The Path Forward: State & Future of the Postal Service

Dale KennedyConsumer & Industry Affairs

May 2, 2014

Cleveland Postal Customer Council

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158.4 billion pieces delivered to 153 million addresses

Postal Service is part of a $1.3 trillion mailing industry employing approximately 8.4 million people

A healthy, financially viable USPS is vital to U.S. economy

We Thank YOU for your business and contribution to the USPS and the mailing industry

Mailing Industry is Critical

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Stronger Together

The Postal Service recognizes and understands:

the value of the PCCs and its members  

the value of the efforts you put into the PCCs to make them so successful 

the expertise, guidance, and feedback you provide to your fellow PCC members and to the USPS 

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Stronger Together

Our collective success depends on meeting our customers’ needs as:

expressed individually

through group forums such as the PCC

maximizing the long standing partnership between the PCC network  and the USPS

Industry Associations

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Stronger Together

Customers and USPS have similar goals

Delivery of timely, actionable messages

Innovative, exciting mail offerings

Recognition of mail as a valued communication tool

A financially viable mailing system

• Liabilities exceed assets by approx. $40 billion

• The USPS has only 36 cents of assets to cover each dollar of its liabilities

Financial Hole

• Under multi-employer accounting rules, there are approximately $50B in obligations not shown on the balance sheet.

Significant profits over years and legislation are needed to recover.

Unrestricted Cash $ 3.8B Retiree Health Benefits $18.1B

Buildings & Equipment, $17.2B Workers' Compensation $15.9Bnet of depreciation

Debt $15.0BOther Assets $ 1.8B

Accrued Compensation, $ 4.9Bbenefits, and leave

Deferred Revenue $ 3.8B

Other $ 5.3B

Total Assets $22.8B Total Liabilities $63.0B

ASSETS LIABILITIES

Revenue & VolumeFY13 Feb YTD vs. FY14 Feb YTD

$ Millions

-2.0%

+12.2%

+1.9%

-0.1%

-5.7%

Volume: - 4.5%

Volume: + 9.5%

Volume: - 1.5%

+2.8%

+1.7%

®

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Disproportionate amount of Standard Mail is scheduled for delivery on Monday resulting in:

Service Variability

Operational Inefficiencies

Increased Cost

Load LevelingLoad Leveling

Load Leveling is a Business Imperative for Change

Impact on Delivery – Average % of Standard Mail Delivered by Day

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

SAT SUN MON TUE WED THU FRI

Del

iver

y D

ay V

olu

mes

DSCF Standard Flats DSCF Standard Letters

12.6%

Qtr 1, FY 2013

42.4%

13.0%

5.2%

16.3%

10.5%

35.4% Standard Letters

52.4% Standard Flats

Monday Delivered Volume

Load Leveling Load Leveling Current StateCurrent State

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Load Leveling Load Leveling 24 Hour Clock Impact24 Hour Clock Impact

Disproportionate Monday workload impacts critical 24 hour clock parameters resulting in:

Late processing

Late / missed transportation

Service failure

Additional processing / transportation costs

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Standard mail dropped at a DDU

Standard mail dropped at a NDC

EDDM - Retail

Periodical/Newspaper processing

First-Class Mail processing

Priority Mail processing

Load Leveling Expected Days of Delivery

Load Leveling Expected Days of Delivery

What stays the same:

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Current Proposed

Thursday Friday, Saturday, Monday Friday, Saturday, Monday

Friday Saturday, Monday Saturday, Monday, Tuesday

Saturday Monday, Tuesday Monday, Tuesday, Wednesday

Sunday Monday, Tuesday, Wednesday Monday, Tuesday, Wednesday

*The current Critical Entry Time (CET) for Standard mail is 4 pm

**For delivery in the continental United States

DSCF Standard Mail**Dropped Before 4pm* on

DELIVERY DAYS MEETING SERVICE STANDARD

Load Leveling Expected Days of Delivery

Load Leveling Expected Days of Delivery

Scope of Limited Change:

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Load Leveling Load Leveling South Jersey TestSouth Jersey Test

Test Location – South Jersey P&DC (First Lean Mail Processing Plant)

Test Period – Sep 12th through Sep 26th, 2013

Delivery Zones Participating: 110

Delivery Routes Participating: 1,190

Scope: Evaluated the impact of load leveling the Standard Mail volumes received at the South Jersey P&DC across the days of the week

Standard Mail Volume in Evaluation: 5.3M pieces

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Load Leveling Load Leveling Results SummaryResults Summary

Efficiency Reduced Total Weekly City Carrier Work Hours

Reduced Carrier Overtime and Penalty Overtime Usage

4.9% reduction vs Baseline Period

35.1% reduction vs Baseline Period

Employee Satisfaction Overwhelmingly positive feedback

Management and Craft

Customer Service Improved Carrier Return Times

74% reduction in Monday’s carriers returning after 1700

Improved On-Time Service Performance 96.00% on-time performance achieved

Load Leveling Load Leveling Next StepsNext Steps

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Review Comments to Proposed Rule – Feb 13, 2014

Publish Final Rule: February 28, 2014

Implement Change no Earlier Than March 27, 2014

Receive PRC Advisory Opinion

Add Additional Sites to Test Implementation Approach

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Full-Service Intelligent Mail Barcode (Imb) and Intelligent Mail Package Barcode (Impb)

April 2013 - USPS announcement letters/postcards/flats Full-Service IMb requirements by January 26, 2014 to qualify for automation rates

November 2013 - PRC ruled that the Postal Service’s IMb requirement constituted a rate increase and subject to a price cap

January 2014 - USPS filed request with US Court of Appeals for review of PRC decision

USPS remains committed to 100 percent Full-Service IMb adoption as an effective way to enhance the value of mail

Package IMpb implemented January 26, 2014 and becomes mandatory January 25, 2015

Status of IMb and IMpb

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Package Growth Initiatives

Improved tracking language on usps.com

More real time scanning equipment

Sunday delivery

Same Day Delivery

Package Services Initiatives

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March 16-19, 2014

Gaylord National Harbor

Washington DC

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Extensive Educational Opportunities - Over 150 workshops and Executive USPS led sessions.

Exhibit Hall - Connect with 88 suppliers and industry leaders and to learn about NEW products, applications and services.

Networking - the key to growing business and making things happen!

NPF Overview

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NPF Accomplishments

* Preliminary Data, April 2014

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Overall Rating

Workshops

PMG Keynotes

Key Sunday Session

NPF Accomplishments

* Preliminary Data, April 2014 21

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Inclined to expand business

Exhibit Hall

NPF Accomplishments

Receptions% found valuable

* Preliminary Data, April 2014

Reasons to attend

% very important

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NPF Current Status

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NPF Next Steps

May 17-20, 2015 Anaheim, California

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Questions?