Higher Fuel Costs Worry USPS, But It's Ready for Busy Fall

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The U.S. Postal Service is preparing to handle an expected increase in volume this fall -- most of it Standard mail -- over last year, but postal officials expressed concern last week about the need to keep fuel costs down.

"Through the calendar year, we publish volume information, and Standard mail has been up consistently," said Tony Pajunas, USPS manager of logistics. "I am expecting the growth we have seen all year long to continue through the holiday period."

As of Aug. 31, Standard mail volume was up nearly 6 percent over last year, while First Class grew 0.2 percent.

Generally, the postal service's peak week for Standard mail is the last week of October or first week of November, when it delivers the most catalogs and ad mail. But that is changing. Now the USPS sees more ad mail later in November and even into December as consumers and companies realize that late orders still can be delivered in time for the holidays.

Average daily volume processed through the year is 100 million. During the holiday season, it rises to 150 million a day. The USPS said it expects its peak volume day to be Monday, Dec. 19, the Monday before Christmas, with 280 million cards and letters to be processed, up 10 million over last year.

The USPS' biggest concern this year: keeping fuel costs down.

"Fuel is having a tremendous detrimental effect on the cost of the logistics network," Pajunas said. "Every penny increase in the price of fuel costs is worth $8 million more a year to us. When you think about all the pennies that fuel has gone up over the past few months, it is adding in excess of $100 million to the bottom line."

Despite fuel costs, the USPS again will extend its surface reach.

"Every year at this time, we supplement our air networks by putting hundreds of trucks in place to really move the mail around the clock because the volume is so much higher than our normal volumes," he said.

Though the USPS may normally truck First-Class mail 700 miles, it might stretch it to 1,000 miles "to make room on the planes for the packages that have to fly to get timely service."

In the past, the USPS needed to hire seasonal workers, but "the automation that we have in place ... allows us to handle the mail in a timely manner, with very little additional hiring," Pajunas said.

The USPS also has focused on processing and delivery changes this year, he said. For example, the installation of 47 APPS, the agency's automated package processing system equipment, should improve the processing of flats and parcels. When it is fully deployed, the system will replace more than 100 mechanized small parcel and bundle sorting machines at 70 facilities.

In addition, to make the process smoother this year, the USPS is urging mailers to use the new Facility Access and Shipment Tracking System, which replaces the current Drop Shipment Appointment System. FAST is supposed to simplify the scheduling process and let customers provide detailed information about their appointments.

The deployment began with the New York metro area in July, and many areas have been phased in since. The USPS is offering preferred status to mailers meeting FAST requirements, which include offering data about their mailings as well as appointment request information. It will use the data to improve dock processes and personnel scheduling.

Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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