CTC Distribution Direct, Minneapolis, the business-to-residential parcel distribution planning and implementation company, recently announced plans to increase the capacity of its parcel distribution network.
The move is designed to service parcel shippers that take advantage of the worksharing discounts to be offered by the pending postal reclassification case.
If the Postal Rate Commission passes the rate case next week, parcel shippers will be able to receive additional discounts by dropping their high-volume parcel presort shipments deeper into the system. For example, instead of dropping packages at the 21 Bulk Mail Centers (BMCs) and eight Auxiliary Service Facilities, shippers will get discounts by bypassing the BMCs and dropping packages at the smaller Sectional Center Facilities (SCFs) and Destination Delivery Units (DDUs) around the country, which may number as many as 470 after reclassification.
To provide more consolidation services for customers taking advantage of worksharing opportunities, CTC is planning to add eight facilities to its network of 12 distribution centers.
“With the additional facilities, instead of only sorting to 30 end-points, we will be able to sort to as deeply as 200 or 300 end-points, depending on the [rate case] decision,” said Michael Talbott, vice president of business development at CTC Distribution Direct.
The rate case also will determine where the company will locate its distribution centers.
“These sites are not fully sourced yet,” Talbott said. “A lot of it depends on what happens with the rate case. If the PRC approves the current rate case, then that determines one set of criteria as to where [the sites] are located. If the rates are different from that, this could change where the USPS puts their end points, which will affect where we will put our sites.”
Regardless, Talbott said that the first four centers, expected to be up and running by early August, will be located in areas with high concentrations of customers and SCFs where there is a need for additional capacity. They will serve an estimated 50 percent of parcel presort distribution at the SCF and DDU entry levels. The remaining four facilities will be operating by the end of the year.
Depending on the needs of each facility, an automated parcel handling and sortation system will be instituted by Siemens ElectroCom, Arlington, TX, a mail-processing automation company.
CTC is working with logistics solutions company J.B. Hunt Transport Services, Lowell, AR, to analyze population centers, population growth, labor markets, transportation costs, marketplace potential, current freight flow and customer location to determine suitable locations for additional sort centers.
The rate case proposal was not the sole deciding factor in CTC's expansion, Talbott said.
“We are also increasing our capacity because we are growing at an annual 30 percent compound growth rate, especially since postal products are getting better every year, and there are more people exploring an alternative to UPS,” he said. “And the industry is very healthy, and we believe the [mailing industry] will continue to outpace retail in terms of getting merchandise into the hands of the consumer.”
The company also is considering increasing its Standard-A mail sortation services for the benefit of its catalog marketing clients.