Service,
Embracing the Future: Making the Tough Choices to Preserve Universal
Mail Service (Washington, D.C.: July 31, 2003).
[20] Peter D. Hart Research Associates, A Consumer Survey About the
U.S. Postal Service, May 2003.
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