Charities ZIP Through USPS Reorganization

January 15, 2010       Tom Pope      

When a Kansas City, Kan., postal service processing center closed, local mailers had to either drop the mail off at a small post office or take it 11 miles to the Kansas City, Mo. plant.

The closing is part of the U.S. Postal Service’s (USPS) consolidation process. Most changes mean shifts of functions, according to Gerry Kreienkamp, field liaison for communications for the USPS in Washington, D.C. “That wasn’t too big of a change for direct mailers because it would simply mean the drop dead time had to be adjusted a little,”he said. “This shouldn’t have an impact on direct mail because the (USPS) changes don’t always result in a closing.” The list of processing centers closed should not be confused with another list of proposed stations to be shut as the USPS tries to deliver itself from billions of dollars in operating debt.

The stations are the local retail offices commonly found in many neighborhoods while the processing centers handle large volume mailers.

“This might affect a small local nonprofit like a church,”Kreienkamp said. “The biggest impact may require the nonprofit to drop at a different site.”

Just because another facility exists doesn’t mean the drop can happen easily, according to Anthony W. Conway, executive director of the Alliance of Nonprofit Mailers in Washington, D.C. “Those other facilities might not have the capacity to deal with increased volume,”he said. “Sometimes they have to split it up to new routing places so that multiple centers might be used instead of one.”

“Many choke points could pop up overnight as staffing changes hit,”he said.  “Mailers might have had a rapport at a plant and now could lose that relationship.”

The USPS seeks major changes at hundreds of locations across the country because of the struggle with a massive decline in mail volume. The agency could encounter a $7 billion loss this fiscal year despite the increase in the price of stamps in May, 2009. USPS Vice President Jordan Small informed a Congressional subcommittee that local managers would conduct a study of approximately 3,200 stations and branches to evaluate customer access and long-term needs. Some 32,741 post offices currently exist.

“Nonprofits should be in communication with their postal service since they are established customers,”said Conway. “Take the initiative and ask them where any new location could be used for deposit.”

Not every facility faces change, said Robert E. McLean, executive director of the Mailers Council in Arlington, Va. “Talk with your representative to see whether the changes are short-term or long-term and what has changed with mail acceptance times in your area,”McLean said. But, nonprofits might have to change the lead time or prep time when conducting a campaign. Smaller nonprofits have more problems because they are short staffed.

“More changes will be coming in the next few years,”McLean said. “Regulations will be occurring so this is more than just consolidation and it affects pricing and timing.” Larger nonprofits deal with a lettershop partner or printer. “Make sure you’re using them to a full advantage to find out about any changes,”he said.

Some areas will not see changes. For example, the Washington, D.C., area has a processing plant in northern Virginia, one in Washington, D.C., and one in southern Maryland. “The issues are complex, which is why the nonprofit has to have a professional to help so they can be aware of the changes,”he said. “Partner with an appropriate vendor.”

Nonprofits might have to relook at the entire postal network, according to Jerry Cerasale, senior vice president of government affairs for the Direct Marketing Association’s (DMA) Washington, D.C., office. “The problem a large mailer like a cataloger might face is possibly changing where they enter the mail stream,”he said. “If they drop ship throughout the country, it might be cheaper to enter in another city by hiring a truck to take the mail from one point to enter the mail stream somewhere else.”

Mailers have to be assured they get a time to drop the mail off so the trucks can be off-loaded by postal employees. All mailers should consider logistics whenever these consolidations occur. “The view from the DMA is that if the changes are really saving money for the postal service, this should be a good thing because it will hold down rates,”he said. Mailers are on top of the changes, according to anecdotes Cerasale said that he has been hearing. “They have run tests to see where to enter the stream,”he said. “The only area with an issue is where they try to schedule the unloading of trucks. If traffic happens, they could be pushed to the back of the line because there were more trucks than people.”

Nonprofits should have a seed piece in the mail to view whether the mail is arriving at the recipient at the estimated time. Another way nonprofits can check on delivery is to see the hits on the Web site or the calls to the center about whether a drop arrived too early or late. “Watch the responses coming in on donations,”Cerasale said. “We have an algorithm to monitor the mail.”

Direct mail agencies that work with nonprofits, such as Amergent in Peabody, Mass., or The Heritage Company in North Little Rock, Ark., are not finding problems with direct mail deliveries yet. “This hasn’t really affected us,”said Rhonda Ward, director of mail and production services at Heritage. “What has changed is that we’re having to code the mail with different tiers so when it gets to the location here, it gets directed to a truck headed to a specific tier instead of being put on equipment before a truck.”

The USPS has been conducting these changes for the past five years, according to Conway. The massive sortation infrastructure is bigger than the amount of mail. In 2006, the service handled 213 billion pieces compared to 177 billion this year and is expected to decline to 150 billion.

“Another concern of cutting costs is that 80 percent of costs are labor related,”he said. “Getting people off the payroll to have a smaller size could present problems.”

The service maintains that entering the mail stream will not be a major problem even if the drop is moved to a processing plant 20 miles away. “That doesn’t mean the bulk mail stops,”said Kreienkamp. “We still have trucks running to the new site.”

The current list at, www.usps.com/all/amp.htm, USPS – Area Mail Processing shows 66 centers that are in the process of having studies on whether to make changes. Some like Aberdeen, S.D., are several years old and didn’t have a consolidation. Approved means the study has been done and can be implemented to change the operations.

“It takes a minimum of five months for a district to go through the approval process,”Kreienkamp said. “It’s a continual process and we’ll be adding new ones between now and June.” Right now the consolidation of processing centers is not significant compared to the bigger changes that will be coming up in 2010, according to McLean. “This is a great time to recognize these changes are coming,”he said. “Get involved with your mailing partner or postal council.”

The USPS “is predicting a deficit for 2010 of $8 billion. That size means they have to make significant operational changes that might be critical for marketing campaigns  the changes today could be small compared to changes in the next two years that are more complicated,”said McLean.  NPT

Tom Pope, a New York City-based journalist, writes about management issues.

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