1. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 1 PRESORT OPTIMIZATION Issue #11 WORK GROUP LEADERS Joe LubenowMarc McCrery Industry USPS

2. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 2 RECENT SIGNIFICANT ACCOMPLISHMENTS n Initiatives to increase pallet and decreased sack utilization n Co-packaging of automation and presorted flats within the same STD or PER package n Options to reduce letter trays n Allow certain Mixed mail on BMC pallets in order to reduce residual mail n Improved prep requirements for “fletters” n Enhanced prep for BPM flats n Formalized prep requirements for flat-sized pieces in letter trays

3. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 3 CURRENT STATUS/INITIATIVES 5-Digit Package Scheme for Flats Developed list of ZIPs that can be combined by mailers in “5-digit scheme” packages based on AFSM 100 Incoming Secondary distribution n Had extensive discussions with the industry through MTAC n Postal Bulletin notice published Dec. 26 th, effective Jan. 9 th. n Will reduce package handlings and costs for the Postal Service

4. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 4 CURRENT STATUS/INITIATIVES 5D 54656 5D 54657 5D 54664 5D SCH 54656 AFSM 100 INC SEC SORT PLAN 5-Digit Package Scheme for Flats Before After

5. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 5 CURRENT STATUS/INITIATIVES 5-Digit Package Scheme for Flats n Includes approximately 6000 ZIPs in 1756 combinations n Approximately 30% of packages are 5D n Only for AFSM 100 compatible Periodicals, Standard, and BPM flats n Restricted to Auto and co-packaged Auto and Presorted n Optional use, but required with 5% merging option beginning April 30, 2003 n OEL → *******************SCH 5-DIGIT 12345 n Presented through an electronic labeling list n Example benefit: 2M plus piece mailing, 7% decrease in total packages, which equates to over 12K packages

6. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 6 CURRENT STATUS/INITIATIVES 3-Digit Containers of Value Restrict the preparation of the 3-digit containers to 3-digit ZIPs for which the contents are actually distributed in 3-digit opposed to SCF operations n Worked to develop consensus within postal HQ and field operations and through MTAC n Postal Bulletin notice published Dec. 26 th, effective Jan. 9 th. n Will reduce containers and associated costs for the Postal Service

7. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 7 CURRENT STATUS/INITIATIVES 3D SCF 670 670, 671 671 SCF Wichita KS 670 3-Digit Containers of Value Never Prepare Never Prepare 672

8. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 8 CURRENT STATUS/INITIATIVES 3-Digit Containers of Value n Approximately 160 3D ZIPs w/o value n Required for Periodicals, Standard and BPM pallets beginning April 30, 2003 n Optional for Periodicals and BPM sacks n Presented in L002 using an indicator n Example benefit: 2M plus piece Periodical mailing → 2% decrease in pallets, which equates to 40 pallets

9. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 9 FUTURE GOALS n Full merging (CR/5D) of non-AFSM 100 compatible flats for dispatch to delivery units n Explore modifying the standards for “OELs” and presort stickers in preparation of advanced package sorting equipment n Increase the combining of letter mail trays from multiple mailings on pallets n Optional 5-digit prep for STD irregular parcels, but with basic rates for former 5-digit pieces n Explore palletization for First-Class Mail n Jointly pursue flats prep enhancements with Product Redesign and Engineering n Cost-based rates n Alternate flats container

10. PRESORT OPTIMIZATION WORK GROUP February 6, 2003 10 WRAP-UP QUESTIONS??????