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R.R. Donnelley Calls for U.S. Postal Service Reform

Press release from the issuing company

CHICAGO, May 16, 2001 - Legislative reforms are needed to define a more tightly-focused mission for the US Postal Service (USPS) that sustains affordable, universal delivery by cutting costs and providing businesses better incentives for more efficient use of the system, an R.R. Donnelley & Sons Company [NYSE: DNY] executive told Congress today. John C. Campanelli, president of R.R. Donnelley Logistics, testified before the US House of Representatives Committee on Government Reform that the USPS must leverage its core competency in "last-mile" delivery and focus on becoming the gateway into the home and office. While suggesting areas for reform to reduce costs, Campanelli also testified that further rate increases -- on top of the two that will already be implemented in less than a year -- would undermine the long-term success of the USPS through a short-term attempt to increase revenues. "The imposition of a sequence of serial rate increases that are several times the rate of inflation at a time when every business in the country is going through a severe belt-tightening exercise has the potential to do far more harm than good to the USPS' bottom line," Campanelli said. "These rate increases are entirely inconsistent with the policies and objectives of Congress, the Administration, and the private sector to revitalize the economy." R.R. Donnelley Logistics, through its work with many leading catalogers and magazine publishers, is the largest single consolidated user of the USPS outside of the federal government. Campanelli suggested to the committee several areas where the USPS can make immediate changes without the need for congressional approval: * Offering discounts for worksharing, such as when mailers use more efficient containers or insert mail deeper into the system, that better reflect the cost savings generated; * Re-examining rules governing sortation, containerization and acceptance scheduling to allow multiple classes of mail to be combined to achieve densities that are a precondition to dropship and presort discounts; * Allowing the use of mixed-mail pallets to control costs by maximizing cube and weight loads when transferring mail; * Quickly creating new services to add value to existing destination delivery unit (DDU) dropship discounts, such as creating a product return rate that relies on reverse routing by logistics companies; * Introducing lower-cost and faster electronic filing formats that reduce the bureaucracy that inhibits large mailers seeking to use the USPS for its "last-mile" efficiencies. * Establishing a real-time online communications system that allows shippers to organize their schedules to assure that mail and products get to consumers when expected. One widely publicized cost saving measure proposed by the USPS recently -- the elimination of Saturday service -- would work against its strength as the only delivery entity to provide regular Saturday delivery, Campanelli added. "The USPS is an integral part of our nation's communications and commercial infrastructure," Campanelli said. "Preservation of universal service insures that a single, unified communication network continues to bind every segment of our population, regardless of geographic location or socioeconomic standing."

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