USPS Begins New Round of Facility Consolidations While Also Procuring Dozens More

The U.S. Postal Service will consolidate 18 of its mail processing plants, coupling that announcement on Tuesday with plans to procure 45 new “annex” facilities that will boost the agency’s package delivery capacity. 

The move highlights USPS’ shift from traditional mail delivery to packages, a trend ongoing for years and accelerated during the COVID-19 pandemic. It will also reignite a fight postal management has avoided since 2015, when it paused its efforts to close and consolidate large numbers of processing plants. 

The Postal Service vowed to not lay off any employees as a result of the consolidations announced Tuesday, which will be completed by November. USPS said it will follow its labor contracts for impacted employees. The agency is currently in the midst of offering voluntary early retirement to much of its eligible supervisory and administrative staff and has indicated that layoffs could be on the table if an insufficient number of employees accept.

Postmaster General Louis DeJoy recently previewed the moves in his 10-year business plan, which he said would allow USPS to break even and stave off $160 billion in losses over the next decade. USPS has pledged $40 billion in capital investments as part of that plan to accompany slower delivery standards for some mail, reduced hours at some post offices and the plant closures. 

In addition to the recently announced contract to begin replacing its aging vehicle fleet, the first part of that investment will go toward the annexes and the “accelerated” procurement of 138 package sorters. The Postal Service expects to have the machines and facilities operational ahead of the 2021 holiday season this coming winter, which is the agency’s busiest period each year. Amid the pandemic and corresponding staff shortages, legal battles over operational changes DeJoy had sought to implement shortly after taking office and unprecedented volume, USPS customers experienced significant delays in late 2020 that upended operations and spurred widespread outcry. 

Package volume has grown 28% over the last year, USPS said, and the new equipment will enable smoother processing to meet growing e-commerce demand. Over the last decade, meanwhile, First-Class Mail has dropped off by 23%. The 45 leased annex facilities will be located near existing processing plants and allow USPS to better handle surges and overflow, the agency explained. 

USPS is moving forward with its facility consolidations despite a 2018 inspector general report that found USPS realized just 5% of the $1.6 billion in savings it had projected from the consolidations. The agency successfully shuttered 141 plants in the first phase of its plan, but pulled the plug on its second phase to close an additional 82 plants when it was halfway through. Lawmakers at the time pleaded with postal management to suspend the plan—which would have cost thousands of jobs and further reduced delivery standards—and USPS ultimately agreed with the misplaced hope it would lead to a legislative postal overhaul.

Kim Frum, a USPS spokesperson, said some employees will be reassigned from their current duties to support the new postal annexes. Those buildings will provide additional space near existing plants, either directly next to them or a few miles away. She also stressed the promise to avoid layoffs applied only to this round of consolidations. 

“[The] mail moves will require that we will allocate more staff to support package processing given the increase in package volume and allocate fewer staff to mail processing given the large decline in mail,” Frum said. 

DeJoy told Government Executive last month the consolidations would be “minimal” and “just for refinement,” while some of the facilities would be repurposed. Like the smaller round of consolidations this time around, the physical footprint reductions in the early 2010s—then known as “network rationalization”—were coupled with slower mail delivery windows. Under the current plan, only about 40% of First-Class Mail will be impacted. More mail will be delivered in a three-to-five day window as USPS seeks to significantly reduce its reliance on air transportation. 

“The Postal Service’s future depends on its ability to adapt to the evolving demands of our customers,” DeJoy said on Tuesday. “These initiatives and investments give our employees the infrastructure and technology they need to serve today’s e-commerce marketplace reliably and efficiently.”

He predicted the combination of facilities additions and subtractions would enable USPS to meet its delivery windows more regularly. The agency delivered less than 88% of mail designated for three-to-five day delivery on time in fiscal 2020, more than 7 percentage points below its target. 

“This optimization will lead to more efficient and reliable performance in our plants, which in turn will enhance our ability to predictably and reliably deliver mail to the more than 161 million addresses we serve each day,” DeJoy said. 

Upon its release, DeJoy's plan received swift pushback from some Democratic lawmakers and mixed reviews from postal labor groups. Mark Dimondstein, president of the American Postal Workers Union, specifically criticized the plant closures, saying any effort to "further pursue the failed strategy of plant consolidation will need to be addressed.”

In what also promises to prove controversial, USPS announced it will resume relocating or removing "unnecessary" mail sorting equipment to make room for more package sorters. The Postal Service sought to dismiss any criticism by noting moving and removing mail equipment is an ongoing strategy "dating back decades," but those efforts last year came under the spotlight in the runup to the election. DeJoy ultimately vowed to pause the initiative until after the election and later faced court mandates to do the same, though he made clear he would not replace machines that had already been disconnected and did not plan to cease the strategy in the long term.

“It’s no secret the Postal Service is facing financial difficulties,” Frum said. “The investment for the mail moves is one piece of the 10-year plan to achieve financial sustainability and service excellence. Procuring the proper package processing equipment and facilities now will help to meet the evolving mailing and shipping needs of American public and business customers ahead of the 2021 holiday season.”