Making Sense of the USPS’ Plan for Facility Closures

U.S. Postal Service Headquarters at L’Enfant Plaza, Washington, DC (photo: Coolcaesar at en.wikipedia)

The fiscal woes of the U.S. Postal Service (USPS) have been widely documented, discussed and dissected in recent years. The most recent 10-K posted by the USPS notes that it has accumulated a net deficiency of $25.4 billion, intensifying the urgency to find a solution. The USPS, for its part, has proffered numerous plans to reinvent itself, most of which have included the closure of hundreds or thousands of postal facilities. The standard logic underpinning these plans is that that many post offices – especially those located in rural areas – are unprofitable. The USPS contends that other locations could benefit from consolidation, shedding obsolete and underutilized properties and reducing personnel and related expenses.

There have been a variety of proposals (and counter-proposals) to close postal facilities, to the point where it has become nearly impossible to understand exactly which strategy is currently in play. The confusion regarding the USPS’ closure program has become so acute that the Congressional Research Service (CRS) recently issued a report for members of Congress to address common questions about the closure process. Yet, even the CRS is stymied in it’s effort to answer the biggest question, conceding that “how many post offices may be closed remains unclear”. The CRS report, nonetheless, is an excellent summary of the issues surrounding post office closures, a must-read for anyone following the subject.

For those who prefer the “Cliff Notes” summary, here are the key take-aways (stats are abstracted from the CRS Report, USPS 10-K and 10-Q filings and other sources):

  • The Postal Service has, generally speaking, five types of retail postal facilities: main post offices, post office branches, post office stations, community post offices and contract postal units.  The USPS today owns and leases between 33,000 and about 35,000 such facilities, depending upon your data source (in addition the USPS also maintains a network of 461 distribution facilities, also planned for closures).
  • In many respects, the downsizing of the Postal Service began decades ago. In 1971 there were 42,287 retail postal facilities and at the end of FY 2011 there were 35,119, according to CRS data.
  • USPS’ plans to close its retail facilities have shifted like the sands.  In May 2009 the USPS announced plans to close up to 3,105 retail facilities. In July 2011 the USPS announced its more ambitious plan to close 3,652 post offices but it appears that between 280 (CRS report) and 430 (according to the Postal Regulatory Commission) were closed.
  • Congress has weighed in, offering various legislative initiatives to reform the Postal Service.  Most of these, frankly, are designed to restrict the USPS’ ability to shutter its post offices. Feeling the pressure from Congress, at the end of last year the USPS decided to suspend its post office closures until May 15, 2012.
  • In May, the USPS announced a different plan to reduce hours at its rural postal facilities in lieu of outright closures. As the CRS report observes, it’s presently unclear whether the USPS also plans to proceed with closures of facilities identified in its 2009 and 2011 lists. What is clear is that they are currently marketing some facilities for sale.