What Will the USPS Network Look Like in 2010?
By Anita Pursley
The following article by PostCom
Secretary Anita Pursley appeared in the
recent Quebecor World LogisticSolutions newsletter and was reprinted with
permission. To learn more about Quebecor World, visit
www.quebecorworldlogistics.com
For several years now, the mailing industry has been anxious to learn more about the Postal Service’s plans for network redesign, now known as Evolutionary Network Design (END) and previously known as Network Integration Alignment (NIA). More specifically, mailers are hoping that whatever is designed, is a lowest combined cost network for the entire mailing industry. As is often the case, mailers are not consulted by the USPS during the planning stages of its projects and only learn the outcome when decisions are already made. In all fairness to the Postal Service, there was an attempt made to involve the mailing community when the concept was originally introduced as NIA, but it only complicated matters. Now, as noted in an April 2005 report by the Government Accountability Office (GAO), the Postal Service is reluctant to publicly disclose information on its realignment strategy because it believes that it will meet with resistance from employees, communities and government representatives if it does so too far in advance.
For mailers, who are large stakeholders of the Postal Service, this seems unfair. Uncertainty about what the Postal Service is planning to do about new processing operations, and potentially new discount structures, can inhibit a mailer’s investment in its own infrastructure. Here are only a few examples of questions being asked: How will Flat Sequencing impact co-mail investments? What is the best way to determine optimum transportation networks? What are the best geographic locations for consolidation facilities? Needless to say, mailers are quite anxious and relieved that the Postal Service is beginning to reveal details.
In an August presentation before the Mailer’s Technical Advisory Committee, USPS Senior VP of Operations Bill Galligan, gave mailers just enough information to wet their appetites. The future network will include Regional Distribution Centers (RDC’s), Local Processing Centers (LPC’s) and Destinating Processing Centers (DPC’s). The new Automated Package Processing System (APPS) equipment will be housed in the RDC’s (approximately 70) and will process packages and bundles of flat mail. The current AFSM 100 flat sorting machines and the new Flat Sequencing System (FSS) equipment will be located at the LPC’s and DPC’s. Galligan noted that the Postal Service’s current network of all-purpose incoming/outgoing plants would take on redefined consolidated network roles.
So, what can we gather (guess) from this new information combined with other known facts?
- Full deployment of the APPS is 74 machines. If you look at the APPS deployment schedule, it will likely reveal the future locations of the RDC’s.
- Drop ship mailers will likely deliver their flat mail (3-digit, SCF and BMC pallets, under current preparation rules) to the 70 +/- RDC’s. These RDC’s will then sort the bundles to the 5-digit level and transport the mail to the LPC or DPC (to be processed on a FSS or an AFSM 100).
- Future plans for FSS deployment (which won’t begin until 2008) will be in the “hundreds” of machines and will process mail for roughly 7,000 zip codes. Although an exact percentage is not known, those zip codes may handle 70 to 85% of the flat mail volume
- Since affluent areas receive the most flat mail, we can expect to see high concentration of FSS machines in certain parts of the country like California and Florida.
- The regular enhanced carrier route rate will likely be eliminated for the 7,000 +/- automated zones handled by the FSS equipment. Assuming that the carrier route discount will still apply to the remaining 30,000+ zip codes, it is uncertain as to whether it would be greater than or equal to a 5-digit discount for the automated zones.
- The Postal Service will want mailers to prepare 5-digit mail (and full 5-digit pallets) and should offer the best rate (or discount) for the 7,000 +/- zip codes.
- 5-digit pallets may be drop shipped to the LPC or DPC for sorting into walk sequence for the ultimate delivery carrier. It should be safe to assume that any future discounts (presort and drop ship) would encourage mail to be prepared to these locations and to this finest level.
- Co-mail will take on a slightly different role for differing areas of the country but should still be lucrative for creating the finest levels of presort and the greatest postal discounts.
- Co-palletization efforts might increase in an attempt to create more 5-digit pallets.
- A more complicated rate structure is anticipated in the future. Software changes will be required. Mail preparation rules will change. The transition period will likely be lengthy and confusing.