United States Postal Service

The National Recycling Operation: A Profitable Solution

"It makes good business sense to do it and we are reducing the impact on the environment.”–Tom Day

The United States Postal Service (USPS) is an iconic American organization. The first Postmaster General (PMG), Benjamin Franklin, was appointed to the position by the Continental Congress in 1775 and was responsible for the postal network from Massachusetts to Georgia. In the over two-hundred years since his appointment, the Postal Service has grown into a tremendous agency, reaching the far corners of the nation. USPS currently services 153.9 million delivery points having added over 1 million new points in the last fiscal year (FY2015). Sixty-seven districts contain over 33,000 postal facilities spanning from as far west as Adak, Alaska in the Bering Sea to as far east as Lubec, Maine. By volume, USPS delivers 40% of the world’s mail to a larger geographic area than any other postal service. To maintain such an extensive network, USPS boasts one of the world’s largest civilian fleets and employs over 490,000 career employees and 130,000 non-career employees. Due both to the size of the agency and to the nature of the postal business, USPS produces over 660,000 tons of waste annually. Given that much of this waste is undeliverable paper mail, 95% of USPS’s waste is recyclable. Yet, in recent years, the Postal Service was diverting less than 40% of their waste.

Not only was the Postal Service falling short of its potential, but it was not meeting mandated diversion requirements. On October 5, 2009, President Obama signed Executive Order (E.O.) 13514, “Federal Leadership in Environmental Energy, and Economic Performance,” requiring federal agencies to divert at least 50% of their waste. This requirement was affirmed on March 19, 2015 by E.O. 13693, Planning for Federal Sustainability in the next Decade. In addition to mandates related to energy efficiency, clean energy, and GHG reductions, E.O. 13693 specifically requires all federal agencies to divert at least 50% of non-hazardous solid waste and non-hazardous construction and demolition debris and to minimize the quantity of toxic and hazardous chemicals acquired, used, or disposed. Realizing that it was not reaching the mandated targets, USPS reevaluated its waste diversion strategy and decided to overhaul its recycling program to not only meet federal requirements, but to far surpass them. Rather than making small changes necessary to reach the mandated 50%, USPS and its sustainability team chose to aim much higher for a 90% diversion rate.

The challenge was creating a standard agency-wide initiative that all parties, including those at the highest and lowest levels, would find acceptable. The Office of Sustainability (OS) came up with what is now known as the National Recycling Operation (NRO). The NRO uses reverse logistics to take advantage of USPS’s existing infrastructure to backhaul recyclable materials from its facilities nationwide back to more centrally located Processing and Distribution Centers (P&DCs).

The NRO allows the Postal Service to use their extensive network to address its most significant waste source: mixed paper. Undeliverable mail is the main source of this paper waste and is considered undeliverable for a number of reasons including: a lack of postage; an incomplete, illegible or incorrect address; or an addressee not at the address. The bulk of undeliverable mail is commercially generated due to outdated and inaccurate addresses kept by business mailers. While USPS does encourage business mailers to keep up-to-date mailing lists, a huge volume of undeliverable mail continues to require proper disposal. In addition to undeliverable mail, USPS also collects paper waste and unwanted mail from its Post Office Box customers through secure receptacles located in about 15,000 Post Office lobbies.

Before the NRO could be implemented, the OS had to gain the approval of top management. The financial struggles of the Postal Service have been well publicized in recent years and are undoubtedly a major concern for the PMG. Although waste diversion is usually considered an environmental undertaking, the OS realized it would need to prove a significant return on investment (ROI) to gain support from the highest levels for a recycling program. Over the course of about one full year, the OS worked with Deloitte and the USPS internal finance team to conduct an exhaustive financial analysis of the NRO. Chief Sustainability Officer Tom Day confirmed that this was not an unusual time frame as “good analysis takes time…especially for an organization of this magnitude.” Ultimately, the business case concluded that the NRO had a potential ROI of $133 million following a 5-year deployment plan, rolling-out the operation at 20% of facilities every year.

Implementing the NRO

The OS began deploying its five year plan to install dumpers and compactors at over 200 processing facilities across the country in 2014. The OS is a relatively small office of only 39 people and therefore needed to hire contractors to help implement and manage the NRO. The consulting firm with whom USPS contracts consists almost exclusively of former postal employees who are familiar with postal operations and priorities ensuring the minimal operational disruption. Deployment began at the least burdensome facilities where in many cases intensive recycling programs already existed. Jim French, USPS Sustainability Integration Specialist, confirmed, “We started in relatively easy places where we knew managers were interested in working with us and we used those as pilot sites.” After piloting several sites, the NRO team established a standardized process for assessing sites, installing the equipment, and instituting backhauling practices.

The NRO team initially conducts a pre-assessment to evaluate current recycling revenue and trash disposal costs, to determine how much recycling could be generated, and to calculate the projected annual benefit to the district. The team then hosts a kick-off meeting with stakeholders at the district level. The meeting provides an overview of the NRO, the program’s financial goals, the business case, leadership’s engagement, district specific benefits, and facility expectations. Following this meeting, the team seeks formal approval from the District Manager to deploy the program. Though the NRO is a national funded and required program, District Managers do still have the autonomy to delay implementation in their respective districts.

With the support of the District Manager, the NRO team then begins the next phase of deployment: site assessments and equipment procurement. Teams of engineers perform site assessments, prepare detailed specification drawings, and determine if any building modifications are necessary. The dumper and compactor manufacturer then conducts a final pre-installation visit to look at the renderings and to determine logistics before hiring a local contractor to install the equipment. Every site installation is different as each dumper and compactor is custom made to account for varying dock heights, high voltage concerns, and hydraulic usage.

George Washington University goes to Lehigh Valley Processing & Distribution Center

To see the NRO in action, GW traveled to Lehigh Valley, Pennsylvania to visit a newly equipped Processing and Distribution Center (P&DC). The Lehigh Valley P&DC installed its dumper and compactor in January 2016 and had been using the new equipment for about three months at the time of GW’s visit. Lehigh Valley P&DC is a moderately sized processing facility that services sixteen counties and 127 associate offices. Richard Orlusky, USPS Sustainability Project Integration Specialist, Tony Mandik, Lehigh Valley In-Plant Support Manager, and Robin Conforti, Lehigh Valley Custodian, all joined GW’s Executive Director of Sustainability Kathleen Merrigan at the P&DC to answer her questions and to demonstrate how the equipment functions.

Maintaining the NRO

The NRO has been deployed in about one-third of the targeted P&DCs nationwide and is still on schedule for complete implementation by 2019. The NRO team faced many challenges, but was able to identify some of the keys to the success of the program. Several challenges can be attributed to the sheer size and scope of the Postal Service. Firstly, the recycling market varies greatly in the United States by region. This presents the most significant challenge during the pre-assessment phase when calculating reasonable estimates for potential recycling revenues. Despite the desire to standardize processes and contracts, the regional disparities make complete standardization impossible.

The size of the Postal Service also contributes to employee turnover. A considerable level of turnover is inevitable at an organization of over 500,000 employees, particularly among the non-career employees. This turnover increases costs associated with training and keeping employees informed. Day, Orlusky, and French all stressed the importance of user buy-in to the success and longevity of the program, a task made more difficult when the users are in flux. Day specifically added, “What drives success is that local buy-in, getting people to understand how it works, what they are expected to do, and what the paybacks are.” Without the participation of the employees in the field, separating waste and ensuring it is properly backhauled, the NRO would stagnate.

There is also the matter of seemingly conflicting priorities. French noted, “If you are a maintenance or plant manager, you are just trying to keep things running on time and recycling is not a priority.” This is in part because the local plants do not directly receive the recycling revenues that they work to produce. Plant personnel may only perceive the costs of the program such as a loss of dock space, additional work hours, or possible operational disruptions. NRO deployment also occurred during and after a period of intense network consolidation. Though the consolidation has since ceased, the initial deployment of the NRO was “like trying to hit a moving target,” according to French. The NRO team did not know which processing facilities would be closed and several facilities they had initially targeted were shut down. Over one million delivery points were added in 2015 after network consolidation, likely exacerbating existing concerns over dock space and work hours at some facilities.

The Future of the NRO

The future success of the NRO will depend largely on persistence and keeping employees well-informed. French equated deployment to “moving a supertanker,” while Orlusky added, “You have to keep pedaling, you don’t stop.” Two years in to deployment, the Postal Service has yet to see significant improvements. According to its 2015 annual report, the NRO was still falling short of the mandated 50% diversion rate at about 38%. When asked if this number would increase drastically in the coming year, French confirmed that it would not, “the supertanker,” he said again. Instead, he emphasized the importance of the standardized process for an organization like the Postal Service. While the process may take time, standardization aims to eventually change the operational mindset of the entire agency. There are several zero-waste plants within the Postal Service that the NRO team could easily point to as examples of success, but instead they continue to work tirelessly for agency-wide standardization, undeterred by the perhaps uphill road ahead.