tag:blogger.com,1999:blog-5635393295921616522024-03-01T00:39:47.810-05:00Courier, Express, and Postal ObserverThe courier, express, and postal industry is the largest segment of the transportation marketplace worldwide. This blog will provide a personal perspective on the challenges faced by firms in the industry as they serve an increasingly competitive market.Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.comBlogger439125tag:blogger.com,1999:blog-563539329592161652.post-61916419770577357532011-09-22T10:40:00.001-04:002011-09-22T10:40:13.789-04:00Courier, Express, and Postal Observer Has MovedNew Posts will be found in an easier to type url. <a href="http://cepobserver.com/"> http://cepobsever.com</a> Nothing will change but WordPress is easier to edit and customizeAlan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-7442026448278625962011-09-16T11:06:00.000-04:002011-09-16T12:52:10.715-04:00The Proposed USPS Network: A Second Best Solution<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFvNaV8hJsb_eW0RMAnXKIvr1WqXzezPS6zdhMEn-UE7kp0wSQlKyysUsRwyDtXCuV65tEv02drhQlgwwOaKVAuSMxCTFHHT4acL3pI-5EjS22AYknwuwnyccwegU25hgll2hiE6NEv1y6/s1600/USPS+Network+Sept+15th.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="290" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFvNaV8hJsb_eW0RMAnXKIvr1WqXzezPS6zdhMEn-UE7kp0wSQlKyysUsRwyDtXCuV65tEv02drhQlgwwOaKVAuSMxCTFHHT4acL3pI-5EjS22AYknwuwnyccwegU25hgll2hiE6NEv1y6/s400/USPS+Network+Sept+15th.png" width="400" /></a>Yesterday the Postal Service presented its proposal to restructure its processing and transportation network. The proposal is a second best solution meaning that pricing, financial, labor contract constraints prevented it from making a proposal that could provide better service or further reduce operating costs.<br />
<h3>
<span style="color: #b45f06;">Pricing and Services</span></h3>
The change in First Class service standards mostly reflect the results of the constraints the Postal Service has on raising First Class rates to cover peak-load and transition costs. Switching to a network of fewer than 200 plants would have some service impacts but would not require adding a day to the current service standards without changes to plant operating plans. An analysis of the proposed network could easily be completed comparing the cost difference of consolidating plants and consolidating plants and changing the operating plan to implement slower delivery standards.<br />
<br />
A previous post illustrated that it is possible to retain current First Class service standards with higher single-piece rates. [<a href="http://courierexpressandpostal.blogspot.com/2011/08/could-first-class-mail-service-standard.html">Could First Class Mail Service Standard Be Retained?</a>] That post suggested that single-piece First Class Mail prices would have to go up by 6 to 10 cents over the next few years. However, pricing constraints prevented the Postal Service from evaluating whether higher First Class single-piece rates or slower service and lower costs is the more rational option for ensuring maximum contribution from this product as volume declines over the next decade. In the review of the Postal Service's proposal, the Postal Regulatory Commission needs to evaluate both options as it is important to understand the impact that the pricing constraint has on potential contribution from single-piece First Class mail. In addition, the Postal Regulatory Commission needs to clearly rethink its decision to maintain the link between single piece and bulk First Class mail rates. Both Congress and the Commission need to determine whether maintaining the Postal Service's First Class mail commitment should be retained at higher rates, a practice common in Europe, or whether First Class mail service should be allowed to decline.<br />
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<h3>
<span style="background-color: white; color: #b45f06;">Pricing Constraints and Rural Areas</span></h3>
The map of new facilities also raises questions about seasonal variations in First Class mail service quality. Many of the areas that see significant reductions in mail processing facilities are in parts of the country with winter weather resulting in slower inter-city transportation than in other seasons. The seasonal difference in service quality needs study by the Postal Service and the Postal Regulatory Commission before it makes a final decision on an operating network.<br />
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<h3>
<span style="color: #b45f06;">Financial Constraints</span></h3>
The new Postal Service network represents a network that minimized capital spending. It uses only existing facilities and existing mail processing equipment. In addition by expanding processing windows, the Postal Service expands the use of its new letter sorting equipment and eliminates the need to replace its older automated sortation equipment.<br />
<br />
The financial constraints have an impact on both the Postal Service's operating costs and the quality of service that the Postal Service can offer. <br />
<br />
The financial constraints affect the operating costs of a streamlined network in two ways.<br />
<br />
<ul>
<li>First, the network must use existing facilities. While some existing facilities are close enough to the cost-optimized locations for a 200 plant network that they would continue to be used, significant parts of the country would be better served by replacing an existing facility with one a significant distance from where existing facilities are located. Also some plants in optimal locations may be too large or too small for its optimal service area and a less optimally located facility has the capacity in place. Using facilities in locations that less than optimal eliminates the need for significant capital to build an optimal network but most likely will generate higher processing and transportation costs than would be found in an optimal network designed without the capital constraints. Facility location has a big impact on decisions to transport mail by air or truck<br /><br /><strong><em>[Changes in the next few paragraphs reflect the first comment and presents a better understanding about the use of Postal Service sortation equpment. 9/16/2011 12:51 p.m.]</em></strong><br /><em>Using existing facilities also limits the Postal Service to using the footprint of existing facilities. This set the limit on the amount of sortation equipment that a facity can hold extending sortation times. Longer sortation times may shift some mail from ground to air transportation to meet two and three day service commitments as wel as affecting mail processing costs.</em></li>
<li>Second, the network <em>can</em> use <em>onl</em>y a portion existing equipment. <em>The Postal Service operates multiple generations of automated sortation equipmen with varying levels of productivity. The amount of equipment used reflects capital constraints that set limits on the amount of equipment that can fit into the proposed network The focus on minimizing equipment use also focuses on improving capital utilization with an uncertain impact on labor utilization</em>. <em> A network optimized to minimize total costs might be less constrained by the amount of equipment used and depending upon other constraints might require more equipment than is now in the Postal Service's inventory to minimize costs or sort mail over shorter periods of time in order to further reduce transportation costs.</em><br /><br /><strike> . Most origination sortation is performed on older automation equipment while destination sortation and carrier route sequencing is performed on newer equipment. The new operating plan minimizes the use of older equipment by using newer equipment over more hours in a day. </strike><br /><strike>If the network was restricted by the amount of newer equipment available, then some less than cost-optimal consolidations exist to accommodate the limits on available new equipment. Capital to replace older equipment would have increased the flexibility of the network model builders to develop an operating-cost optimized network.</strike> </li>
</ul>
The financial constraints affect service quality in two ways as well. <br />
<ul>
<li>First, constraints on capital spending puts facilities in sub-optimal locations that result in increased transportation time between facilities and reduced time to sort mail to meet critical dispatch times in processing plants. Combined, these factors will add a day or two to service in many locations that would not exist in a network not constrained by a lack of capital.</li>
<li>Second, restrictions on capital, combined with labor contract constraints, restrict the ability to reduce the time mail is not moving (i.e. transported, or being delivered) and total time from origin to destination. Ideally, distribution networks, including networks of Deutsche Post, FedEx and United Parcel Service, minimize time spent at network nodes in order to maximize the distance between nodes and ensure overnight and two-day service commitments over geographic areas much broader than the Postal Service does now. Their capital spending on plants and equipment accept the fact that its sortation facilities will be fully utilized only during limited peak periods and sit mostly idle for many more hours than the Postal Service plans to have its equipment remain idle.<br /><br />The difference between the network optimization approaches of Deutsche Post, FedEx and United Parcel Service and the Postal Service reflects the approach of companies with easy access to capital from retained earnings and private capital markets and an enterprise with no retained earnings or access to capital markets. The difference in capital makes a significant contribution to the ability of these enterprises to offer better service than the Postal Service does now or will under the proposed operating plan.</li>
</ul>
<h3>
<span style="color: #b45f06;">Labor Constraints</span></h3>
Even with the new American Postal Workers Union contract, most employees working in processing plants have full time jobs. The full-time job requirement constrains the optimization of network costs and origin-to-destination delivery times. Also the full time requirement results in operating plans that use more labor relative to capital than would be optimal from both a cost and service basis. <br />
<br />
The labor contract constraint combined with the financial constraint on capital purchases results in the Postal Service having a higher proportion of its costs as labor than would be optimal. In many ways, the proposed daily operating schedule that maximizes the use of sortation equipment over a 24 hour day illustrates a constraint driven by the combination of labor contract and financial constraints.<br />
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A higher proportion of part-time employees would allow the Postal Service to more easily substitute capital for labor. Plants would likely be larger and further apart as part-time employees allow the Postal Service to sort mail over short processing windows. The shorter processing windows would allow the Postal Service to more easily increase distance between facilities without affecting service quality.<br />
<h3>
<span style="color: #b45f06;">Opportunities for Improved Profitability and Service Quality</span></h3>
The constraints illustrated show that a Postal Service operating without these constraints could offer better service at lower costs that generate profits. The Postal Service's proposal to allow layoffs may have some impact on its labor contract constraints. It would allow it to increase its proportion of part-time workers to contract limits more quickly but would not give the Postal Service as much flexibility as would be needed to operate an optimal network.<br />
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Neither the pricing or the capital constraints are adequately addressed in either the Postal Service's proposal or in any legislative proposal. <br />
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Discussion of increases in Postal Service prices is limited to mail that travels at rates below costs or receives a legislatively mandated discount. No one has raised removing the constraint on First Class single piece rates in order to minimize service disruptions as the Postal Service downsizes it network.<br />
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The capital constraint illustrates the significant investments in plant and equipment could reduce costs and increase profits. The capital constraint illustrates than maintaining the current payment schedule for retirement obligations, or adding more debt to cover those obligations would not help the Postal Service develop a netowrk that optimally minimizes cost or sets a the capital/labor ratio. The capital constraint hints that the Postal Service, cleared of the disputed portion of its retirement obligations, would be attractive to private investors who could use their capital to make network improvements that the Postal Service could not afford as long as it remains a government enterprise. Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com1tag:blogger.com,1999:blog-563539329592161652.post-89622126283023126472011-09-13T13:48:00.001-04:002011-09-13T13:48:05.015-04:00A Financially Self Sufficient Postal ServiceThree recent articles and blog posts illustrate why any postal reform measure has to go beyond fixing retiree obligations or restructuring operations to reduce costs. If the White House Postal reform bill does not deal with these three issues than Congress will likely have to revisit the Postal Service Business model again in three or four years.<br />
<h2 <strong="">
<span style="color: #990000;">The Postal Service Cannot be Self Sufficient Unless it is Profitable.</span></h2>
Andrew Gelman, a professor of statistics at Columbia University and a prolific writer on statistics and its use in public policy and political campaigns illustrated that the financial problem facing the Postal Service is a legacy of the regulatory structure and financial objects of the Postal Service under the <strong><u>Postal Rate Commission</u></strong>. While not familiar with the current debate, his post in <a href="http://andrewgelman.com/2011/09/how-to-solve-the-post-office%E2%80%99s-problems/">Statistical Modeling, Causal Inference, and Social Science</a>, states what should be clear for anyone who has studied business. An enterprise will find profitability difficult if not impossible if its customers have more market or political power than it has.<br />
<blockquote>
Basically, the post office is always broke because it’s legally
required to be broke. It’s not like other utilities which are
regulated in a gentle way to allow them to make profits. Looking at
this from a political direction, things must somehow be set up so that
the Postal Service’s customers have more clout than the Postal Service
itself. I don’t really have a sense of why this would happen for mail
more than for gas, electricity, water, etc.</blockquote>
Rates charged by the Postal Service need to reflect rates that a profitable well managed firm would charge. The Postal Service cannot afford to offer lower rates to customers that have political clout. This will likely result in higher rates for single piece First Class, Periodicals, and non-Profit Standard mail.<br />
<h2>
<span style="color: #990000;">The Postal Service Cannot be Self Sufficient Unless it is Independent.</span></h2>
<span style="font-size: small;">Felix Salmon, in a <a href="http://blogs.reuters.com/felix-salmon/2011/09/06/how-to-solve-the-post-offices-problems/">Reuter's</a> op-ed focuses his attention on freeing Postal Service from Congress. His solution is deregulating the Postal Service to free it from the shackles that Congress has created.</span><br />
<blockquote>
It seems to me that a significant part of the problem here lies with Congress
and that a massive bout of deregulation could be just the solution that the Post
Office is looking for. Congress is micromanaging the Post Office, telling it how
much it can raise postage rates, telling it that it can’t offer financial
services (despite its huge <a href="https://www.usps.com/shop/money-orders.htm"><span style="color: #006e97;">business</span></a> in money orders),
telling it that it can’t get into all manner of other businesses either and
telling it that it has to deliver mail on Saturdays. Astonishingly, amid all
these rules and regulations, the Post Office is losing billions of dollars.<br />
I see a lot of scope for bipartisan agreement here — unshackle the Post
Office so that it has a hope of serving the country indefinitely into the
future. Republicans like deregulation, right?</blockquote>
His idea of deregulation goes further than any bill before Congress. His focus is on commercial freedoms that includes a significantly reduced role for the Postal Regulatory Commission.
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<br />
He also offers the suggestion that the Postal Service expand into financial services like Australia Post, La Poste (France) and Poste Italiane. Even without expansion into financial services, expansion of the Postal Service's business interests could include the sale of non-postal products through both its corporate-staffed and franchised outlets as Australia Post does, or the provision of secure e-mail boxes as both Canada Post and Deutsche Post do.
<br />
<br />
Deregulating the Postal Service is a different direction than any bill in Congress is now taking. Part of the reason is the political challenge that Mr. Salmon clearly understands. <br />
<blockquote>
The problem, I think, is that for all that Republicans like deregulation,
they really hate the idea of a state-owned organization competing with the
private sector. Of course, the Post Office does that already — it competes with
FedEx and UPS. But the USPS, as a government-subsidized organization with
thousands of locations nationwide and a massive reserve of public trust, could
be a formidable competitor in all manner of different markets and none of the
incumbents in those markets would welcome the competition.</blockquote>
<h2>
<span style="color: #990000;">A Self Sufficient Postal Service Requires a Corporate Business Model and Possibly Privatization.</span></h2>
<span style="font-size: small;">Privatization is a dirty word in postal policy. However, privatization is the 800 pound gorilla in the room that cannot be ignored.</span><br />
Two articles by economist <a href="http://www.becker-posner-blog.com/2011/09/in-trouble-once-again-what-to-do-about-us-post-office-becker.html">Gary Becker</a> and <a href="http://www.becker-posner-blog.com/2011/09/whither-the-post-office-and-its-universal-service-obligation-posner.html">Judge Richard Posner</a> in the <a href="http://www.becker-posner-blog.com/">Becker-Posner Blog</a> make a strong case for not only political independence but also financial independence from the Federal Government. <br />
Gary Becker's commentary focuses on privatization and elimination of the monopoly. <br />
<blockquote>
The solution: completely privatize the postal system, and allow other carriers to make daily mail deliveries using business and residential mailboxes. There are now enough actual and potential competitors, including the Internet, to make delivery of mail a highly competitive industry.</blockquote>
His thoughts on competition in the market and the mailbox monopoly represent a naive understanding of competition in the delivery of mail and parcels. It also ignores security issues that are important for differentiating delivery by the Postal Service from delivery by a newspaper carrier or other hand delivery service. However his discussion as to why privatization should be considered is worth listening to.<br />
<br />
In particular are these points that he makes:<br />
<ul><ul>
<li>Defenders of the postal service correctly point out that part of its troubles is due to regulations that significantly raise its costs of operation.</li>
<li>Nevertheless, the efficiency of the postal service still lags far behind that of Fed Ex and UPS. Part of this lag is due to regulatory restrictions, but some is due to its own mismanagement. As in prior discussions on our blog I refer again to the small town on Cape Cod where I have a summer home. Since its population expands 8-10 times during the summer, first class and other mail rises enormously during the summer. Fed Ex adjusts to this peak load problem in many ways, including renting trucks from Enterprise rental, delivering packages during longer hours, and shifting some employees from other locations. The local post office, by contrast, hardly adjusts at all. It has exactly the same hours as during the low volume winter months, which includes closing from 12-1 on weekdays, and only being open until noon on Saturdays. Since there is no mail delivery in this small town, most residents have mailboxes at the post office. Even though these boxes are in a separate room, which could be kept open when there is no other mail service, this room is closed too at about the same times when other mail service at the post office is closed.</li>
<li>Government enterprises, even quasi-independent ones like the USPS, are notoriously inefficient because of political and regulatory inefficiencies.</li>
</ul>
</ul>
The example that he gives regarding the Cape Cod Post Office is exactly what the new contract with the American Postal Workers Union should allow the Postal Service to deal with. Hiring seasonal summer employees or even transferring employees from other offices for a few months to expand operating hours during the summer should be normal operating practice in seaside towns and other communities with a large number of snow-birds or sun-birds.<br />
<br />
His last point is similar to the conclusions of Andrew Gelman and Felix Salmon. As a government enterprise, the Postal Service cannot compete on either service quality or price effectively and efficiently due to political and regulatory inefficiencies imposed by the Postal Service and the Postal Regulatory Commission.<br />
<br />
Judge Richard Posner concurs with Dr. Becker's conclusion that the Postal Service should be privatized.<br />
<blockquote>
<strong>Becker is certainly correct that the U.S. Postal Service should be privatized.</strong> Although government is probably more efficient at providing some services than private enterprise is, such as the military, national security intelligence, the police, the judiciary, the central bank, and prisons, because the output of these services is so difficult to measure, there is no reason to think it any more efficient at providing postal service than it would be at providing telephone service or airline service. Its origins as a public service reflect government concern with conspiracies (and its desire therefore to be able to read letters in transit), the natural-monopoly character of postal service (multiple postal services would require duplication of delivery trucks, post offices, and sorting stations), and the desire to provide universal service at flat rates in order to improve information flow throughout the entire society (i.e., to achieve network externalities).</blockquote>
However, he uses his more practical experience as a Court of Appeals Judge who has dealt with economic regulatory issues as well as his understanding of universal service obligations that exist in the provision of telephone, electricity, natural gas, and water services to develop a practical method of considering both freeing the Postal Service from the shackles of Congress and regulatory precedent and still ensure the provision of universal service.<br />
<br />
Judge Posner notes that neither outright sale of the Postal Service with the current restrictions imposed by the Congress and the Postal Regulatory Commission nor the sale of the Postal Service without these restrictions are not acceptable solutions.<br />
<blockquote>
<strong>The federal government could no doubt sell the postal service, just as states are busy selling turnpikes and bridges</strong>. If it sold it subject to the buyer’s assuming the universal service obligation, it would have to convey along with the postal service's physical assets its monopoly protections against cream skimming—the monopoly of first- and third-class mail and exclusive access to post boxes. <strong>But then little would have been achieved by the sale—not nothing, because the buyer would be more strongly motivated than government to seek economies, but not a lot.</strong></blockquote>
<blockquote>
<strong>A sale without conditions would be different—the results would be radical: a large reduction in post offices and delivery trucks, and correspondingly large reductions in numbers of employees. But then what of the people living in remote areas? Email and fax are not a complete answer, because there is still a demand for letters, magazines, advertising brochures, and other items of snail mail.</strong> All these are things that can be delivered by Fed Ex or UPS, but the price for pick-up and delivery in remote areas might be quite high. There is no good economic reason to subsidize people who decide to live in remote areas, but there would be political pressures to do so.</blockquote>
As neither of these options seems realistic, Judge Posner proposes a third one. This option reflects a fairly straightforward and traditional economic approach to handling the transition to privatization while still ensuring rural service and is based on a traditional public utility model. <br />
<blockquote>
As a practical matter, reform of the postal service should I think proceed in three stages over a period of years. In the first stage, the postal service should be allowed to charge double postage for mail to or from designated remote areas and to terminate Saturday mail service to and from those areas. In the second, the postal service should be sold to private enterprise but with the legal restrictions (universal service, in its modified form with double postage and no Saturday delivery in remote areas, and exclusive access to post boxes) intact. And in the third the legal restrictions should be removed and all postal service be open to competition.</blockquote>
His proposal to double rural mail delivery prices is absurd. It indicates both a lack of understanding of both Postal Service costs and the competition that faces the Postal Service for hand-delivery of communications and parcels. However it identifies a key point. To survive, the Postal Service needs to have pricing freedom to price its commercial letter, flat and parcel services based on regional cost differences and regional competition differences. <br />
<br />
His second point on privatization reflects the current public utility model. This model requires that regulated utilities are governed by laws that ensure that universal service is provided within their service areas.
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His third point suggests that eliminating all competitive restrictions, including elimination of the mailbox monopoly, depends on more careful study of the delivery market than has been done to date. <br />
<h2>
<span style="color: #990000;">Three Keys to Successful Postal Reform</span></h2>
Postal reform has to both serve the citizens of the United States both in urban areas and the most rural parts of the Great Plains and Appalachia. It must also ensure that business customers that now generate 90% of mail volume will continue to see the Postal Service as an attractive delivery service in 5 and ten years. These four individuals who have limited understanding of the details of the Postal Service's problems identify three critical elements that have to be part of any postal reform that ensures both universal service and the Postal Service's survival as a self-sufficient entity. They are:<br />
<br />
<ol>
<li>Profit must be an explicit goal for organization and profit must reflect a sufficient operating margin to ensure cash is generated to make capital investments needed to improve service once the current financial difficulties pass. There is no excuse for the Postal Service to be the only large national post suffering major losses in the Euro Zone, North America, and Oceana and Australia. </li>
<li>The Postal Service has to be granted significant relief from both Congressional and Postal Regulatory Commission oversight. To the extent that either law or regulatory precedent freezes the status quo and prevents market-based pricing and market-based service quality that law and those regulations must be removed. In particular both restrictions on distance based and regional pricing for commercial mailers need to be lifted in order to develop market-based and not cost-based prices.</li>
<li>Transition of the Postal Service to an entity that operates under standard corporate business, employment, and contract law must occur within a reasonable period. During this period, the privatization of the Postal Service as a public utility providing delivery services must be examined serious.</li>
</ol>
<br />Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com3tag:blogger.com,1999:blog-563539329592161652.post-31794804888942635132011-09-13T09:21:00.001-04:002011-09-13T09:21:29.653-04:00Postal Service Plans to Cut More Post Offices<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjstiKzcSxIsC-_OfJO0g9EvgtUBrUPddVVFW-N0XS7GAWejQ_VKop3oJbB8J9lldRa9ZwMrrA7hf-4pqZxrNYdsTYF6udbmoezJoO0bL12gzWNh14Eu0RJwcNUkg-odBPUK24ohTcZVvbg/s1600/US_Post_Office_Ash_Flat_AR.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="177" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjstiKzcSxIsC-_OfJO0g9EvgtUBrUPddVVFW-N0XS7GAWejQ_VKop3oJbB8J9lldRa9ZwMrrA7hf-4pqZxrNYdsTYF6udbmoezJoO0bL12gzWNh14Eu0RJwcNUkg-odBPUK24ohTcZVvbg/s320/US_Post_Office_Ash_Flat_AR.jpg" width="320" /></a>In an interview with Kelly Holmes of My Print Resource, Deputy Postmaster Ron Stroman indicated the Postal Service's retail optimization initiative before the Postal Regulatory Commission was just the first phase of a muti-phase plan. In the interview he indicated that the the next phase will look at another 4,000 Post Offices, stations and branches.<br />
<br />
Given the current review process that includes both the current Postal Regulatory Commission review of the Postal Service's proposal as well as review of possible appeals, The next phase of the retail optimization will likely occur sometime in mid to late 2012. <br />
<br />
Upon completion of these two phases, as well as retail closure efforts already progressing, the Postal Service will be examining nearly 9,000 Post Offices or as much as one-quarter of all retail facilities.Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-13464252799755071332011-09-13T08:50:00.000-04:002011-09-13T18:32:38.683-04:00Postal Service Cannot Avoid LayoffsThe Postal Service seeks to cuts its full time employees by <a href="http://courierexpressandpostal.blogspot.com/2011/08/postal-service-cutting-228000-career.html">228,000</a> in the next two to three years. A review of attrition rates over the past three years indicates that layoffs are unavoidable. Even with early retirement incentives, layoffs will likely be between 120,000 and 130,000. Without these incentives they would be even higher.<br />
<strong>Attrition of Employees over 50</strong><br />
Attrition of Postal employees over 50 comes from retirement, death, and voluntary and involuntary separation from the Postal Service Early retirement incentives were offered to different groups of employees in 2009 and 2011. So the attrition rates below include the impact of these incentives.<br />
Regarless of the reason an employee over 50 left the Postal Service, about 27% of the Postal Service employees over 50 in 2008 had left by 2011. Similar percentages for over 55, 60 and 65 are shown in the following table.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_02NJX0BhqVcSE8T-lmJQwq9AgHpO6PxBhyphenhyphenFemrJTHbq1-kEZdBX87M6Nk114BzMp3Xo_17jzdeRgiz0TMDzJ5h2G7w9zdDNzpNMUlLHzwDbzvThd_sOuldQy3BWNuQngg6xh7KX5b8yp/s1600/3-Year+attrition+rate.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_02NJX0BhqVcSE8T-lmJQwq9AgHpO6PxBhyphenhyphenFemrJTHbq1-kEZdBX87M6Nk114BzMp3Xo_17jzdeRgiz0TMDzJ5h2G7w9zdDNzpNMUlLHzwDbzvThd_sOuldQy3BWNuQngg6xh7KX5b8yp/s320/3-Year+attrition+rate.png" width="221" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Comparison for Pay Period 18 for 2008 and 2011</td></tr>
</tbody></table>
<br />
Assuming that the Postal Service offers similar incentives to eligible employees, it should see a reduction in full time career employee among employees who are 50 or older today by around 94,000. The Postal Service should see total full time employee count by 100,000 if those under 50 leave Postal Service employment at historical levels. This quick analysis confirms Postal Service statements that it would have to lay off at least 120,000 employees in the next few years as it restructures its service.<br />
<br />
<strong>The Importance of Early Retirement Incentives</strong><br />
<br />
By looking at one-year attrition rates, the importance of incentives becomes clear. Attrition rates of those over 50 rose between 2009 and 2010 reflecting the impact of the <a href="http://voices.washingtonpost.com/federal-eye/2009/08/postal_service_offers_employee.html">early retirement incentives</a> for 150,000 employees that went into effect in the fall of 2009. As could be expected attrition rates fell in 2010-2011 as early retirement incentives pushed up retirement by a year for some employees. <br />
<br />
Attrition rates for employees over 65 appears to suggest that the incentive may have had a real impact for these workers as it induced more retirements than would otherwise occur without having much impact on retirement decisions of employees who continued to work after the incentive expired.<br />
<br />
Attrition rates for those between 50 and 60 actually dropped after an early retirement incentive was offered which suggests that the incentive may have only had the effect of convincing employees who were likely to leave for other employment to leave a year earlier and may not have had much of an impact on the number of Postal employees in that cohort over a longer period. <br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4fAoAmyOKp12ZTOnrNKjSHrzltX8DQuZyEvOn5zUQVT9yQinpoPN-XBFJWYNoB3CiLI2Y2KCoCZMPIKfNj4jYIh7HF51oS0FYgC68isc892T_BaWrU3A2W8wjSMkBAAZzNpP5CnEm8onF/s1600/1-year+attrition+Rate.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="284" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4fAoAmyOKp12ZTOnrNKjSHrzltX8DQuZyEvOn5zUQVT9yQinpoPN-XBFJWYNoB3CiLI2Y2KCoCZMPIKfNj4jYIh7HF51oS0FYgC68isc892T_BaWrU3A2W8wjSMkBAAZzNpP5CnEm8onF/s320/1-year+attrition+Rate.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Comparison for Pay Period 18 for 2008 through 2011</td></tr>
</tbody></table>
<br />
If this estimate is correct, offering early retirement incentives could boost attrition rates for those over 50 by 3%. If these incentives were offered to all Postal Service employees over 50, the Postal Service would see its employee count cut by retirements increase by around 11,000 more than it would otherwise.<br />
<br />
<br />
<strong>Statements Implying that Cuts in Postal Service Employment Can Occur Without Pain Are Wrong.</strong><br />
<br />
Yesterday, the Hill reported that Representative Darrell Issa stated on the Morning Joe on MSNBC,<br />
<blockquote>
"You can get the 200,000 or so excess workers off the payroll without having to use punitive measures."</blockquote>
In the same interview, Mr. Issa talked about forced retirements and implied that a forced retirement was not a punitive retirement. Even if you accepted that forced retirements did not violate age discrimination law and was not a punitive measure, forced retirement of Postal employees would still require a significant number of layoffs.<br />
<br />
If one assumed that every employee over 65 could be forced to retire, then forced retirement would cut Postal employment by 17,000 more than normal attrition. If one assumed that every employee over 60 could be forced to retire than forced retirement would cut Postal employment by71,000 more than normal attrition. So forced requirements would still require layoffs of between 50,000 and 100,000 employees.<br />
<br />
<strong>Cutting Postal Service Employment by 220,000 Requires Major Service Change</strong><br />
<br />
Cutting Postal Service employment by 220,000 requires that it cut its processing capacity, the number of delivery days and retail network significantly. These changes reduce service levels for both individual and commercial mailers retail customers is affected depends on the effectiveness of the Village Post Office concept and other efforts to switch retail services to franchisees and contractors.<br />
<br />
The changes in service standards and delivery days represent a change in the Postal Service's universal service obligation. The changes in service standards represent a change in what the Postal Service promises its customers and do not reflect a specific obligation set in law. The change in delivery days represents a specific legal obligation that can be considered to be part of the Postal Service's universal service obligation.<br />
<br />
The Postal Service's service standard obligation is similar to common carrier obligations that FedEx and United Parcel Service have to meet published delivery standards. Therefore this obligation can be changed at will by the carrier who is only obligated to provide the service that it promises. So technically the change in the service standard could be argued is not a change in the Postal Service's universal service obligation as it is a change in its common carrier obligation. Either way, the change in standard is a reduction in the Postal Service's commitment to its customers.<br />
<br />
Congressman Issa in his interview stated that "Universal service is part of the [Postal Service's] mandate, and we think that's extremely important." As cutting employees would require changes in delivery days and service standard, Congressman Issa's understanding of the Postal Service's Universal Service Obligation does not appear to be fixed with the obligations that now exist.<br />
<br />
<strong>Conclusion</strong><br />
<br />
Cutting 228,000 Postal Service full time jobs will eliminate jobs of people who wish to continue working. As forced retirements are most likely illegal, the Postal Service will have no choice but lay off 120,000 to 130,000 employees over the next few years. <br />
<br />
In order to cut this number of employees, the Postal Service needs to change its way of doing business. Retail services will need to be increasingly performed by contractors and franchisees. Days of delivery would need to be reduced. Service standards would have to be relaxed. The latter two changes represent a major change in the Postal Service's commitment to its customers and a change in the understanding of the Postal Service's universal service and common carrier obligations. Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com25tag:blogger.com,1999:blog-563539329592161652.post-33804336403686788142011-09-12T11:02:00.001-04:002011-09-12T11:02:24.499-04:00100 Years of New Yorker Covers Illustrates How America's Connection with the Postal Service Has ChangedThe <a href="http://www.newyorker.com/online/blogs/newsdesk/2011/09/postal-covers.html">New Yorker</a> in its current issue has an article that shows covers with postal themes over the past 84 years. The covers show the gradual shift of the perception of mail and the Postal Service.<br />
<br />
Looking at the covers, the illustrators clearly show the changes and present a fairly scary picture of the future of the Postal Service.<br />
<br />
<ul>
<li> Covers from the 1920's through the 1970's show the Postal Service as the critical communications link between households and other households. </li>
<li>A cover from 1973 illustrated mail as a critical part of political campaign communications with voters. Today's campaign mailings are a significant step beyond volunteers hand-addressing and stamping envelopes as shown in that cover.</li>
<li>In 1976, a cover by Edward Sorel, illustrated how the combination of lower Postage rates and computerized lists created the catalog and direct mail industry that generated a deluge of catalog deliveries that became as much a sign of Autumn as falling leaves.</li>
<li>In 2004, a cover illustrated the growth of growth of computers and e-mail. This cover coincided with the early years of the decline in First Class mail.</li>
</ul>
<br />
<ul><div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkdqGbSYU8uVnO-QgRsnZI62yKvqUFJNOR7_MTtRFlHE1Il3LpPpk2b1e5NxX31uqn-H74u-Dojg0Qejx5Ma42HC4ARG1x8LoH_DkAlRkt6FqBJYUe1NHTCbwbgtdh36zEAjXGHkiSy1-k/s1600/New+Yorker+9-11-11+cover.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="640" nba="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkdqGbSYU8uVnO-QgRsnZI62yKvqUFJNOR7_MTtRFlHE1Il3LpPpk2b1e5NxX31uqn-H74u-Dojg0Qejx5Ma42HC4ARG1x8LoH_DkAlRkt6FqBJYUe1NHTCbwbgtdh36zEAjXGHkiSy1-k/s640/New+Yorker+9-11-11+cover.jpg" width="467" /></a></div>
<li>Finally, the current cover, suggests a rather ominous future for the Postal Service. The stone cutters chisel new words on the New York Post Office that continually modify the unofficial slogan of the Postal Service as service diminishes. Even more ominous are the tourists on the double decker bus which suggests that we are not far of that the the Postal Service and printed communications are viewed by tourists looking at a historical monument and not a living, breathing enterprise. </li>
</ul>
Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-69381870557111159062011-09-08T13:49:00.002-04:002011-09-08T13:49:43.295-04:00Flooding in Pennsylvania will Delay ShippingFlooding in eastern Pennsylvania will have a big impact on e-commerce shipping in much of the eastern United States. The area facing record level flooding is home to fulfillment centers of nearly every large e-commerce company. With roads closed, these centers will have difficulty both getting products delivered to the centers and shipments to customers out. Among the e-retailers that will be affected is Amazon which has three fulfillment centers in the region.<br />
<br />
Shipments from United Parcel Service, FedEx and the Postal Service that travel by ground through this region will need to find circuitous alternative routes as some major Interstates may remain closed for a few days. The delay in opening highways in Pennsylvania is due to the task of inspecting 100's of bridges over flood swollen creeks and rivers. UPS shipments may also face delays if the flood affects rail service that transports United Parcel Service trailers.<br />
<br />
The <a href="http://www.whptv.com/news/local/story/PennDOT-urging-people-not-to-travel-in-Eastern-PA/gpw8x_3bcUyericK7mgP7g.cspx">Pennsylvania Department of Transportation</a> has urged that travel in eastern Pennsylvania be curtailed. Flooding in the Susquehanna, Schuylkill and Delaware watersheds are at or near record levels not seen since Hurricane Agnes in 1972. Mandatory evacuation of areas flooded in 1972 is occurring in nearly all communities along the Susquehanna River.<br />
<br />
The flooding has already closed both I-80 west of I-81 and I-81 north of Harrisburg as well as numerous U.S. highways and state roads. Later today <a href="http://www.pennlive.com/midstate/index.ssf/2011/09/flood_forecast_worsens_susqueh.html">Harrisburg</a> is expected to be isolated as I-81 and I-83 entrances to the city are closed. <br />
<br />Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-6938268753831969882011-09-07T16:10:00.001-04:002011-09-07T16:20:49.780-04:00Senator Coburn on the Postal Service: Free ManagementCNN interviews Senator Tom Coburn on the Postal Service. In his answers to John King's questions his focus is on freeing management to run the Postal Service with the same flexibility any other business would have to meet market demand. He does not indicate support for any approach to Postal reform but clearly states that operating subsidies are out of the question as far as he is concerned. <br />
<br />
Senator Coburn clearly shows his support for the current Postmaster General and appears to indicate that he would trust him to run the enterprise if he had the freedom to run it. He also clearly states that there is no money to return the Postal Service to a government taxpayer supported model. <br />
<br />
Why he indicates his support for greater management flexibility in negotiating labor contracts, he does go further to suggest that existing contracts should be broken.<br />
<br />
I apologize for the commercial at the beginning, but that was the only way to get the intro and the full interview. It is worth a listen as it provides another clue as to what a bi-partisan postal reform bill might look like.<br />
<br />
<br />
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<embed src="http://i.cdn.turner.com/cnn/.element/apps/cvp/3.0/swf/cnn_416x234_embed.swf?context=embed&videoId=us/2011/09/06/jk-coburn-postal.cnn" type="application/x-shockwave-flash" bgcolor="#000000" allowfullscreen="true" allowscriptaccess="always" width="416" wmode="transparent" height="374"></embed></object>Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com3tag:blogger.com,1999:blog-563539329592161652.post-87731007675000343022011-09-07T14:33:00.001-04:002011-09-07T14:33:12.697-04:00Comparing the Postal Service and Canada Post in AdvertisingToday, I received the following e-mail It shows how a company that sells envelopes, mailers, and folders is using the Postal Service's problems to sell its products. What is striking in the copy is how it contrasts the management of the Postal Service with Canada Post. This has got to hurt at L'Enfant Plaza. It shouldn't as the difference between the two reflects not management ability but the business model that the enterprise most operate under. The Postal Service still operates closer to a government department model than it often admits publicly. Canada Post operates under a business model that is very close to the standard Canadian corporate model.<br />
<br />
While Canada Post may not really be "a model of corporate efficiency," it has maintained its profitability as it handled the growth of electronic communications. In doing so, Canada Post is the North American example of corporatized and privatized national posts that provide universal service profitably while facing increases physical and electronic delivery competition. <br />
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Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-49493799498971665122011-09-06T13:31:00.001-04:002011-09-07T14:53:59.381-04:00Amazon Preparing For Postal Service Shutdown<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvWezWyNQ57kyLelcjssLK8yhLoDQ6OLK34tz5z8jt48Bkk9uC-OtJvHaO7AuIeArdlMByCQrqv7PpL09EBRYM-ortCFHcXxpXhp5m8ZFINveVcKELOIiEv8Xz4W-xOByQUjRbx8Sml7Lk/s1600/a_com_logo_th.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="58" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvWezWyNQ57kyLelcjssLK8yhLoDQ6OLK34tz5z8jt48Bkk9uC-OtJvHaO7AuIeArdlMByCQrqv7PpL09EBRYM-ortCFHcXxpXhp5m8ZFINveVcKELOIiEv8Xz4W-xOByQUjRbx8Sml7Lk/s200/a_com_logo_th.jpg" width="200" /></a>On September 2, 2011, <a href="http://www.thedaily.com/page/2011/09/02/090211-tech-technews-amazon-lockers/">The Daily</a> reported that Amazon is now preparing to test a locker based system for parcel delivery in the Seattle, Washington. The lockers, to be placed in 7-11 gives Amazon an alternative means of delivering shipments that avoid home delivery and the issue of repeated delivery attempts. If Amazon puts one in every 7-11, it will have 8,200 parcel pick-up locations nationwide.<br />
<br />
Seattle is one of the markets that Amazon currently offers local express delivery. Items eligible for local express delivery can be ordered as late as 1 pm for delivery that day. The parcel lockers allow Amazon to cut the delivery time on its shipments by reducing the number of locations where parcels need to be delivered. This should allow Amazon to expand its same day delivery service and possibly reduce shipment times for other shipments.<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp0MnGaxxU7oFaoK6j-pvs2W8BVK6Enk5MQ8C7SPlpRDPrzVZyLQHw-JhwaHkZwcDo_n9G5JL5HLAN3oh0o8z7EPgXE8VfItV3BaZ8-UUJAZzKhad7tIEhtkxDpDbnrQ8eZVPrO78Ew8sy/s1600/amazon-locker2-300x231.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="307" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp0MnGaxxU7oFaoK6j-pvs2W8BVK6Enk5MQ8C7SPlpRDPrzVZyLQHw-JhwaHkZwcDo_n9G5JL5HLAN3oh0o8z7EPgXE8VfItV3BaZ8-UUJAZzKhad7tIEhtkxDpDbnrQ8eZVPrO78Ew8sy/s400/amazon-locker2-300x231.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">7-11 Seattle, WA</td></tr>
</tbody></table>
<a href="http://www.geekwire.com/2011/confirmed-amazons-delivery-locker-7eleven">Geekwire</a> published pictures from a 7-11 in the Capitol Hill section of Seattle.<br />
<br />
The picture shows a set of lockers taking up a small portion of the 7-11's floor space. 7-11 most likely is leasing the space to Amazon. The lease will likely cover all utilities and may include a requirements regarding how the area around the parcel locker is to be maintained Putting the parcel locker in a 7-11 helps reduce security concerns that would exist if the lockers were put outside which is common in other applications.<br />
<br />
The close-up photographs show lockers of different sizes that could fit everything from a book to a small appliance.<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgg9Tq28JNVrE3bOK_bG9_qhvlBvlTGUhadRodxICoH6T7OxnoP-N9CifVmHOr4sOEqEhwtMmBJBqWXoEhmJujS2qD1-MVop69IhMy8dbo5BsmpMVyXzXEQAX5DyB3UCcwLik4awP85NiG_/s1600/amazon-locker333.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="311" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgg9Tq28JNVrE3bOK_bG9_qhvlBvlTGUhadRodxICoH6T7OxnoP-N9CifVmHOr4sOEqEhwtMmBJBqWXoEhmJujS2qD1-MVop69IhMy8dbo5BsmpMVyXzXEQAX5DyB3UCcwLik4awP85NiG_/s400/amazon-locker333.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Amazon Parcel Locker</td></tr>
</tbody></table>
According to The Daily, <span style="background-color: #cccccc;">a source with knowledge of the project, the idea is simple: these nondescript boxes will be in 7-Eleven stores across the country and act as a sort of P.O. box for Amazon purchases. Once a customer makes a buy on Amazon’s website he can select a 7-Eleven close to work, or on the way home and have the package dropped off there.</span><br />
<blockquote>
<blockquote>
<span style="background-color: #cccccc;"><span style="background-color: white;">Once</span> the package is actually delivered, the customer receives an email notification along with a bar code to his smartphone and heads to the 7-Eleven. There he’ll stand in front of the locker system, which looks like the offspring between an ATM machine and a safety deposit box. The machine will scan the bar code on his handset to receive a PIN number. He’ll punch that PIN number and retrieve the package.</span></blockquote>
</blockquote>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimPMDtTmSSp_lKoiJDc-W9p4nfFUq5WDPio_rWXG7igtRlkLCUTI90LXxM3HByvnYjjNPY55g9_DO9updfwsflNgVzQfXYbUhcNMG2sgY8hPmEGvvinaJVXnsKLo1unbVp6YA3zDmri85w/s1600/dhl_packstation02.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="265" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimPMDtTmSSp_lKoiJDc-W9p4nfFUq5WDPio_rWXG7igtRlkLCUTI90LXxM3HByvnYjjNPY55g9_DO9updfwsflNgVzQfXYbUhcNMG2sgY8hPmEGvvinaJVXnsKLo1unbVp6YA3zDmri85w/s400/dhl_packstation02.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">DHL Packstation</td></tr>
</tbody></table>
<br />
<br />
This is similar to how <a href="http://www.dhl.de/en/paket/privatkunden/packstation.html">DHL describes the use of its Packstation</a>: 1) register for the service; 2) choose a packstation; and 3) pick-up a parcel when notified by e-mail or text message. DHL now has 2,500 Packstations in urban, suburban and rural areas. Packstations have been installed in many small rural towns in Germany, with some of these towns as small as 7.000.<br />
The difference between the Packstation and Amazon's kiosk is that Packstations are designed for shipping parcels as well. The credit card reader in the Packstation is missing as well as the slot for printed shipping labels. Also as most Packstations are located outside, they also include a canopy to allow use in inclement weather.<br />
<br />
The front-on picture of the Amazon kiosk provides a better image of what are likely a touch-screen interface and the lockers of various sizes designed for small parcels.<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhok3HMZr04zHW78rCMC4YKKgC8-FzuZgjVKCvXXCQhqqqNlfFxs0o60owDKZDx0jmN2VAfaLjsr_Nbydwx8dqN5A17ZBwRQcWes8kIRNdNGSGO4akdqL-AThPFU5uNm5Ebs0PrHsDkdLuB/s1600/amazon-lockers-300x224.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="297" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhok3HMZr04zHW78rCMC4YKKgC8-FzuZgjVKCvXXCQhqqqNlfFxs0o60owDKZDx0jmN2VAfaLjsr_Nbydwx8dqN5A17ZBwRQcWes8kIRNdNGSGO4akdqL-AThPFU5uNm5Ebs0PrHsDkdLuB/s400/amazon-lockers-300x224.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Amazon Parcel Locker</td></tr>
</tbody></table>
According to the Daily's source, Amazon is testing the system now and could begin roll-out by next summer.<br />
The look of the Parcel locker clearly shows that it is a direct threat to the parcel business of the Postal Service. The size of the lockers fit smaller parcels. This includes parcels that United Parcel Service and FedEx deliver using the Postal Service's Parcel Select or Standard Parcel products, as well as shipments that fit into any of the Postal Service's Priority Mail flat rate boxes.<br />
<br />
While Amazon is installing these parcel kiosks, the lack of branding raises some interesting questions about Amazon's long-term strategy for this significant capital investment.<br />
<ul>
<li>Are the kiosks only going to be available to only Amazon and Amazon marketplace sellers or will they be open to all shippers of parcels?</li>
<li>If they are open to all shippers, what brand will Amazon chose to give it universal appeal?</li>
<li>Could Amazon license the Postal Service brand to give it universal appeal? </li>
<li>Who will have access to the lockers to put parcels in? </li>
<ul>
<li>Will Amazon have a single local carrier handle this or will the parcel lockers be open to UPS, FedEx, Postal Service and other parcel carriers? </li>
<li>If they are open to all carriers, will Amazon charge a fee for their use, turning parcel pick-up into a profit center?</li>
</ul>
<li>Will Amazon open these parcels in all states or will its fight over sales taxes determine where it puts them?</li>
<li>If the sales tax issue creates problem would Amazon operate these parcel lockers through a subsidiary with which it has an arms-length relationship?</li>
</ul>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGa8VJKCFO0M6KHRR3ZUXgBqTfdo-sJ31r4ht_zd004FcxBBtGvUp1PP7z6Q70VWubr9pzSlJhwRg_st4Ve0axw1tZbDmPFBQvbwopIjUby-NXA_SnBa87Dg9jDVxNF-zrynmOw7RB9L6J/s1600/2443219136_90050403ab.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGa8VJKCFO0M6KHRR3ZUXgBqTfdo-sJ31r4ht_zd004FcxBBtGvUp1PP7z6Q70VWubr9pzSlJhwRg_st4Ve0axw1tZbDmPFBQvbwopIjUby-NXA_SnBa87Dg9jDVxNF-zrynmOw7RB9L6J/s320/2443219136_90050403ab.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Post Danmark (Denmark)</td></tr>
</tbody></table>
Outside of the United States, investments in parcel lockers have been made by the national post because the national post is the largest parcel carrier delivering parcels, and in particular small parcels to residences. The United States Postal Service has known about the Packstation, which is made by <a href="http://www.keba.com/en/banking-and-service-automation/kepol-parcel-logistics-solutions/">Keba, AG</a> and parcel locker solutions from other vendors for at least the last two years that they have been mentioned on this blog. [<a href="http://courierexpressandpostal.blogspot.com/2009/08/should-postal-service-close-all-post.html">Should the Postal Service Close all Post Offices</a>?] However, it had neither the available capital nor the willingness to make hard choices about its retail strategy to choose what will likely be the small parcel delivery method of the future.<br />
<br />
Investments of this type take a fairly long time to consider and an even longer time to implement. Amazon's decision to make this investment clearly indicates that it needed a different way to deliver to smaller and in particular smaller high-value parcels than what FedEx, United Parcel Service or the Postal Service now offer or appear to be likely to offer in the future.<br />
<br />
Most importantly, the Postal Service's financial problems, legal and regulatory constraints, and Congressional meddling made it impossible for the Postal Service to provide the service that Amazon receives from the national post in every country where the national post has been corporatized or privatized. Furthermore, the seriousness of the Postal Service's financial condition has resulted in proposals that could add an additional day for drop-shipped parcels or eliminate delivery on Saturdays, options that make Amazon less competitive with stores like Walmart and Best-Buy that offer in-store pickup in an hour or less.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://upload.wikimedia.org/wikipedia/commons/3/37/Small_USPS_Truck.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="179" src="http://upload.wikimedia.org/wikipedia/commons/3/37/Small_USPS_Truck.jpg" width="320" /></a></div>
The risk that the Postal Service may not be able to meet Amazon's delivery needs in the future coupled with the high price of alternatives from FedEx and United Parcel Service that forced Amazon's hand. Given that the investment in a network of parcel lockers will be in hundreds of millions if not billions of dollars range, the size of the risk that the Postal Service could close or offer lower quality parcel delivery services clearly was material to revenue growth and profit prospects of Amazon. This made the investment both prudent for Amazon and a great concern for Postal Service, postal stakeholders, and lawmakers trying to rewrite the law to ensure a future for the Postal Service and the customers it serves.<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com2tag:blogger.com,1999:blog-563539329592161652.post-36115632225641006612011-09-06T08:31:00.001-04:002011-09-06T09:41:06.764-04:00Postal Service Seeks 7% Cut in Contract SpendingThe following article from behind the Bloomberg paywall identifies how the Postal Service's plan to cut contract costs will affect a wide range of contractors. The cuts in capital spending, which come off of severely constricted levels reflect a short-term focus of an enterprise focused only on survival. Other cuts, including those to truck transportation contracts will likely open up transportation of mail to firms that provide dedicated fleets to multiple customers and reduce the number of Postal Service contracts that firms that now get all or most of their business from the Postal Service receive.<br />
<br /><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<strong><span style="font-size: large;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Northrop May Feel Squeeze of Postal Service $1 Billion
Cost Cuts<o:p></o:p></span></span></strong></div>
<br /><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">2011-09-06 04:00:01.3 GMT<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><o:p> </o:p>By Angela Greiling Keane<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>Sept. 6
(Bloomberg) -- The U.S. Postal Service, which spends about $15 billion a year
on products and services, is pressing its more than 20,000 suppliers for $1
billion a year in cost cuts as it faces possible insolvency as soon as Sept.
30.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>Postmaster
General Patrick Donahoe on Sept. 15 is scheduled to announce a plan to
eliminate mail processing facilities and cut transportation and equipment
costs. Donahoe is slated to testify today before the Senate Homeland Security
and Governmental Affairs Committee, which is probing proposals to prevent a
postal shutdown.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>“It’s becoming
more competitive to do work for us and it’s going to have to be done at slimmer
margins from a standpoint of our supplier base,” Chief Financial Officer Joseph
Corbett said in an interview. Corbett said he wants to cut at least $1 billion
a year from supplier spending.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>The
cost-cutting has implications for many of the largest Postal Service
contractors, said David Hendel, a Husch Blackwell LLP partner who specializes
in postal contracting. He compiles a list of top service contractors from
documents obtained through the Freedom of Information Act.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Companies at risk of losing postal revenue
range from Northrop Grumman Corp. and Siemens AG, which supply sorting
equipment including barcode readers; to FedEx Corp., the largest contractor; to
closely held trucking company Pat Salmon & Sons, which doesn’t list any
business line on its website other than hauling mail.<o:p></o:p></span><br />
<br /><strong><span style="font-size: large;"><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>‘Stark Reality’<o:p></o:p></span></span></strong><br />
<br /><o:p><span style="font-family: Calibri;"> </span></o:p><span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> <span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"> </span></span></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">The Postal
Service’s mail volume has declined 20 percent since peaking at 213 billion
pieces in 2006. It has said it may lose $9 billion in the fiscal year ending
Sept. 30 and run out of money by that date to make all payments required by
law.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>The service
has asked Congress to let it delay a $5.5 billion payment for future retiree
health benefits and shift what it says are over payments to federal pension
funds to cover that payment. It wants to end Saturday mail delivery, cut 220,000 jobs by 2015 and close 3,700 post offices.<o:p></o:p></span><br />
<br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>Corbett is
continuing an initiative he started after becoming financial chief in 2009 by
sending a letter to suppliers explaining the “stark reality” of postal finances
and asking for “significant price reductions on both existing and future work.”<o:p></o:p></span></div>
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>The service is
bidding contracts for services from transportation to custodial work,
renegotiating existing contracts “wherever it makes good business sense,”
simplifying its requirements to suppliers and lowering use of consumable
products, Douglas Glair, the service’s manager of supply chain management
strategies, said in an e-mail.<o:p></o:p></span><br />
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;"></span></span><br />
<span style="font-family: Calibri;"><span style="mso-spacerun: yes;">
</span></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><strong><span style="font-size: large;">FedEx Tops List<o:p></o:p></span></strong></span><br />
<br /><o:p><span style="font-family: Calibri;"> </span></o:p><span style="font-family: Calibri;"><span style="mso-spacerun: yes;"> <span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"> </span></span></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">FedEx, which
operates the world’s largest cargo airline, is the largest Postal Service
supplier, receiving $1.4 billion in the 2010 fiscal year, according to Hendel’s
list. Hendel has compiled the list annually since 2001.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>FedEx’s postal
revenue is more than twice the $495 million of No. 2 Northrop Grumman Corp.,
according to the list. Most of FedEx’s postal revenue comes from a seven-year,
$1 billion-a- year contract to fly about 4 billion pounds of mail per day until
2013, an agreement the service negotiated “from a position of extreme
weakness,” Hendel said.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>FedEx’s mail
volume will decrease after the contract runs out as the service moves more mail
on the ground, Corbett said. </span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">The service will continue to use FedEx to transport
priority mail and some first-class mail, he said.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>FedEx receives
about 3.5 percent of its revenue from the Postal Service, based on Hendel’s
listed amount as a percentage of the company’s last-reported annual revenue.
The company, based in Memphis, Tennessee, declined to comment on whether it’s
under Postal Service pressure to cut costs.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>“FedEx values
its alliance relationship with USPS, both as a supplier and a customer,” Maury
Donahue, a FedEx spokeswoman, said in an e-mail.<o:p></o:p></span><br />
<br /><strong><span style="font-size: large;"><o:p><span style="font-family: Calibri;"> </span></o:p><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">One-Way Pay<o:p></o:p></span></span></strong><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>From 2009 to
2010, the service cut transportation expenses $148 million, or 2.5 percent, and non-transportation
supplier expenses by $60 million to $9.2 billion, or 12 percent of its
operating expenses, according to a regulatory filing.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>In a 2009
letter from transportation contract managers to trucking suppliers, the service
proposed rate reductions, a request it called “extreme” while also saying
contracts without rate reductions may not be renewed.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>The Postal
Service is asking trucking suppliers that have to make round-trips to haul mail
to be paid for only the half the journey when the truck is full of mail, rather
than for round-trip mileage, Hendel said. “If the contractor will not agree to
this, the Postal Service is threatening to terminate their contract,” he said.<o:p></o:p></span><br />
<br /><span style="font-size: large;"><o:p><span style="font-family: Calibri;"> </span></o:p><strong><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Equipment Freeze<o:p></o:p></span></strong></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><o:p> </o:p><span style="mso-spacerun: yes;"> </span>In a plan the
service circulated to lawmakers in August, it said it wants to cut its more
than 500 mail processing facilities down to fewer than 200. It didn’t say how
much money it expects to save.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>Among other
things, the service “will not be buying mail processing equipment, period,” Sue
Brennan, a Postal Service spokeswoman, said in an e-mail.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>Munich-based
Siemens AG, the service’s fifth largest supplier in its 2010 fiscal year with
$135 million in revenue according to Hendel’s data, is taking notice.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>“We’re affected by their budget and their
spending,” </span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Daryl Dulaney, chief executive officer of the Siemens
Industry division, said in an interview at Bloomberg’s Washington office. </span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">“It causes us to react and adjust.”<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>Randy Belote,
a spokesman for Northrop Grumman, based in Falls Church, Virginia, declined to
comment.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><strong><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="font-size: large;">Cheaper Ads<o:p></o:p></span></span></strong><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><o:p> </o:p><span style="mso-spacerun: yes;"> </span>The Postal
Service’s advertising spending increased 40 percent as the service promoted its
profitable package-delivery businesses. Most of the increase went to advertise
flat-rate boxes through a campaign created by Campbell-Ewald, making it the
eighth largest USPS supplier according to Henkel.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>Jim Palmer,
chief client officer for the advertising agency based in Warren, Michigan, said
they understand the Postal Service’s requests for cost-cutting. He declined to
discuss what cuts the service has requested.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> <span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"> </span></span></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">“When the
Postal Service comes to us, we do our absolute best to react to their
situation,” he said in an interview. </span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">“As their business has ebbed and flowed, and it’s no
secret that there are some challenging times, we react in kind.”<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>While some of
the Postal Service’s suppliers have diversified businesses, others are more
dependent on the mail revenue for their livelihoods, Hendel said.<o:p></o:p></span><br />
<br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>One is Pat
Salmon & Sons, the fourth-largest contractor with $143 million in revenue.
The company was founded in 1946 to move mail in Arkansas and has more than 100
postal contracts and moves mail in 26 states, according to its website.<o:p></o:p></span></div>
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>“We wouldn’t
be interested in commenting at all,” said a man at the company’s headquarters
in North Little Rock, Arkansas, who didn’t identify himself before he hung up.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>The Postal
Service may have a hard time squeezing more savings out of suppliers, Hendel
said.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"> </span>“About the
only thing left is for USPS to reduce the services and goods that USPS buys, or
relax contract requirements and specifications so that the cost of performance
is less,” he said.<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><strong><span style="font-size: large;">For Related News and Information:<o:p></o:p></span></strong></span><br />
<br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Postal stories: NI POS <go><o:p></o:p></go></span></div>
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">For top government stories: GTOP <go><o:p></o:p></go></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><o:p> </o:p>--Editors: Bernard Kohn, Timothy Franklin<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><o:p> </o:p>To contact the reporter on this story:<o:p></o:p></span></div>
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Angela Greiling Keane in Washington at +1-202-654-1287 or
</span><a href="mailto:agreilingkea@bloomberg.net"><span style="color: blue; font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">agreilingkea@bloomberg.net</span></a><o:p></o:p><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><o:p> </o:p>To contact the editor responsible for this story:<o:p></o:p></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">Bernard Kohn at +1-202-654-7361 or </span><a href="mailto:bkohn2@bloomberg.net"><span style="color: blue; font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">bkohn2@bloomberg.net</span></a><o:p></o:p>Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-40329596813186529082011-09-06T07:56:00.002-04:002011-09-06T07:56:30.769-04:00Newspaper Calls for Shutting Down the Postal ServiceIn an editorial, the <a href="http://www.delcotimes.com/articles/2011/09/06/opinion/doc4e6576c94ffc7991493497.txt?viewmode=fullstory">Delaware County Daily Times</a> called for the shut down of the Postal Service The paper called the Postal Service "a prime example of a service the federal government in the
very near future will longer need to provide. It should be planning for
that day right now instead of looking for ways to prop up a huge and
expensive bureaucracy that has served the country well but has been made
expendable by progress."<br />
<br />
The editorial illustrates why postal stakeholders have failed to explain why mail matters to the economy today and will 10 years from now. This editorial, from a newspaper whose editorial page leans somewhat left of center, that public support for having a government entity deliver items consisting of some correspondence and transactions but mostly advertising and parcels may not be all that strong.Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-26038373871269291032011-09-05T12:21:00.001-04:002011-09-06T10:54:33.484-04:00Senate Hearing Witnesses Suggests Retiree Benefit Fix Still on Table<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVD1TrZrkz1lLQMraxo9XdQxplTgmfrjSirNjo6pg7Kqem6xM6jXB3eB5QlPkb_2_q3QPbkQdKqh0dcJgNxYTlAU6plkGRXTGbxLlHw4H6T7bymIiUUxQUdwgUNIoV3m21fNWUb4cjil3J/s1600/USPS.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVD1TrZrkz1lLQMraxo9XdQxplTgmfrjSirNjo6pg7Kqem6xM6jXB3eB5QlPkb_2_q3QPbkQdKqh0dcJgNxYTlAU6plkGRXTGbxLlHw4H6T7bymIiUUxQUdwgUNIoV3m21fNWUb4cjil3J/s1600/USPS.jpeg" /></a></div>
The list of witnesses included testifying to the Senate Homeland Security and Governmental Affairs Committee on Tuesday includes a witness that is not one of the "usual suspects." By including Thomas D. Levy, Senior Vice President and Chief Actuary, the Segal Company, the Committee signals that it believes that adjusting the retiree obligations will likely be part of legislation that the Committee proposes.<br />
<br />
The <a href="http://www.federaltimes.com/article/20100630/DEPARTMENTS02/6300306/">Segal Company</a> conducted the actuarial analysis of the Postal Service's pensions. Mr. Levy's testimony will likely cover the conclusions of that report. Given the primary focus of Segal Company, he may also be asked questions about actuarial issues relating to the Postal Service's retiree healthcare obligations.<br />
<br />
Mr. Levy's appearance is designed to provide a legislative record to support the Senate Committee's legislative proposal. As he will likely testify that changes to retiree obligations is logical and in concordance with actuarial standards, this would suggest that the Committee will likely include legislative changes that follow actuarial standards.<br />
<br />
The Senate Committee's choice of witnesses shows a contrast with the House Oversight and Government Reform Committee. The House Committee, <em>in the last Congress had Jonathan Foley, Director of Planning and Policy Analysis, U.S. Office of Personnel Management testify in which he testified that OPM did not have the authority to change formulas used to calculate the Postal Service's obligations for retiree benefits. The report of the Inspector General of the Office of Personnel</em> <em>Management which came out in February 2011,was entered into the record at a hearing held in the current Congress. This</em> report of the Inspector General of the Office of Personnel Management <em>reinforces the impression that the</em> primary concern of the House Committee <em>is </em>supporting the interests of the Office of Personnel Management over that of the Postal Service. With this position set, the Issa-Ross bill therefore uses increased Postal Service debt to ensure that the Office of Personnel Management's financial interests are not adjusted. [I<em>talizized edits made 9/6/11 10:52 to clarify when OPM testified]</em><br />
<br />
By the end of the hearing tomorrow, postal stakeholders should be clear that there will be two drastically different bills for solving the Postal Service's financial problems. With only a limited number of legislative days between now and October 1, 2011, a path to agreement appears difficult at best.<br />
<br />
<br />
<br />
<br />Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com8tag:blogger.com,1999:blog-563539329592161652.post-75535609209223476622011-09-05T10:33:00.000-04:002011-09-22T10:41:47.322-04:00Ensuring Access to Retail Services: Defining Effecting AccessThe issue of retail access to services provided by the Postal Service is a two-part policy question. The two questions are:<br />
<ul>
<li>How much access to retail services should be included in the Postal Service's universal service obligation? Answered below</li>
<li>What restrictions should the Postal Service face in meeting its obligation to provide retail access? (Answered in a subsequent Post)</li>
</ul>
Right now the debate over saving Post Offices involves communities concerned about the future of 4351 Post Offices. For 728 of them, the Postal Service is currently progressing through the current process of meetings with communities which is increasingly followed by an appeal to the Postal Regulatory Commission. The Postal Service proposes evaluating 3,653 post offices, stations and branches though a uniform approach in its Retail Access Optimization proceeding at the Postal Regulatory Commission. <br />
<br />
<div>
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjstiKzcSxIsC-_OfJO0g9EvgtUBrUPddVVFW-N0XS7GAWejQ_VKop3oJbB8J9lldRa9ZwMrrA7hf-4pqZxrNYdsTYF6udbmoezJoO0bL12gzWNh14Eu0RJwcNUkg-odBPUK24ohTcZVvbg/s1600/US_Post_Office_Ash_Flat_AR.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="110" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjstiKzcSxIsC-_OfJO0g9EvgtUBrUPddVVFW-N0XS7GAWejQ_VKop3oJbB8J9lldRa9ZwMrrA7hf-4pqZxrNYdsTYF6udbmoezJoO0bL12gzWNh14Eu0RJwcNUkg-odBPUK24ohTcZVvbg/s200/US_Post_Office_Ash_Flat_AR.jpg" width="200" /></a></div>
The emotional attachment to post offices is understandable as the establishment of a post office signaled the establishment of a town. The history of <a href="http://www.sharpcounty.org/ashflat.htm">Ashflat, Arkansas</a> describes how a town's identify is linked to its post office. <span style="background-color: #cccccc; padding-bottom: 2px;">With increases in population and <span class="IL_AD" id="IL_AD1"><u><span style="color: #009900;">trade</span></u></span>, Ash Flat became a town when a new <span class="IL_AD" id="IL_AD3"><u><span style="color: #009900;">post office</span></u></span> was built in 1856.</span><br />
Today Ashflat, a town of 1,082 is the county seat of Sharp County. The town is also a regional commercial center with a Walmart.<br />
<br />
<div>
</div>
The establishment of a Post Office was important in the 19th century as mail delivery in rural areas was to a Post Office and not a home or farm. Looking at maps of Northeastern Arkansas it is hard to imagine how far someone would have had to travel on horseback or carriage to get to the nearest town that already had a Post Office and mail delivery.<br />
<br />
<div>
</div>
Times have changed. Mail is delivered to homes and businesses and Post Offices for most people is not where mail must be received. Post Offices serve one or two roles today. First, they provide retail services. Second, they may act as a carrier depot, or a central location where carriers get mail that must be delivered and complete any sortation needed to more efficiently deliver the mail.<br />
<br />
The question about what level of access to retail services, would meet the Postal Service's Universal Service obligation leads to the two questions at the top of the post that I will present the available options in turn.<br />
<br />
<div>
</div>
<b>How much access to retail services should be included in the Postal Service's universal service obligation?</b><br />
<br />
<div>
</div>
Postal policy relating to Post Offices can be found in two sections of U.S. Code<br />
<br />
<div>
</div>
Title <strike>29</strike> <u style="color: red;">39</u><span style="color: red;"> </span>Sec. 101 Postal Policy:<br />
<blockquote>
(a)....It <b>shall provide prompt, reliable, and efficient services to patrons in all areas</b> and <b>shall render postal services to all communities</b>.<br />
(b) <span class="ptext-1">The Postal Service <b>shall provide a maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining</b>. <b>No small post office shall be closed solely for operating at a deficit</b>, it being the specific<b> intent of the Congress that effective postal services be insured to residents of both urban and rural communities.</b></span></blockquote>
Title 29 403. General duties<br />
<blockquote>
(b) <span class="ptext-1">It shall be the responsibility of the Postal Service—</span><br />
<div>
<blockquote>
<span class="enumbell">(3 ) </span><span class="ptext-2">to establish and maintain postal facilities of such character and in such locations, that <b>postal patrons throughout the Nation will, consistent with reasonable economies of postal operations, have ready access to essential postal services.</b></span></blockquote>
</div>
</blockquote>
What is clear is Congress's intent, "<b>effective postal services be insured to residents of both urban and rural communities.</b>" What is less clear how the Postal Service and the Postal Regulatory Commission should balance the need for effective service and the restriction on closing post offices. <br />
<br />
<div>
</div>
Defining what is effective retail access requires understanding what transactions require an in-person retail transaction and which ones can be performed as or more effectively without a retail outlet. The following table lists most Postal Service retail transactions. The three types of outlets that involve local physical access identify options for providing Postal retail services at that type of outlet. A <span style="color: black; font-family: ZDingbats; font-size: 16pt;">4 </span>indicates that the service is offered at all locations. The <span style="color: black; font-family: ZDingbats; font-size: 16pt;">d </span>indicates that the service is offered at Post Offices and may or may not be offered at contract stations. The <span style="color: black; font-family: ZDingbats; font-size: 16pt;">D </span>indicates that the service is offered at Office Depot and not at banks or supermarkets. Postal Services offered at Office Depot may be offered at pack and ship stores and other locations that offer Postal Service parcel services and stamp book sales but do not sell single stamps and Postal Service money orders or rent Postal Service mail boxes. <br />
<br />
<div>
</div>
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBX67dyAWtoyXnmmIUjtuu6omP80LY8rRmqDbv9JD0SXqjW2g8jXD1JIh6SkjGpYad4eiFa_9i5vsHcs_iH5FBf0W66-y2Glo9_wI66B14iQxePoat27i458PCIaQ4oAzfwuuWfEv66fDE/s1600/Postal+transactions.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="466" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBX67dyAWtoyXnmmIUjtuu6omP80LY8rRmqDbv9JD0SXqjW2g8jXD1JIh6SkjGpYad4eiFa_9i5vsHcs_iH5FBf0W66-y2Glo9_wI66B14iQxePoat27i458PCIaQ4oAzfwuuWfEv66fDE/s640/Postal+transactions.png" width="640" /></a><br />
<div class="separator" style="clear: both; text-align: center;">
</div>
Defining what is effective access to postal services that require an in-person retail transaction is both a business and political decision.<br />
<br />
<div>
</div>
Effective access from a business perspective describes access that is sufficiently easy for customers to use. An optimally effective level of Postal retail access would reflect the level of access that adding an additional access point would add more costs than the incremental sales of Postal products or services. The addition of the phrase "<b>consistent with reasonable economies of postal operations</b>," reinforces the comparison of marginal revenue to marginal costs in assessing effective access.<br />
<br />
<div>
</div>
The political aspect of the definition of access focuses on the access issue independent of the business case for having a retail postal facility in a particular location. The law states that the Postal Service should provide a "<b>maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining." </b>Because the maximum degree of effective postal services is not defined, the operating assumption for the Postal Service, the Postal Regulatory Commission, and Congress has been that the Postal Service provides a maximum degree of service as long as it does not close an existing Post Office for financial reasons. The political aspect of retail access now also assumes that effective retail access requires access in an employee-manned Post Office.<br />
<br />
<b><span style="font-size: large;">Solutions from Other National Posts</span></b><br />
<br />
<div>
The charters of the Australia Post, Canada Post, and La Poste (France) provide three similar approaches of defining effective access that do a better job of ensuring effective service that a national operator can provide without subsidies than what is in current U.S. law. What is common among all of the solutions below is a definite rule for defining access for both rural and urban areas. A similar approach to defining effective access can be found in Germany, Denmark, Ireland, the Netherlands and Sweden. All of these countries, except France allow the national postal operator to choose fairly freely among corporate, franchise, and self -service options in providing access.</div>
<br />
<b>Australia Post</b><br />
<br />
<div>
Australia Post's <a href="http://auspost.com.au/about-us/community-service-obligations.html">Community Service Obligation</a> describes its access obligation as follows:</div>
<blockquote>
Access - Maintain mail lodgement <i>[access]</i> points at 4,000 retail outlets (2,500 in rural and remote areas).</blockquote>
<blockquote>
Retail outlets to be located so that:<br />
<ul>
<li>in metropolitan areas at least 90 per cent of residences are within 2.5 km <i>[1.55 miles] </i>of an outlet</li>
<li>in non-metropolitan areas at least 85 per cent of residences are within 7.5 <i>[4.65 miles]</i> km of an outlet. </li>
</ul>
</blockquote>
<b>Canada Post</b> <br />
<br />
The <a href="http://www.tc.gc.ca/eng/mediaroom/infosheets-canadapost-1770.htm">Canada Post Charter</a> has three provisions that describe access.<br />
<ul>
<li>Canada Post will provide an extensive network for accessing postal services that includes retail postal outlets, stamp shops and street letterboxes, as well as access to information and customer service through the Canada Post's website and call centres. </li>
<li>Canada Post will provide retail postal outlets, including both corporate post offices and private dealer operated outlets which are conveniently located and operated, so that: </li>
<ul>
<li>98 percent of consumers will have a postal outlet within 15 km<i>[9.3 miles]</i>; </li>
<li>88 percent of consumers will have a postal outlet within 5 km<i>[3.1 miles]</i>; and </li>
<li>78 percent of consumers will have a postal outlet within 2.5 km <i>[1.55 miles]</i>.</li>
</ul>
<li>The moratorium on the closure of rural post offices is maintained. Situations affecting Canada Post personnel (e.g., retirement, illness, death, etc.) or Canada Post infrastructure (e.g., fire or termination of lease, etc.) may, nevertheless, affect the ongoing operation of a post office. </li>
</ul>
<b>La Poste</b><br />
<br />
La Poste is required to provide retail access to ensure that:<br />
<ul>
<li>99% of the national population and at least 95% of the population within each department [state] is less than 10 km <i>[6.2 miles] </i>from a post office branch</li>
<li>In addition, every community over 10,000 should have one post office branch per 20,000 inhabitants.</li>
</ul>
<br />
<b><span style="font-size: large;">Conclusion</span></b><br />
<br />
Providing effective access needs a better definition than what is current law. Countries like Australia and Canada with rural areas as rural any part of the United States provide retail services in their most remote areas with rules that are logical. Canada Post face greater limits as it serves numerous arctic and sub-arctic communities and significant political pressure to plant the flag of the government of Canada in all provinces given that country's challenge of dealing with a long-standing separatist movement when the charter was written. <br />
<br />
No National Postal operator has an obligation relating to access that goes beyond defining how far an outlet may be from any citizen. They have not attempted to put into the service charter or universal service obligation any measure of effectiveness that relates to how easy it is to use the service at a particular access point. (This could be important as an access point may be theoretically accessible based on the distance to citizens but effectively not be accessible if it is not open more than a few hours a day.)<br />
<br />
Current legislative proposals before Congress either provide no effective guidance for defining effective access or set that guidance at a level that is significantly higher than countries with both large urban centers and vast territories of sparsely populated territory have chosen. In addition, the financial problems of the Postal Service cannot wait a year or more to implement a more rational definition of access. Congress would be wise to choose an effective access definition closer to what Canada or Australia has than what is now on the table. Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com1tag:blogger.com,1999:blog-563539329592161652.post-3577205650150424132011-09-05T08:19:00.000-04:002011-09-05T08:19:38.490-04:00Confusion Over If / When The Postal Service Shuts DownThe <a href="http://www.nytimes.com/2011/09/05/business/in-internet-age-postal-service-struggles-to-stay-solvent-and-relevant.html?pagewanted=1&_r=1&ref=todayspaper">New York Times</a> reports that:<br />
<blockquote>But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.</blockquote>This story reflects the confusion of conflicting statements of CFO Joe Corbett at the <a href="http://courierexpressandpostal.blogspot.com/2011/05/usps-has-shut-down-date.html">May</a> and August MTAC meetings. In May heard the Postal Service would run out of cash in July, 2012 and have to shut down and in August he said just the opposite. <br />
<br />
The Postal Service has repeatedly used the words insolvency, and a recent analysis on this blog shows they will have less than $2.5 billion in cash and borrowing authority on September 30 to pay $9.1 billion in bills. Therefore if the Treasury department demanded payment, the Postal Service would shut down in October.<br />
<br />
For 2012. the financial picture is not much better. The economic outlook is weak, and more than likely weaker that what drove the forecasts presented at MTAC only a few weeks ago. So a shutdown date in late 2012 seems possible if the Postal Service to make its payments for retiree healthcare benefits.<br />
<br />
At the Senate hearing tomorrow, Postmaster General Pat Donohoe has to clarify the question of Postal Service shutdown. If he does not provide that information in his testimony, Senators on the Homeland Security and Governmental Affairs must get clarification on if shutdown could occur and if it could when.<br />
<br />
<br />
<blockquote></blockquote>Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-44495700441770150582011-09-04T20:45:00.000-04:002011-09-04T20:45:17.102-04:00Postal Service Will Be Front Page News Tuesday<div align="left" class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPUu34GHChW-TvLfiQJTqJjCmlNCE0fyh39Fo_EI7VJ4zbOi5DCpLdNIeTF5RRZOwkorPzh0LuzwX7_munSX-3iqgMezFBZgQJVG3VUDkdA6i-gIrLgs_I2TFOOaEHARbYnlk3d6G45d-t/s1600/Hurricanes.gif" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="325" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPUu34GHChW-TvLfiQJTqJjCmlNCE0fyh39Fo_EI7VJ4zbOi5DCpLdNIeTF5RRZOwkorPzh0LuzwX7_munSX-3iqgMezFBZgQJVG3VUDkdA6i-gIrLgs_I2TFOOaEHARbYnlk3d6G45d-t/s400/Hurricanes.gif" width="400" /></a></div>On Tuesday, the Postal Service will be the center of a news storm that will be more powerful than either of the two tropical storms that the National Hurricane Center is following.<br />
<br />
The Senate Homeland Security hearing will be held on one of those rare days when there is no other major news story for the cable news channels, network news, and national newspapers to cover. <br />
<br />
More than likely, much of the footage for the Postal Service stories if not already in the can, will be completed early Tuesday morning so that it can be edited into the questions and testimony at the hearing. The News Hour on PBS will likely focus its largest portion of its broadcast to include both a summary of the hearing as well as a set of talking heads discussing the legislative options that are now on the table.<br />
<br />
Fox News will be looking to book Congressmen Darrell Issa and Dennis Ross, and spokespeople from think-tanks that will frequently use the term "bailout" to describe any proposal other than the one Congressmen Issa and Ross have proposed. <br />
<br />
MSNBC will find guests that will discuss the economic impact of laying off 220,000 postal workers as well as the impact on rural communities and citizens on the wrong side of the digital divide. Discussions of the anti-union aspects of certain proposals will also be raised<br />
<br />
In blogs from the far right to far left, writers looking for a topic will chose the Postal Service. Most will do little more than repeat the writer's philosophical beliefs and show how the Postal Service's problem fits their understanding of Washington's problems that is no different than what they would say on any other hot political topic.<br />
<br />
This orgy of talking points recitation will likely last well past mid-day on Wednesday. Without a major international or financial crisis, the Postal Service will an above the fold story in the morning papers, and a major story in the 7 a.m. hour of all morning news shows. Talk radio will use the Postal Service has a great way to fill up an hour or more of time in most host's 3 hour sifts. The Postal Service could get coverage well into Thursday morning if the Postal Service's problems are raised at the President spokesman's daily briefing on Tuesday or at the Republican Presidential debate Wednesday night. <br />
<br />
At the end of the two or three days of being above the fold in both print and broadcast media, Postal stakeholders will be back in the same position they are today, with one exception the Postal Service will be two or three days closer to insolvency. Congress will be no closer to finding either a short-term or long-term solution. Given recent history, even the impending deadline of default will not force Congressional action as the political advantage caused by the Postal Service's default will outweigh the harm caused to the 8% of the economy that is the Postal sector, and to the credibility of the Federal Government as a debtor when one of its largest entitities stops paying some of its bills<br />
Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com14tag:blogger.com,1999:blog-563539329592161652.post-83730613474237858902011-09-02T15:45:00.000-04:002011-09-02T15:45:03.093-04:00The New Postal Service: Constraints Slows ServiceA comment to the Post on the impact of the new network on First Class Presort Mail explains both why drop shipped First Class mail won't work and how operating and capital constraints will degrade service for any mail that requires cross dock transfers before destination sortation and sequencing is completed.<br />
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<strong>uncommonsense said...</strong> <br />
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<br />
<dd class="comment-body" id="Blog1_cmt-955077381512854744"><span style="background-color: #cccccc;">The reason for increasing the delivery standard is so that the machines can run most of the day. The network consolidations can only happen if the USPS uses the machines they have to finalize delivery point mail 16 hours a day or so instead of only doing it after midnight like they do now. <br />
If the zone you are wanting to have delivered to finalizes its product @5 in the afternoon any mail arriving after 3 in the afternoon likely won’t be finalized for another 24 hours. <br />
Whether or not a drop shipment can be delivered the next day will be highly dependent on what time of day the destination zone of mail in that drop shipment is finalized. They are likely to run the zones farthest from the plants first and the zones nearer the plant last. This means that for mail destined to be delivered near a plant a drop shipment is likely to be able to be delivered the next day while zones distant to the plant will likely not make it</span> </dd><br />
<div class="comment-body"><br />
</div><div class="comment-body"><strong>Based on this comment it would appear that under the new scheme</strong></div><ul><li>Sequencing of mail will be spread out over a 16 hour period. Some of this mail will be sequenced in the early evening and other mail will be sequenced late at night. So all of the mail has to be ready for sequencing by 6 pm or it is possible that it will not go out for delivery the next day.</li>
<li>Origination sortation starts 8 am</li>
<li>Critical dispatch times for origination mail may be early to mid-afternoon.</li>
<li>Destination sortation up through sequencing could start around noon finish up as early as 4 or 5 pm.</li>
</ul><strong>How does it affect mailers?</strong><br />
<ul><li>Most commercial mailers will see their mail take an additional day longer than it does now. Some drop-shipped mail may avoid delays if they are shipped from the mailer earlier so that it arrives by noon. It would appear that all classes of mail will likely add a delivery day.</li>
<li>Deliveries to zones that are further from a processing plant may take an additional two days especially if drop shipments or transportation from other Postal facilities run late.</li>
<li>Parcel shipments not dropped at delivery units will take an additional day just like letter and flat mail.</li>
<li>Unclear how it will affect delivery of drugs, perishables, ballots, election materials, and live bees, plants, crickets, and baby chicks.</li>
</ul><strong>How does it affect mail's competitive position?<span style="background-color: #cccccc;"></span></strong><br />
<ul><li>Time sensitive periodicals and advertising will likely seek alternative delivery options. <a href="http://courierexpressandpostal.blogspot.com/2011/07/bloomberg-businessweek-expanding-use-of.html">Businessweek's</a> switch to alternative delivery will likely be emulated by other weeklies.</li>
<li>Mailers will have to adjust the time allotted to taking a concept to the point that it is tendered to the Postal Service if they have a specific delivery period in mind.</li>
<li>Printers will have to work with tighter printing schedules. Reducing Postal Service costs could raise printing costs if mailers demand that printers cut the printing time in order to meet an in-home date commitment.</li>
<li>Coordinating web and mobile based advertising will need more planning. </li>
<li>The extra two to four days for handling transactions by mail will increase the value of electronic bill presentment and payment. Incentives for bill presentment and payment can be expected to grow and charges for hard copy bills and payments may become more common.</li>
<li>Services that accumulate documents traditionally found in a mailbox will see demand grow faster than their business cases developed before the change expected. This may allow <a href="http://www.volly.com/">Volley</a>, <a href="https://app.manilla.com/users/sign_up?v=2&gclid=CIbOlMjl_KoCFQt_5Qodky9_zw">Manila</a>, and <a href="https://www.zumbox.com/">Zumbox</a> to show a profit before investors or their parent company expected.</li>
</ul><strong>Drivers of the Operating Plan</strong><br />
<br />
The operating plan is driven by a number of capital, regulatory, and labor contract constraints. These include:<br />
<ul><li>The Postal Service's poor financial condition: </li>
<ul><li>The New Postal Service needed to create a network that minimizes capital spending. This includes spending on new plant and equipment as well as spending moving equipment from one plant to another.</li>
<ul><li>Without the severe capital constraint, similar or nearly similar networks could be designed with more equipment per facility that processes mail in less time but uses the equipment for fewer hours per day. This would allow mail to travel greater distances between facilities and make service commitments better than what the new network generates. Corporatized postal operations are using this model rather than the one that the Postal Service chose.</li>
</ul><li>The network focuses on cost savings only. Optimization models are designed to minimize costs given the volumes that a network is expected to handle. They assume that the volumes of mail they are designed to optimize reflect the volumes that would exist with the slower service standards.</li>
<ul><li>The Postal Service has not released any information about the impact on mail volume demand of adding a day to service standards.</li>
</ul></ul><li>Regulatory Constraints</li>
<ul><li>The postal service cannot change prices to allow products that create peak load costs to bear those costs. </li>
<ul><li>As a previous post noted, the Postal Service could have maintained current processing schedules,(i.e. originating mail in the early evening, destination sortation late in the evening, and sequencing after midnight) if it shifted the increased single piece mail rates to reflect peak load costs.</li>
<ul><li>Most foreign postal administration prices incorporate peak load costs in their pricing which allows them to offer overnight service over geographic territory at least as large as what UPS ground offers for parcels.</li>
</ul></ul></ul><li>Full Time Positions</li>
<ul><li>Full time positions require mail processing be spread out over more time than is optimal for service. In order to operate a network designed to minimized time between acceptance and delivery spent in a plant and maximize the distance between facilities, work schedules of employees need significantly greater flexibility than what the Postal Service has in its contracts.</li>
<ul><li>Both FedEx and United Parcel Service use mostly part-time employees to sort parcels and load vehicles. This allows them to cut the time it takes to sort parcels at origin so that they can get on the road quickly. The same is true at destination and intermediate sortation facilities. By minimizing time in plants, United Parcel Service and FedEx can maximize the service areas that they can provide by ground transportation in one to three days. </li>
</ul><li>Networks that can use a higher percentage of part time positions would likely have more employees, and larger facilities. Increase in the percentage of part time employees could also result in less centralization of sortation than the network proposed does. To the extent that very large faciities are difficult to manage, large metropolitan areas may have more facilities than a pure optimization would suggest.</li>
</ul></ul>Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com4tag:blogger.com,1999:blog-563539329592161652.post-66438522761735464542011-09-02T08:11:00.000-04:002011-09-02T08:11:00.437-04:00Letter Carriers are Smarter Than Rocket ScientistsTraditionally the smartest investors are those that slowly and steadily build their fortune. This is particularly true regarding those saving for retirement.<br />
<br />
Using this criteria, <a href="http://www.federalnewsradio.com/?sid=2524000&nid=20">Federal News Radio</a> reports that letter carriers are smarter investors than:<br />
<ul><li>Army, Navy, Air Force and NASA rocket scientists.</li>
<li> Researchers at the National Institutes of Health.</li>
<li> Scientists for the Centers for Communicable Disease.</li>
<li> CIA covert operators.</li>
</ul>Postal Service letter carriers do it without the advantage of staff back in Langley, VA making sure they save for retirement, and the advanced degrees that medical and other research scientists have. Federal News Radio quotes <span style="background-color: white;"><strong>Tom Trabucco</strong>, director of external affairs for the Federal Retirement Thrift Investment Board as saying that " according to the<b> National Association of Letter Carriers</b>, 95 of every 100 members participates in the TSP and contributes at least 5 percent of their salary into some or all of its funds." </span><br />
<br />
Listen to the entire Federal News Radio Show that discussed the importance of retirement saving <a href="http://federalnewsradio.com/?nid=22&sid=2522163" target="_blank">by clicking here</a>.<br />
<br />
Letter carriers are also often considered among the healthiest federal employees. So when they eventually retire they may find they will have a lengthy retirement to spend some time off of their feet on a beautiful beach.<br />
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<div class="separator" style="clear: both; text-align: center;"><a href="http://upload.wikimedia.org/wikipedia/commons/2/29/Daytona_Beach,_Florida_(4783857222).jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="428" src="http://upload.wikimedia.org/wikipedia/commons/2/29/Daytona_Beach,_Florida_(4783857222).jpg" width="640" /></a></div><div style="text-align: center;"><br />
</div><div style="text-align: center;"><strong>Daytona Beach, Florida</strong></div>Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-48456718471782341892011-09-01T13:49:00.001-04:002011-09-01T14:54:27.489-04:00Congressman Issa Markets His Reform BillCongressmen Darrell Issa Dennis Ross have raised the ante over Postal Reform by creating a <a href="http://postal.oversight.house.gov/">website</a> and video (see below) designed to promote their postal reform bill. The website and the video both follow the form used by lobbyists to promote passage of a bill or influence government policy. The website and video, along with the committee's use of social media illustrate how sponsors of controversial bills are changing how they will promote their positions.<br />
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<a href="http://postal.oversight.house.gov/" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="337" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKiw1nas8tG5XD9eyMVOfMXQmab_TvgBgr7Xi_40e95Z3koCqHbOY7qkMLEIq-lCmLOLOdgyO-4qnJEkB4tDFO2z5Qp4RIGmQcchbdx8_QHWiFDpBo0th1hIggRwiE3UUkNnLEzdMoIq0h/s640/postal+oversight.jpg" width="640" /></a> <br />
The website promotes the Committee's bill on a page entitled <a href="http://postal.oversight.house.gov/OurPlan.html">"Our Plan: Just the Facts</a>," in language that has previous been included in press releases from Congressman Issa and Ross as well as videos of previous hearings. The page also includes videos of previous hearings that the Committee has held on the Postal Service.<br />
<br />
The "<a href="http://postal.oversight.house.gov/InTheNews.html">In the News"</a> page lists news stories and editorials that support the bill or the changes that the bill proposes. <br />
<br />
The "Can You Fix it?" pop-up lays out the options as the committee Republicans see them. Options proposed by others in the House or in the Senate are described as a taxpayer bailout. A description that many stakeholders and other members of Congress would disagree with.<br />
<br />
The video on the website. is slickly produced and presents an unflattering image of the prospects of the Postal Service, and for that matter the idea of a national postal operator. More importantly for the private sector postal industry, that generates $1.1 trillion in sales and employs more than 8 million, it puts their business in an unflattering light by association. From a Washington perspective, all that it is missing from the video is the disclaimer naming a sponsor, which provides little information as to who actually paid for the ad.<br />
<br />
<iframe allowfullscreen="" frameborder="0" height="345" src="http://www.youtube.com/embed/Q5Ztl3iAMO0" width="560"></iframe><br />
<br />
The House Oversight and Government Reform Committee Website follows creation of websites that propose alternative solutions. These include <a href="http://www.savethepostoffice.com/">Save the Post Office</a> and ones developed by postal unions and postmasters. Soon others will sprout up to support and oppose the bill that Congressmen Issa and Ross presented<br />
<br />
The questions for postal stakeholders are:<br />
<ul><li>Does this effort of the Republicans on the House Oversight and Government Reform Committee move finding a solution forward or does it just raise the temperature of the debate?</li>
<li>How will this effort to promote a particular postal reform bill influence <a href="http://courierexpressandpostal.blogspot.com/2011/08/politics-of-rural-post-offices-and.html">Republicans from the moderate through conservative wings of the party</a> who have already expressed a preference for a different solution to the Postal Service's problems.</li>
</ul>Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com4tag:blogger.com,1999:blog-563539329592161652.post-50455091145637021912011-09-01T08:52:00.002-04:002011-09-05T12:43:42.691-04:00The New Postal Service: Initial Financial PictureOn Tuesday September 6, Postmaster General Pat Donahoe will present to Congress a vision of the "New Postal Service." This vision reflects the Postal Service's current financial situation as driven by legal and regulatory constraints. <br />
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At the end of the fiscal year the old Postal Service will be insolvent. It will not have enough cash and borrowing capacity to pay its bills including bills that were not changed by the PAEA.<br />
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To understand how bad the finances, I have developed a rough estimate of the Postal Service's cash position and bills at the end of Fiscal Year 2011. Then given the Postal Service's borrowing capacity at the end of the year, I have calculated an estimate of the difference between the Postal Service's bills and its ability to pay.<br />
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<strong><span style="font-size: large;">The Postal Service's Cash Position on September 30, 2011</span></strong><br />
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The following estimate is based on the cash flow statement in the 2011 Quarter 3 10-Q, and the initial financial report on July 2011. <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhura3XroPrym2_RtzIZDA0-cv_cpz3WtG_i6Og71z7zhI6NA-yoGCB2cgeXEfXFUtr4OSMRx88UbJlb6dVY-Z1ovghlGMDG4b2WlZWG-ae2Rd0PaOS6WFK08jDWEhdtSE1bllwQHO_Suud/s1600/usps+cash+flow+9-1-11.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhura3XroPrym2_RtzIZDA0-cv_cpz3WtG_i6Og71z7zhI6NA-yoGCB2cgeXEfXFUtr4OSMRx88UbJlb6dVY-Z1ovghlGMDG4b2WlZWG-ae2Rd0PaOS6WFK08jDWEhdtSE1bllwQHO_Suud/s640/usps+cash+flow+9-1-11.png" width="598" /></a></div>
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<strong><span style="font-size: large;">Postal Service End of Year Bills</span></strong><br />
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At the end of the year the Postal Service has three large bills from the the Department of Labor and the Office of Personnel Management. As the chart shows, even without the $5.5 billion PAEA retiree health benefit payment the Postal Service still has $3.6 billion in obligations. As the previous chart shows, the Postal Service will not have the cash to pay these bills so it will need to borrow to make its payment.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4KQUm3Rpupus0ROp1lPNOKgTJcjbXqJ7zCUxhgH7ULqsH-REvHARogvf9sJe72IZmX92u34JChwGYsX3cNKh4mImP1gDTthPuH6PfXQHTY97JAXGtKk5sfmjPln78qYzIATlz3Fw0r_rj/s1600/usps+Bills+9-1+est.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="302" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4KQUm3Rpupus0ROp1lPNOKgTJcjbXqJ7zCUxhgH7ULqsH-REvHARogvf9sJe72IZmX92u34JChwGYsX3cNKh4mImP1gDTthPuH6PfXQHTY97JAXGtKk5sfmjPln78qYzIATlz3Fw0r_rj/s400/usps+Bills+9-1+est.png" width="400" /></a></div>
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<strong><span style="font-size: large;">Postal Service Cash with New Debt</span></strong><br />
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The following chart shows how much cash the Postal Service should have available at the end of the year if it used all of its legal borrowing authority. <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6McNeG9uaNxa9GnPvV8DbeRUzTYousz7IkHYrkTHkz-YpC6HxmWQ7CiY4CCl5Qdl9MhAxjazPUcb2HX6QhBK1DqLFeFBlx41rjci2zj78XUzyCVTnJMfo3KAyxs67x3wp_rTz7CBREIkG/s1600/usps+cash+9-1+est.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="166" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6McNeG9uaNxa9GnPvV8DbeRUzTYousz7IkHYrkTHkz-YpC6HxmWQ7CiY4CCl5Qdl9MhAxjazPUcb2HX6QhBK1DqLFeFBlx41rjci2zj78XUzyCVTnJMfo3KAyxs67x3wp_rTz7CBREIkG/s320/usps+cash+9-1+est.png" width="320" /></a></div>
<strong><span style="font-size: large;">Insolvency Appears Inevitable</span></strong><br />
<br />
Even if the Postal Service maxes out its debt, it still will not be able to pay all of its bills. <strong>The Postal Service will fall $1.239 billion short of paying its non-PAEA bills.</strong> <strong>It will be $6.739 billion short if you add in the PAEA retiree health benefit payment.</strong> <br />
<br />
It does appear that it will have enough cash once it adds extra debt to make the workers compensation payment, so the Department of Labor should be able to make benefit payments. It does not appear that the Postal Service will be able to make either its non-PAEA or PAEA payments for retiree health benefits. While it could pay a portion of the non-PAEA obligation, doing so would put it in a dangerous position of having no cash on hand when recurring bills like payroll, payments to transportation contractors and electric utilities come due.<br />
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<strong><span style="font-size: large;">Impact on the Federal Budget</span></strong><br />
<br />
The Postal Service's financial problems affects the Federal budget because the budget assumes that the Postal Service will make payments. In addition the budget also assumes that the Postal Service had made the $800 million in FERS payments that it has will not have paid starting at the end of June.<br />
<br />
In total the impact of the Federal budget will be:<br />
<ul>
<li>$7.537 billion if the Postal Service pays part of the non-PAEA retiree health payment</li>
<li>$8.736 billion if the Postal Service pays none of the non-PAEA retiree health payment</li>
</ul>
What is not clear is whether this affects the FY 2011 Federal budget that ends on September 30, 2011 or the FY 2012 Federal Budget that starts October 1, 2011. It is also possible that some of the impact will by in FY 2011 and some in FY 2012.<br />
<br />
The Postal Service's current financial prospects suggests that it will have at least a $5.5 billion impact on the Federal budget for a couple years past 2012. The impact reflects the fact that it is hard to imagine a financial forecast developed under current legal and regulatory constraints that would allow the Postal Service to make the PAEA retiree health beneift payments for a couple of years.<br />
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<strong><span style="font-size: large;">Impact on the Postal Service in FY 2012</span></strong><br />
<br />
Starting October 1, 2011, the Postal Service will have a minimal amount of cash and unpaid obligations from FY 2011 hanging over its head and will face similar obligatins at the end of FY 2012. The Postal Service also faces a prospect that the economy will remain sluggish and therefore postal revenue will be stagnant or worse.<br />
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The "New Postal Service," reflects both this horrendous cash position and no indication that Postal Service management believes that the Postal Service will not see legislative or regulatory help in a timely fashion. Cutting service quality commitments is the only move available to the Postal Service that current legislative and regulatory constraints cannot stop. <br />
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At its hearing on September 6, the Senate Committee on Homeland Security and Governmental Affairs, will hear not only a description of the "New Postal Service," but also a request for legislation to adjust labor contracts and employee benefits that management believes are needed in addition to the service quality reductions to bring the Postal Service to break-even.<br />
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The Senate committee should focus on how the "New Postal Service" changes United States Postal policy and most importantly how it affects the economic role that the Postal Service currently plays. Developing operating models of fewer processing plants, fewer full time employees and slower service is easy. Determining if that is what is best for the United States economy is hard and is the responsibility of Congress and not the Postal Service. <br />
<br />Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-88486748381496194842011-08-31T14:21:00.003-04:002011-08-31T17:42:45.737-04:00Canada Post Service StandardsCanada Post switched to 2-day local delivery over 25 years ago. That change was made as part of a massive restructuring of Canada Post's operations to deal with losses that equaled nearly 1/3 of revenue.<br />
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The Canada Post's service standards for lettermail, the equivalent of First Class Mail in the United States, are relatively simple and are explicitly included in <a href="http://www.tc.gc.ca/eng/mediaroom/infosheets-canadapost-1770.htm">Canada Post Corporation's charter</a>. They are:<br />
<ul><li>Within a community within two business days; </li>
<li>Within a province within three business days; and </li>
<li>Between provinces within four business days.</li>
</ul>These service standards are a day longer than what the United States Postal Service provides now for First Class Mail and probably close to what they will be once the Postal Service restructures its network. <br />
<br />
Canada Post's also has service standards for Publications, addressed admail and unaddressed admail. These service standards differ from the Postal Service as they indicate that mail will be delivered on a specific day after it is tendered to Canada Post and not a range of days. Therefore, advertising mailers have as much certainty about their delivery date as mailers of transactions, bills, payments and correspondence.<br />
<br />
To put these service standards in context, here are service standards between Toronto and a number of Canada Post's largest cities for both lettermail and admail. The chart shows that Canada Post follows it mandate generally for lettermail, although it does provide service between Montreal and Toronto a day faster than its service standard requires. There are some other inter-provincial service that is three days as well including service from Ottawa, Ontario to points in Quebec. The chart also shows that Canada Post has more precise service commitments for advertising mail than the United States Postal Service offers.<br />
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<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj84vGunhL09rx1WO4eHuFHpubSCBLfoqR2vJI5hNPrXon4tR9fv6FyIYK_nYgaw1kuly1PCu5rBSaObFULZsTYiCJ_2P-l0-Wu1hjm4zcda0tH9EaaqJpLNAdgj9VZpu-r_lGpn2Ke_elt/s1600/CPC+Service+Standards.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="620" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj84vGunhL09rx1WO4eHuFHpubSCBLfoqR2vJI5hNPrXon4tR9fv6FyIYK_nYgaw1kuly1PCu5rBSaObFULZsTYiCJ_2P-l0-Wu1hjm4zcda0tH9EaaqJpLNAdgj9VZpu-r_lGpn2Ke_elt/s640/CPC+Service+Standards.png" width="640" /></a> </div>Service Information for a broader range of Canadian cities as well as service standards for Canada Post's parcel, expedited, and express products can be found in the <a href="http://www.canadapost.ca/tools/pg/manual/PGservstds-e.asp">Delivery Standards</a> page of its website.Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-12568449720711667322011-08-31T13:40:00.001-04:002011-08-31T15:02:20.011-04:00Network Restructuring and First Class Presort MailThe Postal Service's network restructuring will add an extra day to most First Class Mail delivery standards. While it is theoretically possible for bulk First Class mailers to avoid that delay by drop shipping, the viability of drop shipping depends on the Postal Service having clerks and mail handlers working in the evening to accept the mail and route the mail to the appropriate machine for the correct destination sort.<br />
<br />
Early discussions with the Postal Service suggests that they want bulk First Class mailers to tender their mail before noon. This would allow bulk mail to be sorted or dispatched to the facility doing destination sortation during the daytime shift. This would suggest that the Postal Service plans to have critical dispatch times at or just after rush hour. With these dispatch times, receiving facilities will have skeletal staffs in the evening to handle mail transported to the facility and not much else. These entry times and dispatch times would appear to force bulk mailers to accept service that is a day slower than it is now and preclude drop shipping of First Class bulk mail even if they could convince the Postal Service to offer a drop ship discount. <br />
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Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com1tag:blogger.com,1999:blog-563539329592161652.post-36653537275589462622011-08-31T11:18:00.000-04:002011-08-31T11:18:36.952-04:00India Introduces Urban FranchisesThe India Post Office has introduced franchised urban post offices in fast growing areas The details of the <a href="http://www.indiapost.gov.in/Pdf/No.40-28-2010-PLG_Franchisee_Scheme.pdf">franchise agreement</a> provide a lot more details to franchisees than public information on Village Post Offices due. The details illustrate that franchisees will have a broader range of Products than what a Village Post Office can sell.<br />
<br />
<div> Here are some details:</div><br />
Only counter services are to be franchised, while delivery and transmission will be continued through the Department. Linking arrangements for the franchised outlets will be provided by the franchisee. <br />
The franchisee will provide service across the counter for a minimum defined time schedule with flexibility to work round the clock.<br />
<br />
<strong><span style="font-size: large;">Products and services offered</span></strong><br />
<ul><li>Sale of stamps and stationery</li>
<li>Booking registered articles, speed post articles, money orders (on EDBO model), e-post, etc. (no bulk booking to be taken up in franchised outlets</li>
<li>Functioning as an agent for PLI and provide related after sales service, including collection of premia. (subject to fulfillment of criteria for PLI agents)</li>
<li>Marketing products for which the Department has a corporate agency or tie-up and provide related follow up services. (subject to agreement with the other organizations involved)</li>
<li>Providing retail and bill/tax/fine collection/payment services of the Department. (subject to agreement with the other organizations involved)</li>
<li>Facilitating the provision of e—governance and citizen centric services (subject to agreement with the other organizations involved)</li>
<li>Any other service introduced by the Department in future through its outlets which is considered amenable to the franchise model. (subject to agreement with the other organizations involved)</li>
</ul>The model has adequate flexibility built in to allow a range of services to be extended through the outlets according to the need / demand, and to increase the range when found necessary. Thus, the range of counter services that can be offered through different outlets can vary, keeping in view the location and its capacity to generate revenues.<br />
<br />
<strong><span style="font-size: large;">Implementation Strategy:</span></strong><br />
In the initial phase and for the present, the urban franchise model will be implemented only in fast developing areas of urban growth like metros and their satellite towns, as also such urban areas where there is a justification for post offices on the distance and population norms but there is difficulty in providing the same through redeployment. The further extension of the scheme can be taken up after the results available from experience of the initial phase – say after six months of initial launch.<br />
<strong><span style="font-size: large;">Viability:</span></strong><br />
The viability of each franchise only requires to be assessed by the concerned field unit so as to ensure adequate returns to the franchisee. The expected minimum revenue, would depend on the range of services, particular location, potential revenue, the investments that the franchisee is willing to make, the cost likely to be incurred by the Department in providing support facilities, etc.<br />
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<br />
<div class="WordSection1"> <div class="MsoNormal" style="line-height: 86%; margin: 0in 0in 0.3in 2.65in;"><b><u><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: -0.3pt; line-height: 86%; mso-font-width: 105%;">COMMISSION SCHEDULE</span></u></b></div><table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin: auto auto auto 0.75pt; mso-padding-alt: 0in 0in 0in 0in; mso-table-layout-alt: fixed;"><tbody>
<tr style="height: 25.9pt; mso-height-rule: exactly; mso-yfti-firstrow: yes; mso-yfti-irow: 0;"> <td style="background-color: transparent; border: 1pt solid windowtext; height: 25.9pt; mso-border-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div align="center" class="MsoNormal" style="margin: 0in 0in 0pt; text-align: center;"><b><span style="font-family: "Arial","sans-serif"; font-size: 11pt;">Service<o:p></o:p></span></b></div></td> <td style="background-color: transparent; border-color: windowtext windowtext windowtext rgb(0, 0, 0); border-style: solid solid solid none; border-width: 1pt 1pt 1pt 0px; height: 25.9pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div align="center" class="MsoNormal" style="margin: 0in 0in 0pt; text-align: center;"><b><span style="font-family: "Arial","sans-serif"; font-size: 11pt;">Commissioner per transaction<o:p></o:p></span></b></div></td> </tr>
<tr style="height: 25.95pt; mso-height-rule: exactly; mso-yfti-irow: 1;"> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext; border-style: none solid solid; border-width: 0px 1pt 1pt; height: 25.95pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.75pt; mso-list: l0 level1 lfo1; tab-stops: list 23.75pt; text-indent: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.4pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span dir="LTR"></span><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.4pt;">Booking of Registered Articles<o:p></o:p></span></div></td> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1pt 1pt 0px; height: 25.95pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.5pt;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt;">Rs.2.00<o:p></o:p></span></div></td> </tr>
<tr style="height: 25.65pt; mso-height-rule: exactly; mso-yfti-irow: 2;"> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext; border-style: none solid solid; border-width: 0px 1pt 1pt; height: 25.65pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.75pt; mso-list: l0 level1 lfo1; tab-stops: list 23.75pt; text-indent: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.4pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span dir="LTR"></span><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.5pt;">Booking of Speed Post Articles<o:p></o:p></span></div></td> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1pt 1pt 0px; height: 25.65pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.5pt;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt;">Rs.2.00<o:p></o:p></span></div></td> </tr>
<tr style="height: 25.95pt; mso-height-rule: exactly; mso-yfti-irow: 3;"> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext; border-style: none solid solid; border-width: 0px 1pt 1pt; height: 25.95pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.75pt; mso-list: l0 level1 lfo1; tab-stops: list 23.75pt; text-indent: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.4pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span dir="LTR"></span><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.6pt;">Booking of Money Orders<o:p></o:p></span></div></td> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1pt 1pt 0px; height: 25.95pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.5pt;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt;">Rs.3.50<o:p></o:p></span></div></td> </tr>
<tr style="height: 38.4pt; mso-height-rule: exactly; mso-yfti-irow: 4;"> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext; border-style: none solid solid; border-width: 0px 1pt 1pt; height: 38.4pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 5.4pt 0pt 0.05in; mso-list: l0 level1 lfo2; tab-stops: list .4in; text-indent: 0.05in;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.15pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span dir="LTR"></span><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.15pt;">Sale of postage stamps and postal </span><span style="font-family: "Arial","sans-serif"; font-size: 11pt;">stationery and money order forms<o:p></o:p></span></div></td> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1pt 1pt 0px; height: 38.4pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.5pt;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt;">5% of sale amount<o:p></o:p></span></div></td> </tr>
<tr style="height: 25.95pt; mso-height-rule: exactly; mso-yfti-irow: 5; mso-yfti-lastrow: yes;"> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext; border-style: none solid solid; border-width: 0px 1pt 1pt; height: 25.95pt; mso-border-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.75pt; mso-list: l0 level1 lfo1; tab-stops: list 23.75pt; text-indent: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 0.4pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">5.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span dir="LTR"></span><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: 1pt;">Retail Services<o:p></o:p></span></div></td> <td style="background-color: transparent; border-color: rgb(0, 0, 0) windowtext windowtext rgb(0, 0, 0); border-style: none solid solid none; border-width: 0px 1pt 1pt 0px; height: 25.95pt; mso-border-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; mso-height-rule: exactly; padding: 0in; width: 216.25pt;" valign="top" width="288"> <div class="MsoNormal" style="margin: 0in 0in 0pt 5.5pt; tab-stops: 37.35pt 124.2pt 168.3pt right 210.0pt;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt; letter-spacing: -1.3pt;">40%<span style="mso-tab-count: 1;"> </span></span><span style="font-family: "Arial","sans-serif"; font-size: 11pt;">of commission<span style="mso-tab-count: 1;"> </span><span style="letter-spacing: -0.5pt;">earned<span style="mso-tab-count: 1;"> </span></span><span style="letter-spacing: -2.6pt;">by<span style="mso-tab-count: 1;"> </span></span>Department of Post</span></div><div class="MsoNormal" style="line-height: 86%; margin: 0in 0in 0pt 5.5pt;"><span style="font-family: "Arial","sans-serif"; font-size: 11pt; line-height: 86%;">(rounded off in rupees to be 40% or less)<o:p></o:p></span></div></td> </tr>
</tbody></table></div><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-ansi-language: EN-US; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast;"><br clear="all" style="mso-break-type: section-break; page-break-before: always;" /> </span>Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com0tag:blogger.com,1999:blog-563539329592161652.post-40308888330197114142011-08-31T10:02:00.000-04:002011-08-31T10:02:46.465-04:00The Idle Postal Worker MythStand-by time is a measure of the effectiveness of the Postal Service's workforce scheduling systems as well as its ability to adjust the total size of its workforce as volumes change and networks are modified. Stand-by time has often been used to either bash management or union contracts. The newest numbers suggests that while any stand-by time is not desirable, standby time is only 23 minutes per postal employee per year.<br />
<br />
The decline in stand-by hours over the past few years can be seen in this chart from the USPS-OIG report, <a href="http://www.uspsoig.gov/foia_files/HR-MA-11-003.pdf">Stand-by Time Management Advisory</a>. the chart showed that institutional stand-by time peaked between April and December 2009, a period that fell between fiscal years 2009 and 2010. <br />
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<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUfwmgpCXLnBFCiyFCP-C9I9dCwVFlhoiUdNV3uhj4LDny6QWAFD1pyAEokLFWV_0dbqWNYKBF6Ml6A-rAnjBeTYkDMTM57c2XRM3Fnb5Sp9Ubx165vtbXHk-rgdNOdjuvqxx4rDzgFLzF/s1600/Strand+by+time.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="280" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUfwmgpCXLnBFCiyFCP-C9I9dCwVFlhoiUdNV3uhj4LDny6QWAFD1pyAEokLFWV_0dbqWNYKBF6Ml6A-rAnjBeTYkDMTM57c2XRM3Fnb5Sp9Ubx165vtbXHk-rgdNOdjuvqxx4rDzgFLzF/s640/Strand+by+time.png" width="640" /></a></div>Stand-by hours peaked during that period in both areas that had relatively low levels of stand-by time in previous quarters and those whose stand-by time was significantly higher than other areas. The peak in stand-by time reflected a period of transition for the Postal Service as it made adjustments to its workforce to reflect the impact of the recession and competition from electronic communications.<br />
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The chart also shows that in most areas, the Postal Service has brought stand-by time below absolute levels at the beginning of fiscal year 2009. As a proportion of total hours stand-by time has declined over this period as well. It was 0.1% of total hours in 2009, 0.07% in 2010 and 0.02% of total hours in 2011. These proportions suggest that while stand-by hours created some rather embarrassing newspaper stories, even during the highest period in late FY 2009, the measures of stand-by time do not indicate systematic mismanagement.<br />
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As the Postal Service begins to restructure its operating network, stand-by time will likely increase. Managing a transition to a smaller processing network, or fewer Postal Service owned retail outlets will likely result in delays that put employees in a stand-by mode as they are waiting to retire, be RIF'ed, or transferred to another job or facility. During the transition period, studies like the Inspector General may need to find other ways to measure management's effective use of its workforce than following standby time. <br />
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One tool that the Inspector General should consider using to look at management effectiveness is the In-Office Cost System (IOCS). While this data collection system is designed for ratemaking, it provides a wealth of information about what individuals clocked into a particular MODS operation code are actually doing. For example, IOCS could be used to identify what individuals who stated that they were clocked in to a standby MODS code were doing while they were on standby. It could also be used to identify how much time employees clocked into non-standby MODS code are on break or other activity not sorting or handling mail. <br />
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As IOCS is a sampling system, developing statistically reliable information by tour, quarter or area may be limited, but work that I performed along this line some 20 years ago suggests that it could tell an awful lot about how the shifts in mail volume over the past few years have affected the ability of plant management to fully use employees clocked into an operation in a physical activity associated with that operation. This information combined with the stand-by time information report would provide a better idea as to how volume changes and organizational transformations will affect management's ability to restructure the Postal Service's workforce quickly.<br />
Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com7tag:blogger.com,1999:blog-563539329592161652.post-346144675317402112011-08-31T08:27:00.001-04:002011-08-31T08:41:44.083-04:00Every Door Direct Mail - How it is Being UsedThe Postal Service has published its first quarterly report on the use of its newest product, <a href="http://www.uspseverydoor.com/">Every Door Direct Mail</a> . Every Door Direct Mail creates a simplified process for small saturation mailings for local advertisers. The early data suggests that Every Day Direct Mail is serving the types of customers that it was designed to serve. A quick search of the web also indicates the product has created opportunities for small printers and mailing houses.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhyF3y_CPCm1JdEuRaAAz6H-MxlG8KbOEpJ7EOvg3lhPyPm0y5lSIxYGSPSpG-sK7RcxX1G0QHr1pZzUZF1oEfcKi1mNQfpVkA0QOUXPVemFgwwjbVyZpcdNdHVZA0ZWf_C6-qC03Yz2lfS/s1600/EDDM+stats.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="315" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhyF3y_CPCm1JdEuRaAAz6H-MxlG8KbOEpJ7EOvg3lhPyPm0y5lSIxYGSPSpG-sK7RcxX1G0QHr1pZzUZF1oEfcKi1mNQfpVkA0QOUXPVemFgwwjbVyZpcdNdHVZA0ZWf_C6-qC03Yz2lfS/s400/EDDM+stats.png" width="400" /></a>With an average mailing size under 2,000 pieces, Every Day Direct Mail clearly is being used by advertisers that mail to a rather limited geographic area. <br />
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Most customers are new to the Postal Service with only 8.6% using other Postal Service products. It is also clear that many customers used Every Day Direct Mail more than once as the average customer used the product 2.25 times in the quarter. This figure may underestimate repeat customers as customers added near the end of the quarter would not have had the opportunity to use the service a second time.<br />
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Every Day Direct Mail likely generated a little over $1 million in the quarter. Given that over 90% of the customers do not use other Postal Service products, <strong>most of this revenue is from new customers to mail advertising.</strong><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6fAdPEuOHC807y8NNjctnpFqTiJbOVoSzjhQc55ajlIxL8u-Pklsdl11Uk-pphbhJ524Hu0GNGS0hvSsYItZvYY83bAwY_gQTKjne5FbAu0z8aQw_prQiRo5itjWQOAb0Fbe_uO_UgvbH/s1600/EDDM+day+of+week+stats.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6fAdPEuOHC807y8NNjctnpFqTiJbOVoSzjhQc55ajlIxL8u-Pklsdl11Uk-pphbhJ524Hu0GNGS0hvSsYItZvYY83bAwY_gQTKjne5FbAu0z8aQw_prQiRo5itjWQOAb0Fbe_uO_UgvbH/s320/EDDM+day+of+week+stats.png" width="281" /></a>The Postal Service also reported data on mail volume by day of the week. the data suggests that Every Day Direct Mail customers are choosing delivery days designed to drive end-of-the-week and weekend sales.<br />
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Every Day Direct Mail appears to have spawned marketing efforts among a number of printers who are promoting the product to sell printing and mail preparation services. Some even are offering to handle the entire transaction process for a fee rather than have the advertiser deal directly with the Postal Service. <br />
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Examples of vendors marketing Every Day Direct Mail on the web includes:<br />
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<a href="http://www.sonicprint.com/EDDM-Every-Door-Direct-Mail.php?$google&gclid=CLiTyqq6-aoCFeMD5QodLkuIOw">Sonic Print</a><br />
<br />
<a href="http://www.printingforless.com/Every-Door-Direct-Mail.html"> Printing for Less</a><br />
<br />
<a href="http://thepostcardwiz.com/"> Postcard Wiz</a><br />
<br />
<a href="http://www.directmailtools.com/?gclid=CNH5tNe7-aoCFYio4AodbB0DWQ">Direct Mail Tools</a>Alan Robinsonhttp://www.blogger.com/profile/18015201735147037122noreply@blogger.com1