1. CO-PALLETIZATION AND CO-MAILING UPDATE Mailers’ Technical Advisory Committee (MTAC), May 17, 2006 1 Update on Co-Palletization and Co-Mailing May 17, 2006 Marc McCrery USPS Manager, Operational Requirements

2. CO-PALLETIZATION AND CO-MAILING UPDATE Mailers’ Technical Advisory Committee (MTAC), May 17, 2006 2 Definitions n Co-palletization is when pure bundles of Periodicals or Standard Mail flats from different titles or versions are combined on destination pallets. n Co-mailing (a.k.a. co-mingling, co- bundling, co-packaging) is when multiple versions or titles of Periodicals or Standard Mail flats are combined within presort destination bundles through an in-line or off-line production process.

3. CO-PALLETIZATION AND CO-MAILING UPDATE Mailers’ Technical Advisory Committee (MTAC), May 17, 2006 3 Co-Palletization – Customer Benefits n Reduce the number of containers prepared by customers n Move mail from sacks to pallets n Match preparation with shape-based postal processing n Eliminate residual mail n Improve drop ship penetration and discounts n Improve delivery consistency

4. CO-PALLETIZATION AND CO-MAILING UPDATE Mailers’ Technical Advisory Committee (MTAC), May 17, 2006 4 n Decrease use of sacks n Prepare fewer bundles n Increase presort discounts for pieces moving to finer bundle level (e.g., from 5-D to CR-RT) n More opportunity for Periodicals with separate 5- Digit & 3-digit rates, co-pal discounts, and pallet discounts n Improve Palletization n Prepare finer level pallets (more SCF & 5-digit) and fewer pallets n Improve drop ship penetration and discounts n Improve delivery consistency n Moves toward shape-based processing environment n Consistent with future flats strategies (e.g. FSS) Co-Mailing – Customer Benefits

5. CO-PALLETIZATION AND CO-MAILING UPDATE Mailers’ Technical Advisory Committee (MTAC), May 17, 2006 5 Co-Palletization and Co-Mailing of Mixed Classes n Provide further opportunities to consolidate flats mail streams where it makes sense for efficiency n Build on opportunities of Periodicals co- palletization experiment n Further reduce the number of containers prepared by customers n Move mail from sacks to pallets n Match preparation with shape-based postal processing n Increase presort, pallet, and dropship discounts n Move mail closer to destination

6. CO-PALLETIZATION AND CO-MAILING UPDATE Mailers’ Technical Advisory Committee (MTAC), May 17, 2006 6 Mixed-Class Co-Palletization Levels* 5D/L001 ADC SCF 3D CRFIRM5D/Scheme3D/SchemeADC PER STD [Optional For Co-Pal] [Optional][Optional For Co-Pal] *Slide represents co-mailing if bundles at each presort level are merged together.

7. CO-PALLETIZATION AND CO-MAILING UPDATE Mailers’ Technical Advisory Committee (MTAC), May 17, 2006 7 Co-Palletization and Co-Mailing of Mixed Classes n We have solicited the participation of mail service providers to help work through the implementation issues. n We have pulled in printers and transportation providers seriously interested in mixed-class co-palletization or co-mailing. n In cooperation with software vendors, volunteers are being asked to assist in the development of the necessary documentation. n We hope to pilot mixed class co-palletization and co-mailing by end of the calendar year.

8. CO-PALLETIZATION AND CO-MAILING UPDATE Mailers’ Technical Advisory Committee (MTAC), May 17, 2006 8 Questions???