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R&D Initiatives at the USPS Could Trim Postal Costs

Press release from the issuing company

WASHINGTON - The Postal Service's chief engineer has unveiled two R&D programs that could eliminate up to $2.8 billion annually in delivery costs. The first will bring flat sorting technology up to the same level of sophistication as letter mail by sorting flats, such as magazines, catalogs and other periodicals, into delivery order. The second will stretch the technology envelope by developing a single system to sort letters and flats into delivery order simultaneously and then bundle it into individual delivery packages. Tom Day, Vice President, Engineering, said this strategy to optimize efficiencies, as part of the Postal Service's blueprint of the future, also known as the Transformation Plan, will enhance productivity and dramatically reduce costs. "Our delivery costs are approximately $18.5 billion," he explained. "This cost, combined with the cost to serve 1.5 million new addresses each year creates the opportunity to improve efficiencies." Day said using technology to place flat mail into delivery point sequence will allow letter carriers to be more efficient in the office and allow them to begin serving their customers earlier in the morning. Because of development and planning associated with this vision, the Postal Service will conduct two parallel R&D initiatives. Flat Sequencing System The Flat Sequencing System (FSS), as the first initiative, will automate flat sorting to delivery order. While this will not merge flats and letters into one package, its goal is to place flats in delivery sequence within one or more five-digit zones. "This program essentially strives to replicate the success we have achieved with Delivery Point Sequencing of letters," he explained. "We'll work with vendors to develop a machine to perform three key functions: Induct flats at high speed; automatically manage trays throughout the process; and sequence flats to delivery order." Delivery Point Packager The second initiative, Delivery Point Packager (DPP), reduces the time carriers spend casing flats and reduces the time they spend delivering by creating packages of mixed letters and flats for each delivery stop. Previous tests of this method have shown a 20% reduction in the time required to deliver when mail is prepared in these bundles. Day said applying this twenty percent savings in delivery time to the 7,000 locations results in a delivery savings of approximately $2.8 billion annually. He noted however, that this amount excludes some additional mail processing costs. Field tests were conducted in Carson City, NV and Sterling, VA where letters and flat mail were manually sorted into plastic bags to simulate the output of a Delivery Point Packager. Letter carriers then delivered the bags to customers. "We are carefully weighing the risks and benefits of both systems," Day explained, "and we'll apply a technology or combination of technologies that proves the most effective for us." He did note however that the testing will take time. "Before we can make an informed decision on these technologies, we need more design and experience." Day said that design and simulation begins in summer 2003 for Flat Sequencing and in winter 2004 for the Delivery Packager. Competitive vendor testing at Postal plants is expected to take place in winter 2005 for the flats program and summer 2007 for the packager.