USPS: Product Redesign Changes Coming by Spring

The U.S. Postal Service expects to complete much of its product redesign effort by May so that the changes can be included in the next rate case, which could be filed next fall and implemented in January 2006.

“We want to have all of our major initiatives ready to go by May of 2004 so they can be put into the production process for an omnibus rate case that might be filed about a year from now, more or less,” said Don O'Hara, USPS manager of product redesign.

Begun in 2001, the product redesign initiative aims to bring sweeping changes to postal products and services. Goals include developing flexible cost-based presort, preparation and entry; defining work-sharing opportunities; improving value to customers; driving costs out of the system through incentive-based practices; and having prices and products that generate growth in volume and revenue.

The USPS last undertook such an effort in the early 1990s. It was called classification reform, and the most important development was a change in rates and preparation requirements for automation letter mail.

Most of the initiatives will be incorporated into the rate case or filed as a separate redesign/reclassification case with the Postal Rate Commission. Others may be filed with the PRC as niche classification cases, and others will be “options,” or changes in requirements that do not require PRC approval because they have no rate implications.

One change will raise Standard Mail five-digit bundle minimums from 10 to 15 pieces for mail pieces that weigh less than five ounces and are thinner than three-quarters of an inch. Mailers said this initiative will reduce bundle-handling costs for the USPS and mailers. The USPS expects to publish this as a proposed rule in the Federal Register later this month and hopes to implement it by April 2004.

Additionally, by the end of the year, the USPS hopes to publish a proposed rule in the Federal Register that would permit co-palletization and co-mailing of mixed classes of flat-size mail. This change will allow Periodicals, Standard Mail pieces and Bound Printed Matter flats to be placed on the same pallets or in the same bundles. This would leave the USPS with fewer pallets and bundles to handle and let mailers get deeper drop-ship discounts with existing rates. The USPS hopes to implement this rule in July 2004.

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