Moving the Mail

NETWORK FACILITES NDC NETWORK RE-EGGINEERING HOW YOUR MAIL MOVES IMPROVING THE PARNTERSHIP

3 NETWORK FACILITIES - 2 STCs NY SURFACE TRANSFER CENTER (STC) – BRONX, NY –EXPRESS MAIL –FIRST CLASS –PERIODICAL –STANDARD NJ SURFACE TRANSFER CENTER (STC) – CARTERETT, NJ –EXPRESS MAIL –FIRST CLASS –PERIODICAL –STANDARD MOVING THE MAIL

P&DC NY STC STC P&DC STC SURFACE NETWORK

5 NETWORK FACILITIES - 2 L&DCs NJ LOGISTICS & DISTRIBUTION CENTER (NJ L&DC) – KEARNY, NJ –PRIORITY –OUTBOUND MILITARY PRIORITY –OUTBOUND INTERNATIONAL PRIORITY NY LOGISTICS & DISTRIBUTION CENTER (NY L&DC) – BETHPAGE, NY –PRIORITY –FIRST CLASS –INBOUND MILITARY PRIORITY –INBOUND INTERNATIONAL PRIORITY MOVING THE MAIL

P&DC NY L&DC L&DC P&DC NDC P&DC L&DC SURFACE NETWORK

P&DC NY L&DC L&DC P&DC NDC P&DC L&DC AIR NETWORK JFK??

8 NETWORK FACILITIES - 2 AIRPORTS / 1 ISC JFK / ISC – INTERNATIONAL SERVICE CENTER –FIRST CLASS – AIR TRANSPORTION –INTERNATIONAL EXPRESS –DOMESTIC EXPRESS –MILITARY MAIL –INTERNATIONAL GATEWAY TO WORLD Newark Liberty Airport –FIRST CLASS – AIR TRANSPORTION –INTERNATIONAL PRIORITY \ –MILITARY MAIL MOVING THE MAIL

9 NETWORK FACILITIES – AIR TRANSPORTATION COMMERCIAL AIR CARRIERS –JET BLUE –AMERICAN –UNITED –US AIR –CONTINENTIAL –DELTA SHARED NETWORK CARRIERS –FEDEX –UPS MOVING THE MAIL

10 NETWORK FACILITIES NJ NDC – JERSEY CITY, NJ CURRENT MAIL - –STANDARD –PACKAGES –PERIODICALS –INTERNATIONAL SURFACE –SURFACE MILITARY MOVING THE MAIL

Network Re-engineering Why change ????? Adjust to declining volume – 213 Billion pieces 2006 / 168 Billion pieces 2010 Adapt to how our customers use mail Internet, reduced spending Control operating cost MOVING THE MAIL

12 NETWORK DISTRIBTUION CENTER Transformation of 21 Bulk Mail Centers (BMC) to Network Distribution Centers (NDC) –Consolidate package distribution –Improve utilization of BMC & Surface Transfer Center (STC) containerization and transportation –Improve utilization of facilities –Leverage multiple trailer loading and dispatching techniques Transformation BMCNDC MOVING THE MAIL

13 NDC Responsibilities - 21 Facilities 11 - Tier 1 NDC –Distribution of local (turnaround) and destination Standard Mail, Periodicals, and Package Services 6 - Tier 2 NDC –Tier 1 responsibilities –Distribution of outgoing Standard Mail, Periodicals, and Package Services to the network Including, MXD States Outgoing single piece sort –STC containerization and dispatch operations – outgoing / incoming all classes 4 - Tier 3 NDC –Tier 1 and Tier 2 responsibilities –Consolidation points for less than truck load volumes from Tier 2 sites MOVING THE MAIL

14 Plan for Change – Overview BMCs of the future… Network Distribution Centers (NDCs) TodayTomorrow Process Standard Mail Package Services Some Periodicals Process Standard Mail Package Services Some Periodicals Some facilities will only distribute destinating mail (tier 1 NDCs) and Priority Mail Inter-BMC Transportation Rail Vans 53-foot trailers Containerized Inter-NDC Transportation Shared product transportation to maximize trailer utilization –All classes except Express Mail Existing dispatches to all current STC and NDC sites New dispatches to ADC, AADC and SCFs due to expanded reach and volume Using: –53-foot trailers –More efficient containers and possibly floor loading MOVING THE MAIL

15 NJ NDC – Overview Implemented in July 2009 –Involved consolidation of Springfield BMC, Philadelphia BMC, and New Jersey BMC originating processing into the NJ NDC Operational Impacts –NDCs operate like P&DCs –Operating plan changes required to coincide with STC containerization & dispatch plan –NDC sort to ADCs, AADCs and NDCs Transportation Impacts –Streamline / improve network –Increase utilization of assets –Improve transit time MOVING THE MAIL

16 NJ NDC – Overview Future - Move NY and NJ STC into NJ NDC fall Move STD MXD processing into NJ NDC fall Flat Sequencing System ( FSS) currently being installed Highlights -LOCAL PACKAGE SERVICE UP 24% -STANDARD SERVICE UP 3% -PERIODICAL SERVICE – MAINTAINED -TRANSPORTION UTLIZATION – 84% PER TRIP AVERAGE REDUCE COST $45 MILLION -WORKHOURS – DOWN 5% -WORKLOAD – UP 79% MOVING THE MAIL

17 Pref & Non PrefNon-Pref 12 Based on Day CET for 3-day mail Current NJ/ NY STC Pt-Pt Surface DFW JAX ATL MEM MCI STL MSP MOVING THE MAIL

18 All products Std, Per, Pkgs 12 DEN ABQ PHX BIL SLC Based on Day CET for 3 Day FCM Based on Day CET for 3 Day FCM All products, except PRI Based on CET for PRI Operating Plan Changes – Impact of CET Change MOVING THE MAIL

19 STANDARD, PACKAGES, BUNDLES POST OFFICE ORIGINATING P&DC BMEU MAILER NJ NDC TIER 1 NJ NDC TIER 2 DESTINATIGN P&DC POST OFFICE DESTINATING NDC DESTINATIGN P&DC POST OFFICE MOVING THE MAIL

20 FIRST CLASS W/ STC IN NJ NDC POST OFFICE ORIGINATING P&DC BMEU MAILER NJ NDC TIER 1 NJ NDC TIER 2 DESTINATIGN P&DC POST OFFICE DESTINATING NDC DESTINATIGN P&DC POST OFFICE ORIG STC DEST STC ORIG AIR STOP DEST AIR STOP MOVING THE MAIL DESTINATIGN P&DC POST OFFICE

21 FIRST CLASS W/ STC IN NJ NDC POST OFFICE ORIGINATING P&DC BMEU MAILER NJ NDC TIER 1 NJ NDC TIER 2 DESTINATIGN P&DC POST OFFICE DESTINATING NDC DESTINATIGN P&DC POST OFFICE ORIG STC DEST STC ORIG AIR STOP DEST AIR STOP MOVING THE MAIL DESTINATIGN P&DC POST OFFICE DEST STC

22 FIRST CLASS / STANDARD W/ STC IN NJ NDC POST OFFICE ORIGINATING P&DC BMEU MAILER NJ NDC TIER 1 NJ NDC TIER 2 DESTINATIGN P&DC POST OFFICE DESTINATING NDC DESTINATIGN P&DC POST OFFICE ORIG STC DEST STC ORIG AIR STOP DEST AIR STOP DESTINATIGN P&DC POST OFFICE MOVING THE MAIL DESTINATIGN P&DC POST OFFICE

23 PERIODICAL MAIL – L201 POST OFFICE ORIGINATING P&DC BMEU MAILER NJ NDC TIER 1 NJ NDC TIER 2 DESTINATIGN P&DC POST OFFICE DESTINATING NDC DESTINATIGN P&DC POST OFFICE ORIG STC DEST STC ORIG AIR STOP DEST AIR STOP DESTINATIGN P&DC POST OFFICE MOVING THE MAIL

24 PERIODICAL MAIL – L201 – MIRRORS FIRST CLASS POST OFFICE ORIGINATING P&DC BMEU MAILER NJ NDC TIER 1 NJ NDC TIER 2 DESTINATIGN P&DC POST OFFICE DESTINATING NDC DESTINATIGN P&DC POST OFFICE ORIG STC DEST STC ORIG AIR STOP DEST AIR STOP DESTINATIGN P&DC POST OFFICE MOVING THE MAIL

25 PERIODICAL MAIL – L-009 POST OFFICE ORIGINATING P&DC BMEU MAILER NJ NDC TIER 1 NJ NDC TIER 2 DESTINATING NDC ORIG STC DESTINATIGN P&DC POST OFFICE DVD NJ P&DC – MXD MOVING THE MAIL

® APPS – OPN 247 MI AFSM – OPN 144STD WN SPBS – OPN 137 WN AFSM – OPN 144 DU MI AFSM – OPN 144STD MI AFSM – OPN D, REJ 5D, CR FSS RUN 1 FSS RUN 2 FSS RUN 3 FSS RUN 4 FSS RUN 5 FSS RUN 6 FSS RUN 7 FSS RUN 8 SAMP RUN 2 SAMP RUN 1 SAMP RUN 3 SAMP RUN 4 SAMP RUN 5 SAMP RUN 6 SAMP RUN 7 SAMP RUN 8 MI SPBS 2 – OPN 137 DPS 5D REJ, Committed Mail Cased Mail Current Scheduling w/ FSS

® NJI & BMC

®

29 MOVING THE MAIL SURFACE vs. AIR NETWORK All products All products, except PRI Std, Per, Pkgs

30 Separation requirements 1.Local NDC service area – local plant 2.Network NDC split(s) Two splits required Tier 1 and Tier 2 Periodicals compliance with L201 & L009 split Label quality – print head USPS Network Re-Engineering Focus on service improvement Reduce operating cost / improve utilization USPS Commitment to our customers NY Districts / PCC IMPROVING THE PARTNERSHIP MOVING THE MAIL