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USPS overhauls logistics network as financial pressures mount
New regional hubs, sorting centers to speed package flows and cut costs
Key Takeaways:
- USPS is restructuring its logistics network with regional hubs and optimized transportation to improve efficiency and reduce costs.
- Postmaster General David Steiner warned the agency could run out of cash by the end of the fiscal year without structural reforms.
- The Postal Service has invested nearly $20 billion in modernization, including automation and expanded processing capacity for packages.
The U.S. Postal Service is revamping its logistics and transportation network to speed package flows and cut costs, but the postmaster general says its business model is running out of cash.
This message was delivered by U.S. Postmaster General and CEO David Steiner during his recent testimony before a U.S. Senate Committee on Homeland Security and Governmental Affairs.
Steiner said Congress needs to fix the post office’s “broken business model” that is “running out of cash by the end of this fiscal year.” He said the agency’s “unrestricted cash position [is] deteriorating to a negative $125.9 billion by FY 2035 absent structural change.”
He delivered a 33-page address called “Reforming the U.S. Postal Service’s Broken Business Model” on June 24.
“Every lever that is available to private-sector enterprises, or even other government agencies, is unavailable to the Postal Service,” Steiner said.
He said Congress should allow USPS “to operate as a truly independent agency, free of government-imposed mandates, or pay us for those mandates. We truly believe that paying for those mandates and utilizing the Postal Service as a growth engine for the $2 trillion mailing industry is what is best for the American people.”
Amid the call for changes, he outlined ongoing logistical inefficiency improvements to modernize “operational precision.”
USPS has invested nearly $20 billion to redesign its facilities and processing to handle a higher volume of letters and automate package processing to efficiently handle today’s evolving mail and package mix, Albert Ruiz, USPS senior public relations spokesperson, told Transport Topics.
Changing transportation network
The USPS has changed its transportation network to have regional processing and distribution centers as a focal point with supporting facilities and high-speed routes. The goal is an efficient, lower-cost transportation network designed for faster flows of packages and mail.
“Under the legacy network, processing functions were spread across several facilities in a given region, leaving the processing network decentralized and necessitating duplicative or excessive transportation trips to move mail and packages between processing facilities,” Ruiz said.
Today’s new RPDCs feature standardized processing, transportation and cross-docking functions for mail and packages. These centers also can handle higher-powered package sorting equipment — boosting package processing to 88 million in 2025 from 60 million five years earlier.
USPS aims to establish 60 RPDCs. It launched three new ones June 29 in Nashville, Tenn.; Oklahoma City and Sacramento, Calif.
Other active RPDCs
USPS’ other active RPDCs are located in Atlanta; Birmingham, Ala.; Boise, Idaho; Charlotte, N.C.; Chicago; Greensboro, N.C.; Houston; Indianapolis; Jacksonville, Fla.; Jersey City, N.J.; Memphis, Tenn.; Phoenix, Portland, Ore.; Richmond, Va.; and St. Louis.
“Our old, inefficient and expensive patchwork of facilities is being systematically replaced with a structured, logical and efficient hub-and-spoke network,” Steiner said.
Sorting and delivery centers
USPS is also modernizing its transportation system of 19,000 local delivery units in key markets for fewer, larger sorting and delivery centers. By combining operations in centralized facilities the agency plans to streamline processes and improve reliability and efficiency in final-delivery operations.
The agency has now opened 158 SDCs with modern package sorting equipment, electric vehicle-charging infrastructure and optimized transportation to and from processing facilities.
By mid-July, USPS plans to open SDC sites in Colorado, Florida, Idaho, Iowa, Minnesota, South Dakota and Washington state.
Regional optimization
A third component of improvements is regional transportation optimization. This objective aligns transportation schedules between processing facilities and post office locations to improve operational efficiencies.
RTO was fully implemented nationwide in July 2025. Without changing deliveries, RTO “is focused on more efficient collection, transportation, and processing of mail and packages,” Ruiz said.
