1. Postal Logistics & Transportation Jeff Kruepke Quad/Transportation Services (414) 566-4255 jeff.kruepke@qg.com www.QG.com

2. Postal Logistics & Transportation – What Is It? – History – Why Do It? – How Is It Done? – Future

3. Postal Logistics & Transportation What Is It? Planning And Execution Of The Movement Of Printed Matter Prepared To USPS Specifications From The Final Production Source To The Point Of Acceptance By The USPS Or… Delivering Printed Matter Closest To Destination USPS Facilities Based On Cost and/or Time Savings Opportunities Or… Dropshipping

4. Postal Logistics & Transportation When Did It Start? R90-1 Rate Case (Effective Date 02/03/1991) 2C Zone Skipping & SCF Discount Previously Available DDU/SCF Zones For Ad Weight DDU/SCF Per Piece Discounts 3C DDU/SCF/BMC Piece or Pound Discounts R97-1 Rate Case (Effective Date 01/10/1999) 4C (Parcel Post) Zone Skipping To BMC Previously Available DDU/SCF Rates

5. Postal Logistics & Transportation Why Do It? Delivery Performance Delivering Deeper Into The Postal Network Usually Results In More Predictable Delivery Performance Predictable Delivery Performance Allows For Synchronizing The Production and/or Transportation Schedule With The In Home Requirements Desired

6. Postal Logistics & Transportation Why Do It? In Home Performance (Estimate) Origin Entered (DMU) 2 to 17 days BMC 5 to 8 days ADC/SCF/ASF 2 to 4 days DDU 1 to 2 days

7. Postal Logistics & Transportation Why Do It? Cost Savings Periodicals Dropship Independent Postage Per Piece Charges Bundle Charges Dropship Dependent Postage Advertising Weight Editorial Weight Container Charge

8. Postal Logistics & Transportation Periodical Dropship Postage Advertising Weight Savings CWT Editorial Weight Savings CWT ZoneDDUSCFADC 1&2$7.90$3.00$2.00 3$9.70$4.80$3.80 4$14.30$9.40$8.40 5$21.20$16.30$15.30 6$28.60$23.70$22.70 7$37.40$32.50$31.50 8$45.00$40.10$39.10 DDUSCFADC $6.60$2.50$1.70

9. Postal Logistics & Transportation Periodical Dropship Postage Container Charge Savings Pallet TypeDDUSCFADC 5 Digit$25.75$18.95$11.45 3 Digit/SCFN/A$16.28$10.78 ADCN/A $9.71

10. Postal Logistics & Transportation WeightAdd %SortOriginal ZoneNew ZoneSavings CWT 5000%SCF5 $5.76 50010%SCF5 $7.14 50020%SCF5 $8.52 50030%SCF5 $9.90 50040%SCF5 $11.28 50050%SCF5 $12.66 50060%SCF5 $14.04 50070%SCF5 $15.42 1,0000%SCF5 $4.13 1,00010%SCF5 $5.51 1,00020%SCF5 $6.89 1,00030%SCF5 $8.27 1,00040%SCF5 $9.65 1,00050%SCF5 $11.03 1,00060%SCF5 $12.41 1,00070%SCF5 $13.79

11. Postal Logistics & Transportation Why Do It? Cost Savings Standard Mail Dropship Independent Postage Per Piece Charges Per Pound Charges Destination Entry Discounts 3.3 oz Or Less = Piece Discount Greater Than 3.3 oz = Pound Discount

12. Postal Logistics & Transportation Standard Mail Dropship Discounts Piece Rate - Discount Per Piece DDUSCFBMC $0.051$0.042$0.033 Pound Rate - Discount Per Pound DDUSCFBMC $0.248$0.203$0.159

13. Postal Logistics & Transportation Piece Discount - 3.3 oz (.2063 pounds) Or Less PiecesPiece WeightPallet WeightEntry LevelSavings CWT 2,4240.2063500DDU$24.73 2,6670.1875500DDU$27.20 4,0000.1250500DDU$40.80 8,0000.0625500DDU$81.60 2,4240.2063500SCF$20.36 2,6670.1875500SCF$22.40 4,0000.1250500SCF$33.60 8,0000.0625500SCF$67.20 2,4240.2063500BMC$16.00 2,6670.1875500BMC$17.60 4,0000.1250500BMC$26.40 8,0000.0625500BMC$52.80

14. Postal Logistics & Transportation Pound Discount - (Greater Than 3.3 oz) PiecesPiece WeightPallet WeightEntry LevelSavings CWT 1,0000.5000500DDU$24.80 1,0000.5000500SCF$20.30 1,0000.5000500BMC$15.90 2,0000.2500500DDU$24.80 2,0000.2500500SCF$20.30 2,0000.2500500BMC$15.90

15. Postal Logistics & Transportation How Is it Done? Mail.dat Container Summary Data Container Type (Pallet/Sack/Tray) Sort Level (5 Digit/SCF/ADC/BMC) Weight Detail Data Bundle Level Detail Counts By Mail Piece/Zip/Rate Level Mail Piece Unit Detail Add % Piece Weight

16. Postal Logistics & Transportation How Is it Done? Critical Mass Logistical Analysis Detailed Study News Weekly Production Constraints Critical Entry Times (In Home) Cost Simple Study Desired In Home Window Cost

17. Postal Logistics & Transportation How Is it Done? Load Planning Creating Critical Mass Common Delivery Point Common Delivery Window Common Availability Window Origin Consideration

18. Direct Delivery Oklahoma City Saratoga Springs Jacksonville Martinsburg Hartford Lomira Pewaukee Sussex West Allis The Rock Nashville Atlanta - 100,000 lbs. to Jacksonville, FL out of Lomira - Create 2 straight loads to Jacksonville of 45,000 lbs. - 10,000 lbs. left residual - Multi-stop option - Take residual product and combine product destined for Nashville and Atlanta to make one full load - Make multiple stops to deliver product

19. Miami Regional Delivery Oklahoma City Saratoga Springs Jacksonville Martinsburg Ft. Myers Hartford Lomira Pewaukee Sussex West Allis The Rock - 100,000 lbs. to Jacksonville, FL out of Lomira - Create 2 straight loads to Jacksonville of 45,000 lbs. - 10,000 lbs. left residual - Multi-stop option vs. one full load

20. Postal Logistics & Transportation

22. How Is it Done? Appointment Scheduling FAST (Facility Access and Shipment Tracking) Web Enabled USPS System For Scheduling Dropship Appointments Currently Standard Mail and Parcel Select Only Periodicals Soon! Mail.dat Integration

23. Postal Logistics & Transportation How Is it Done? Appointment Scheduling FAST (Facility Access and Shipment Tracking) Web Enabled USPS System For Scheduling Dropship Appointments Currently Standard Mail and Parcel Select Only Periodicals Soon!

24. Postal Logistics & Transportation How Is it Done? Transportation Network Time and/or Shipment Size = $$$ Best “Value” Option For Shipment Transit Times Reliability Cost

25. Postal Logistics & Transportation How Is it Done? Air Freight Shortest Transit Times Very Reliable Very Expensive Limited Wide Body Service (Palletized)

26. Postal Logistics & Transportation How Is it Done? LTL (Including Redelivery Agents) Published Transit Schedules Reliable Cost Effective For Non Critical Mass Deliveries

27. Postal Logistics & Transportation How Is it Done? Truckload - Truck Most Flexible Reliable Cost Effective For Critical Mass Deliveries

28. Postal Logistics & Transportation How Is it Done? Truckload - Intermodal Limited Lanes Generally Longer Transit Times vs Truck Reliable Can Be Very Cost Effective (50% vs Truck)

29. Postal Logistics & Transportation How Is it Done? Tracking In Transit (To Postal Facility) EDI Integration Carrier Web Sites Check Calls Delivery (To Postal Facility) EDI Integration Carrier Web Sites Check Calls FAST

30. Postal Logistics & Transportation

31. How Is it Done? Tracking In Transit (within USPS) Surface Visibility CONFIRM (Non CART Flats) Delivery (Final) Seed Tracking

32. Postal Logistics & Transportation Future USPS Sent Strong Signal To Standard Mail Dropship Discounts Increased > 50% USPS Sent Mixed Signal To Periodical Mail Dropship Discounts Decreased For Certain Segments Low Add % Heavier Pallets Shape Based Network Will “Shift” Costs From USPS To Mailer

33. Sample – Atlanta Area Atlanta SCF North Metro Atlanta BMC SCF Flats SCF Letters SCF Parcels SCF Flats SCF Letters SCF Parcels BMC Flats BMC Letters BMC Parcels Athens SCF Flats SCF Letters SCF Parcels

34. Sample – Atlanta Area Atlanta SCF North Metro Atlanta BMC SCF Letters SCF Parcels SCF Letters SCF Parcels BMC Flats BMC Letters BMC Parcels Athens Periodical Flats SCF Letters SCF Parcels BMC Annex Periodical Flats SCF STD Flat SCF STD Flat SCF STD Flat Periodical Flats Periodical Flats STD Ltr

35. Postal Logistics & Transportation Questions?