US Postal Service to downgrade South Dakota mail operations

The U.S. Postal Service has finalized its plan to downgrade the downtown Sioux Falls post office to a local processing center, shifting non-local mail operations to a facility in Omaha, Nebraska.

The reorganization, first introduced in January, has sparked concerns about slower mail delivery to rural communities because letters and packages formerly processed and sent from Sioux Falls will be routed through Omaha, 160 miles away.

USPS expects the change to impact 35 non-managerial jobs and three management positions in Sioux Falls. Those jobs are protected by union contracts, but the employees will likely have to shift to other facilities, said Todd West, president of the South Dakota chapter of the American Postal Workers Union.

In February, the USPS finalized a decision to downgrade its Huron facility to a local processing center, moving all non-local processing to Fargo, North Dakota.

“These moves are going to affect service,” West, who is based in Watertown, told News Watch. “If you want to mail something and you know it’s going to take three or four days to get there if you go through the post office, what are you going to do? You’re going to FedEx or UPS or another carrier.”

The Sioux Falls downtown facility is currently a processing and distribution center.

In a statement dated April 30, the USPS said that the Sioux Falls facility would remain open as a local processing center and will receive “up to $12.75 million in upgrades,” including upgraded sorting equipment, new lighting and renovated bathrooms and break rooms.

As for the reorganization, “the business case supports transferring mail processing outgoing operations to the (Omaha facility),” the statement read.

No timetable set for change

Mark Inglett, a USPS spokesman based in Kansas City, told News Watch that there is no current timetable for when the changes will take place.

Service times for first-class mail are already trending downward in South Dakota, Iowa and Nebraska, according to USPS data. The on-time rate for first-class mail for fiscal year 2024 is 81.4%, compared to 86.8% at the same time last year.

South Dakota Rep. Dusty Johnson told News Watch in a statement that the restructuring in Sioux Falls and Huron could affect delivery service and uproot employees.

“While the purpose of restructuring the Postal Service nationwide is to increase efficiency, in a state with significant rural populations like South Dakota, the change may decrease speed and efficiency,” Johnson said. “South Dakotans rely on timely service to get their news and pay their bills. Not to mention the dozens of positions that will be transferred out of state, forcing families to relocate or find another job.”

The reorganization is part of a $40 billion “Delivering for America” investment strategy spearheaded by Postmaster General Louis DeJoy, who was appointed by former President Donald Trump in June 2020.

It continues a trend from 2012, when the USPS closed processing centers in Aberdeen, Mobridge and Pierre, leaving South Dakota with facilities in Sioux Falls, Rapid City and Huron.

Postmaster general takes heat

The intent of the plan is to “upgrade and improve the USPS’s processing, transportation and delivery networks” in the face of changing mail habits and increased competition from package shipping companies.

In November 2023, the USPS announced it has lost $6.5 billion in the most recent fiscal year, despite its own projections that it would break even.

DeJoy cited inflation as a main cause of the poor performance and pointed to the ongoing restructuring as a positive step in turning things around.

“We are just in the early stages of one of the nation’s largest organizational transformations,” he said at the time.

The USPS on April 9 proposed an overall increase of nearly 8 percent on the price of postage, pending approval from a regulatory commission. Forever stamps would cost 73 cents instead of 68 cents under the proposal.

DeJoy was harshly criticized by U.S. senators at an April 14 oversight hearing that spotlighted mail delivery delays stemming from centralized USPS operations in the Atlanta area.

Democratic Sen. Jon Ossoff of Georgia cited statistics that showed on-time delivery rates of 36% and told DeJoy: “You’ve got weeks, not months, to fix this. And if you don’t fix it, I don’t think you’re fit for this job.”

‘Not changing service standards’

The postmaster general can only be removed from office by the USPS Board of Governors, whose chairman has shown support in the past for the “Delivering for America” strategy.

Under the proposed Sioux Falls plan, mail and packages destined for outside the immediate Sioux Falls area would be routed to Omaha and “aggregated with mail and packages from other areas going to the same places.”

“All they will be processing in Sioux Falls is mail for the 570 and 571 ZIP codes,” said West. “So if you drop a letter in the mailbox, whether it’s going to Sioux Falls, Brandon or Texas, it’s going to go down to Omaha. If it’s worked out down there that it’s going to Sioux Falls or Brandon, it’s going to come back to Sioux Falls and that’s when they’re going to process it.”

Some of the concerns about slower delivery have come from groups such as newspaper publishers who rely increasingly on mail delivery and pharmacies that send out prescriptions to customers.

USPS officials held a public input hearing March 13 in Sioux Falls, where they assured attendees that the Sioux Falls facility would not be closing and that no career employees would be laid off.

But Inglett’s statement that “we’re not changing our service standards” did not put minds at ease, including those of South Dakota’s congressional delegation.

Rep. Johnson joined Sens. John Thune and Mike Rounds in sending a letter to DeJoy on April 12 urging the USPS to “avoid downsizing or significantly reorganizing mail processing operations in states like South Dakota without considering the particular effects on rural areas.”

Less than three weeks later, USPS finalized the plan.

This story was produced by South Dakota News Watch, an independent, nonprofit news organization. Read more in-depth stories at sdnewswatch.org and sign up for an email every few days to get stories as soon as they’re published. Contact Stu Whitney at  at stu.whitney@sdnewswatch.org.