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Network Rationalization Update
March 10, 2015
Western Area Mailing Industry Focus Group
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Business Imperative
Phase II Service Standards & CETs
Concept of Operations & Volume Distribution
Phase II Network
Consolidation Timeline
Commitment to Employees
Commitment to Customers
Communication Plans
Project Management Approach
Agenda
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Financial losses of $26 Billion over last 3 years
Continued decline of First-Class Mail volume
Increasing wage inflation and operating costs
Debt pressures
Uncertainty regarding legislative reform
Review of postal prices in courts
Needed capital investments to acquire package sorting equipment and replace aging delivery vehicle fleet
Phase 2 Network RationalizationBusiness Imperative
Business Imperative
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Business ImperativeVolume Decline
Source: RPW, FY2007 – FY2013
2007 2008 2009 2010 2011 2012 2013 2014 (est)
0
5
10
15
20
25
30
35
40
45Single Piece - First Class Letters
Piec
es (m
illio
ns)
16.4% decline since AMP packages developed
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Service Standard Changes – Phase II
First-Class Mail– Overnight: First-Class Presort mail, properly prepared,
containerized, for local plants SCF service area, entered by applicable CET
– 2-day: Intra-SCF single-piece mail or maximum 6 hour drive time between originating facility and SCF facility
– 3-5 day: Everything else
Periodicals– End-to-end Periodicals transported with First-Class Mail pieces
on surface transportation move to a minimum 3-day service standard (equal to the sum of 1 day plus FCM service standard)
– No change to destination entered Periodicalshttps://www.federalregister.gov/articles/2014/08/01/2014-18223/designation-of-implementation-date-revised-service-standards-for-market-dominant-mail-products
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Periodicals CET Matrix – Phase II Service Standard Change
Type
No Bundle Sort Needed
5-Digit / Scheme Container
Bundle Sort Needed
3-Digit and Up Container
Direct 5 Digit Carrier Route
Pallets
NonFSS 1400 1100 1700
FSS 1100 0800
Periodicals CETs – Under Phase II Service Standard Change
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USPS Modeled Processing Network Phase II
Plan to consolidate processing at 82 mail processing sites in 2014
Facility Type TotalAnnexes 2Customer Service Facilities 16DDC's 1P&DC/P&DF's 63Total 82
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JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Jan 5 Operational
Window Changes
January 10 Plant
Consolidations Mail Moves Begin
October 1 Finalize All
Consolidation Activities
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FY 2015 FY 2016
Timeline Network Rationalization Phase 2 – 2015
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Methodical, measured transition
Options available for remaining with the Postal Service
Proven track record of working with Unions and Management Associations; success through attrition
OUR COMMITMENT TO EMPLOYEES
Employees
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Changes
Planning for new mail processing footprint and transport pattern
Revised Critical Entry Times
Our Approach
Industry-specific solutions, where necessary
Ongoing communication and collaborative mitigation of issues
Our Customers
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Early Warning System well established Mail move plan updated and posted on RIBBS Continued communication with the mailing
industry Site Intervention based on Early Warning System Feedback system in place to address customer
issues:• CustomerFirst! System• BSN eService
Tools & Processes in
place to ensure High
Level of Service
Performance
Flawless Execution
Recovery “Tiger Team”Early Warning System
High Levels of Service Performance Expected
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We will continue: Industry Alerts Industry & PCC webinars and presentations
PCC and Managed Account messaging from: PCC program office HQ Business Customer Support & Service From Area and District BSNs
BME messaging to affected customers
Weekly posting of planned operational moves on RIBBS
Structured release cycle for labeling list / mail directional file changes
Industry and Customer Communications
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Project Plans Established for:
Consolidated Site
Gaining Site
All Sites – Operating Window Changes
Project Plans
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Complement
Advantages of a Transformed InfrastructurePhase ll Benefits
Reduce Excess Capacity
More Efficient Transportation Network
Fully Utilized Workforce
Up to $750 Million Cost Reduction
Reduced Equipment
Reduced Footprint
Revised Entry Times
Phase ll Benefits:
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Thank YouQuestions?
Thank YouQuestions?
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