BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20268-0001
POSTAL RATE AND FEE CHANGES, 2006
Postal Rate Commission
Submitted 7/20/2006 12:00 pm
Filing ID: 50935
Accepted 7/20/2006
Docket No. R2006-1
RESPONSES OF POSTAL SERVICE WITNESS KIEFER
TO INTERROGATORIES OF UNITED PARCEL SERVICE
(UPS/USPS–T37–9 - 10)
The United States Postal Service hereby provides the responses of
witness Kiefer to the following interrogatories of United Parcel Service, filed on
July 7, 2006: UPS/USPS–T37–9 - 10.
Each interrogatory is stated verbatim and is followed by the response.
Respectfully submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux, Jr.
Chief Counsel, Ratemaking
Scott L. Reiter
475 L'Enfant Plaza West, S.W.
Washington, D.C. 20260-1137
(202) 268-2999, Fax -5402
[email protected]
July 20, 2006
RESPONSE OF POSTAL SERVICE WITNESS KIEFER TO
INTERROGATORIES OF UNITED PARCEL SERVICE
UPS/USPS-T37-9. Refer to library reference USPS-LR-L-82, WP-PP-1 and
WPPP-19.
(a) Confirm that Alaska Bypass mail volume in the TYBR is 1,671,068 pieces.
If not confirmed, explain in detail. Also, provide the RPW data used to
calculate this figure per note “6e”.
(b) Confirm that Alaska Bypass revenue is assumed to be 12.081% of NonAlaska Intra-BMC revenue. If not confirmed, explain in detail. Also, provide
the RPW data used to calculate this figure per note “5a-b”.
(c) Confirm that Alaska Bypass revenue in the TYBR is calculated to be
$19,048,805. If not confirmed, explain in detail.
(d) Confirm that the TYBR cost for Alaska non-preferential air is $1,063,000
(per library reference USPS-LR-L-89, Attachment B, page 8, row 3). If not
confirmed, explain in detail.
(e) Explain in detail the reasons for the significant differential between the
Alaska Bypass revenue that you estimate and the cost for Alaska nonpreferential air.
RESPONSE
a.
Confirmed. The calculation supporting the specific figure, 1,671,068, is
shown in WP- PP-1, cell D29. It is the product of the TYBR total Intra-BMC
volume forecast and the share of Intra-BMC pieces that are “Alaska Bypass”
pieces, 4.627%, shown in cell D30. This ratio is obtained by dividing the
RPW number of Alaska Bypass Intra-BMC pieces in the base year
(1,578,095) by the RPW total Intra-BMC volume in the base year
(34,107,784).
b.
Confirmed. This ratio is obtained by dividing the RPW revenue from Alaska
Bypass Intra-BMC pieces in the base year ($17,085,340) by the RPW total
Intra-BMC non-Alaska revenue in the base year ($141,428,465).
c.
Confirmed.
d.
Not confirmed. Please see witness Mayes’ response to UPS/USPS-T25-6.
e.
I understand from witness Mayes that the corrected Alaska non-preferential
air costs will be significantly higher than the $1 million figure mentioned in
the question. This will narrow the difference between the Alaska Bypass
revenue and the Alaska non-preferential air costs. I should note that the
RESPONSE OF POSTAL SERVICE WITNESS KIEFER TO
INTERROGATORIES OF UNITED PARCEL SERVICE
question sets up a comparison between one component of costs and total
revenues for a single mail category. A more reasonable comparison would
be between total unit costs for Alaska Bypass mail and unit revenues. As I
have pointed out in earlier responses to UPS interrogatories, the Postal
Service does not have cost information that is designed to adequately
calculate unit costs and contributions below the subclass level. This
reservation was expressed with respect to rate categories like Intra-BMC
Parcel Post. It applies even more strongly to sub-components of Intra-BMC,
like Alaska Bypass mail. I do not know what the difference is between
Alaska Bypass revenue and actual Alaska Bypass total costs.
RESPONSE OF POSTAL SERVICE WITNESS KIEFER TO
INTERROGATORIES OF UNITED PARCEL SERVICE
UPS/USPS-T37-10. Refer to your response to PSA/USPS-T37-1 and
PSA/USPS-T37-3. Provide the TYAR average cost per piece and TYAR average
revenue per piece, and your underlying calculations, for:
(a) Inter-BMC parcels;
(b) DBMC parcels;
(c) DSCF parcels; and
(d) Intra-BMC Alaska Bypass parcels.
RESPONSE
(a)-(c) Please see UPS-USPS-T37-10.XLS, attached. Please also see my
responses to PSA/USPS-T37-1(a) and PSA/USPS-T37-3, in particular,
the reservations I expressed that these costs are assigned costs and that I
do not know how close these assigned costs are to the actual costs of
Inter-BMC, DMBC and DSCF parcels.
(d)
The TYAR average revenue per piece for Alaska Bypass pieces is $13.41
(= $21,239,491 divided by 1,583,409 pieces). I do not know the average
cost for these pieces and have not developed an assigned cost for them.
Attachment to response to UPS/USPS-T37-10
Page 1 of 4
Per Piece
Assigned Cost
3.146
TYAR Assigned Costs Calculation
Assigned Costs--Before Surcharges
Weight
(Pounds)
Zones 1 & 2
Zone 3
Zone 4
Zone 5
Intra-BMC
Total
DDU
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
1,462,158
3,106,548
1,568,393
685,883
432,673
379,166
259,975
149,940
90,852
71,713
98,044
81,404
18,396
95,458
18,775
33,109
28,851
20,005
35,736
24,951
16,844
15,206,653
32,262,354
19,276,628
12,094,803
8,047,701
5,377,666
4,352,883
3,138,143
2,322,078
2,024,266
1,522,996
1,437,002
1,083,065
762,050
913,476
889,663
709,473
616,462
1,000,039
612,063
533,379
1,922,169
4,706,145
3,669,574
2,319,440
1,591,664
1,000,431
974,597
655,215
410,113
529,204
336,220
253,941
290,154
283,607
198,733
166,811
178,078
196,405
163,358
209,729
114,671
252,922
1,253,061
654,172
500,885
388,640
222,148
229,776
101,131
148,512
73,170
153,499
54,942
93,559
127,767
76,999
45,390
46,648
43,500
74,982
34,075
83,360
20,611
87,867
43,619
23,351
19,505
9,417
10,729
9,077
16,952
1,669
7,595
1,217
12,971
664
6,773
810
581
10,780
6,786
2,742
12,597
18,864,512
41,415,976
25,212,386
15,624,362
10,480,184
6,988,828
5,827,959
4,053,506
2,988,507
2,700,022
2,118,355
1,828,506
1,498,145
1,269,546
1,214,756
1,135,784
963,631
887,151
1,280,901
883,560
760,852
7,722,095
49,890,278
36,885,172
24,298,294
16,835,536
12,882,411
11,158,236
8,040,498
6,625,352
5,531,876
4,447,403
3,793,039
3,107,125
2,449,796
2,680,240
1,976,552
1,703,726
1,558,615
1,768,638
1,098,978
1,197,406
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
44,485
14,577
7,935
8,957
9,075
563
3,259
18,544
624
2,299
10,384
620
20,258
241
3,079
89
9,954
101
763
165
187
4,395
116
86
2,254
185
231
111
22
68
136
240
46
59
12
25
10,672
6,185
460,982
384,866
350,109
324,124
358,976
324,875
294,710
344,584
433,607
280,266
239,495
203,721
149,177
123,950
193,000
260,072
194,173
202,481
111,512
173,961
99,706
118,876
88,217
79,144
210,092
62,094
75,386
107,942
60,121
112,009
197,303
121,983
88,370
53,849
37,365
58,517
63,547
29,397
44,549
16,128
36,017
39,789
30,469
21,269
71,781
16,517
18,988
15,421
3,013
728,319
1,258,043
122,959
80,643
130,198
79,965
102,287
100,623
92,328
155,650
41,455
70,462
66,187
100,630
34,454
58,417
87,950
55,877
27,683
89,885
87,068
156,049
21,783
53,054
39,142
38,093
62,693
9,213
57,350
113,889
42,212
16,552
49,480
105,365
57,127
29,526
78,384
15,153
17,258
28,495
851
9,049
4,342
33,739
8,495
6,189
4,501
17,580
109,213
491,530
11,712
6,479
30,712
19,030
2,387
29,573
471
8,947
626
438
45,583
28,951
1,285
31,913
1,504
1,662
234
805
7,812
1,406
147
1,505
117
30,404
1,383
138
1,568
88
18
36
109
201
55
57
19
1,335
20
17,464
3,461
10,982
330
9,522
17,986
22,925
264
10,141
109
4,228
2,006
143
291
15
60
30
15
7,965
16
16
49
33
50
17
17
17
2,270
18
18
36
18
19
1,226
1,115
651,119
486,895
528,475
450,063
495,651
455,898
400,908
527,835
480,539
355,472
361,793
334,214
205,190
214,580
285,562
317,716
240,010
293,272
207,172
331,598
121,872
177,863
127,643
147,744
276,440
71,630
134,552
224,300
102,391
128,683
247,064
227,807
145,598
83,374
115,750
73,805
80,836
57,892
46,735
25,176
40,359
39,789
64,208
29,809
77,970
21,018
18,988
15,421
20,593
866,895
1,760,333
1,187,303
1,024,725
851,919
682,172
628,376
578,038
526,570
444,397
1,345,342
522,423
358,497
451,608
314,821
289,377
272,066
276,334
231,844
208,226
243,600
212,900
240,534
235,314
212,384
171,903
136,985
102,550
108,399
77,985
95,813
71,113
51,046
33,081
34,330
38,697
30,299
27,011
29,505
25,881
31,063
30,985
50,893
17,331
17,681
33,403
8,296
5,162
4,109
3,041
3,120
702,846
13,504
8,859,874
123,555,706
23,431,291
4,948,793
398,264
161,193,928
218,946,067
Balloon
Oversized
Total
Local
Note: Calculations exclude Alaska Bypass pieces.
Attachment to response to UPS/USPS-T37-10
Page 2 of 4
Adjusted TYAR Assigned Costs And Revenues
Cost Item/Adjustment
Subtotals
Calculated Intra-BMC Assigned Costs
Less: Intra-BMC Barcode Savings
Plus: Intra-BMC Non-machinable Costs
Intra-BMC Revenue Adjustment Factor
Intra-BMC Non-Alaska Adjusted Assigned Costs
Intra-BMC Non-Alaska Volume
Intra-BMC Non-Alaska Per-Piece Assigned Costs
Intra-BMC Non-Alaska Revenue
Intra-BMC Non-Alaska Per-Piece Revenue
161,193,928
(50,032)
15,233,010
Calculated DDU Assigned Costs
Parcel Select Revenue Adjustment Factor
DDU Adjusted Assigned Costs
DDU Volume
DDU Per-Piece Assigned Costs
DDU Calculated Revenue
DDU Adjusted Revenue
DDU Per-Piece Revenue
218,946,067
Note: Pickup Fees, Combination Revenue and
Other Fees are not included in revenues.
Contingency is not included in costs.
Totals
0.99148843
174,875,661
32,639,237
5.36
175,815,561
5.39
1.01299204
221,790,623
186,080,909
1.19
312,195,543
316,251,599
1.70
Attachment to response to UPS/USPS-T37-10
Page 3 of 4
Per Piece
Assigned Cost
3.146
TYAR Assigned Costs Calculation
Assigned Costs--Before Surcharges
Weight
(Pounds)
Zones 1 & 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
1,519,849
2,810,264
1,887,738
2,096,953
1,314,481
972,568
785,466
541,951
348,704
429,525
521,975
259,929
306,892
119,621
228,680
135,004
179,689
132,743
121,921
88,702
94,388
148,135
65,651
107,725
40,849
159,657
17,577
114,971
88,972
33,688
47,298
31,159
82,672
20,296
31,160
102,058
10,849
7,198
20,043
2,755,647
6,799,707
4,356,653
2,883,148
2,294,342
2,187,005
1,713,167
1,322,701
1,028,446
860,352
582,622
510,175
707,897
468,891
441,253
560,040
380,137
185,413
225,535
191,457
174,367
127,800
125,087
419,662
147,184
227,924
148,703
119,780
42,367
91,987
157,748
61,984
103,586
69,350
75,599
42,844
45,157
13,206
27,030
5,557,718
25,666,617
18,457,219
13,026,962
9,128,542
5,691,954
4,755,212
3,617,143
3,305,996
2,630,863
2,046,969
1,855,739
1,260,072
1,209,160
1,215,518
806,893
579,311
707,670
596,931
591,128
695,629
369,432
905,105
649,216
349,019
501,457
345,560
391,242
301,053
310,479
146,097
154,140
184,708
87,078
184,601
88,508
134,926
68,996
125,481
6,040,387
32,723,906
23,590,023
16,223,625
10,504,170
7,737,303
5,111,665
4,885,570
3,928,597
2,790,194
2,307,578
2,284,978
1,944,587
1,442,407
1,401,508
1,480,370
1,097,542
990,814
847,014
805,503
659,225
644,732
1,009,027
575,338
402,122
311,048
363,325
337,111
361,563
209,426
278,038
367,148
297,504
134,900
393,212
329,493
147,056
74,891
49,382
3,254,842
17,566,785
13,589,144
8,158,375
5,565,298
3,163,478
2,132,864
1,484,235
1,529,067
1,236,928
939,330
1,378,356
1,186,598
901,630
828,932
1,127,056
546,712
855,577
485,335
592,116
562,005
684,897
478,546
495,545
170,483
408,506
398,640
348,141
279,156
497,225
167,820
330,376
103,403
507,935
63,948
168,535
66,451
122,107
269,568
2,268,901
13,403,805
10,117,279
6,285,426
4,485,684
3,442,483
1,978,999
1,475,563
1,250,663
1,093,213
944,977
1,007,600
791,676
638,799
676,032
722,745
543,043
495,825
482,584
816,490
310,678
403,179
305,912
247,058
245,674
266,410
233,917
114,351
256,936
211,832
114,520
130,298
223,864
100,842
114,914
67,705
90,052
124,951
3,805
4,189,169
24,635,395
17,664,065
12,249,697
7,856,812
4,697,321
4,001,574
1,622,364
1,173,755
1,495,103
2,111,096
1,520,327
1,835,810
1,103,592
1,223,222
1,036,070
979,381
952,149
1,250,984
993,259
983,109
926,939
901,604
828,441
878,189
596,912
1,020,021
1,164,848
533,675
452,537
440,503
326,926
447,410
564,174
499,225
530,425
541,154
210,945
391,952
25,586,513
123,606,480
89,662,121
60,924,186
41,149,329
27,892,110
20,478,948
14,949,528
12,565,228
10,536,177
9,454,546
8,817,104
8,033,532
5,884,099
6,015,144
5,868,177
4,305,814
4,320,191
4,010,302
4,078,655
3,479,401
3,305,112
3,790,930
3,322,985
2,233,520
2,471,914
2,527,743
2,590,444
1,863,721
1,807,173
1,352,025
1,402,033
1,443,147
1,484,575
1,362,659
1,329,568
1,035,645
622,295
887,261
95,066
649,867
605,188
510,647
551,718
218,559
202,007
127,859
134,599
101,377
90,673
52,351
41,707
29,210
78,650
29,943
17,010
13,839
25,815
14,772
11,546
7,781
6,295
4,553
3,825
2,930
6,229
4,047
5,104
3,176
3,437
1,560
1,795
1,733
1,243
1,813
1,382
833
1,222
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
9,053
981
6,912
120,852
1,681
24,371
322
14,138
24,713
3,302
1,900
621
4,880
652
18,292
1,112
1,397
675
160
4,668
21
21
106
64,148
13,619
52,628
7,702
8,809
63,805
36,601
18,910
11,466
6,509
203,827
12,230
15,978
255
34,173
997
161
227
6,772
60,340
6,170
22
22
154
63,659
59,984
26,057
111,962
55,433
21,174
41,025
63,369
12,652
46,828
27,869
12,984
78,417
249
17,337
90,119
75,924
23,366
36,833
26,680
7,408
178
16,753
5,487
30,327
43,512
14,787
34,407
13,597
19,632
26,660
14,231
275,600
132,733
147,862
113,777
291,099
55,710
212,984
74,314
26,916
95,981
62,564
47,755
28,841
9,534
70,117
25,406
31,525
40,931
19,476
51,474
6,142
47,785
27,859
23,877
163,302
51
412
5,843
10,670
2,812
253,285
144,560
44,075
63,784
207,749
21,595
107,677
43,121
27,489
54,135
98,233
48,275
26,302
15,033
45,269
61,288
34,471
55,201
38,956
420
49,570
46,258
2,692
56,638
24,951
28
10,755
140
2,060
20,472
153,031
102,101
28,288
13,274
41,607
62,626
332,629
21,530
55,049
32,368
15,071
54,297
9,606
55,182
28,005
19,158
95,474
34,299
10,151
230
58,309
24,035
11,013
38,598
123
47,500
20,207
11,965
94,609
71,479
344,197
244,527
190,447
82,720
219,956
242,619
157,420
199,858
14,778
34,673
61,020
60,045
44,033
138,700
87,338
41,327
58,259
89,780
96,630
124,560
59,503
68,184
6,603
79,808
33,656
452,817
40,890
5,305
72,385
176,794
54,579
738,066
499,478
767,798
448,332
974,896
437,517
325,490
430,858
432,170
278,948
143,896
158,006
316,595
322,124
290,628
209,703
154,918
150,213
217,763
319,732
106,552
161,319
142,210
257,967
78,912
467,349
179,582
31,964
45,108
14,777
92,857
1,077,451
545,128
16,345,595
33,373,409
110,077,876
137,175,148
74,107,712
57,775,366
108,413,537
537,268,644
Balloon
Oversized
Total
Zone 3
Note: Calculations exclude Alaska Bypass pieces.
Zone 4
Zone 5
Zone 6
Zone 7
Zone 8
Inter-BMC
Total
DBMC
Zone 3
DBMC
Zone 4
4,435,293
30,782,565
21,492,777
16,207,727
13,239,416
6,926,847
6,064,990
6,962,521
3,592,228
2,904,528
2,454,576
1,856,400
1,568,833
1,262,718
1,969,428
1,104,786
1,022,121
795,251
832,402
1,029,629
843,105
889,634
880,040
442,277
351,846
377,100
438,132
309,934
251,974
288,343
258,812
207,322
284,339
242,868
198,467
189,336
149,109
148,565
151,413
1,212,236
9,231,149
7,772,530
5,934,143
4,570,764
2,828,854
2,504,520
2,193,494
1,540,143
1,413,414
1,169,966
799,767
676,450
636,542
955,983
494,375
593,538
397,917
425,183
487,031
441,556
347,197
426,483
226,739
219,518
189,477
187,107
165,159
134,549
116,614
150,272
98,731
106,710
126,830
103,817
86,671
58,032
67,899
77,934
274,995
2,240,425
2,141,732
1,804,374
1,565,862
770,155
799,597
584,059
495,876
428,822
347,366
222,763
239,044
148,402
266,223
148,298
162,580
103,021
132,106
144,881
139,456
117,513
97,995
70,066
73,586
76,963
65,380
70,009
49,336
48,239
50,529
31,843
55,968
34,698
33,537
30,498
25,185
30,972
31,672
-
5,922,524
42,254,139
31,407,038
23,946,244
19,376,041
10,525,856
9,369,107
9,740,074
5,628,246
4,746,765
3,971,908
2,878,930
2,484,326
2,047,662
3,191,633
1,747,459
1,778,239
1,296,188
1,389,691
1,661,541
1,424,117
1,354,344
1,404,519
739,081
644,950
643,540
690,619
545,102
435,859
453,195
459,612
337,896
447,017
404,396
335,821
306,505
232,326
247,436
261,019
751
594
1,084
629
393
513
409
295
492
535
418
299
248
195
150
183
177
73
106
99
108
167
59
68
111
60
43
9
9
25,917
4,536
151,382
111,390
225,609
149,050
310,520
129,975
84,025
76,383
51,475
45,505
45,184
61,556
79,726
39,769
25,526
21,412
29,366
15,166
28,429
29,528
20,425
20,432
17,640
13,805
22,708
10,392
11,439
5,449
5,085
10,379
8,401
2,070,392
581,749
89,144
99,412
80,523
42,129
92,658
57,522
30,912
41,113
28,195
53,191
18,614
29,119
36,360
21,170
16,116
9,263
12,435
13,169
15,088
18,843
7,959
14,518
6,792
7,253
7,517
4,499
4,302
4,703
3,567
3,575
1,325
1,069,952
199,489
33,431
20,994
24,585
21,446
16,407
20,343
19,705
21,401
7,005
24,028
5,134
9,038
9,275
7,866
6,186
2,618
7,440
2,493
6,269
10,748
2,609
3,389
1,699
2,245
2,241
1,485
1,619
1,306
1,067
9,059
608
302,655
112,767
-
3,700,092
137,916,922
51,309,717
14,873,188
-
273,957
231,795
330,717
212,625
419,585
207,840
134,642
138,898
86,675
122,724
68,933
99,713
125,361
68,806
47,829
33,293
49,241
30,828
49,786
59,119
30,992
38,339
26,130
23,303
32,466
16,376
17,360
11,457
9,719
23,013
10,334
3,442,999
894,005
204,099,827
DSCF
DBMC
Zones 1&2
DBMC
Zone 5
All
DBMC
Attachment to response to UPS/USPS-T37-10
Page 4 of 4
Adjusted TYAR Assigned Costs And Revenues
Cost Item/Adjustment
Calculated Inter-BMC Assigned Costs
Less: Inter-BMC Barcode Savings
Less: Inter-BMC BMC Presort Savings
Less: Inter-BMC OBMC Presort Savings
Plus: Inter-BMC Non-machinable Costs
Inter-BMC Revenue Adjustment Factor
Inter-BMC Adjusted Assigned Costs
(Excluding Dim-Weight Pieces)
Inter-BMC Volume (Excluding Dim-Weight Pieces)
Inter-BMC Per-Piece Assigned Costs
Inter-BMC Adjusted Revenue
Inter-BMC Adjusted Per-Piece Revenue
(Excluding Dim-Weight Pieces)
Calculated DSCF Assigned Costs
Parcel Select Revenue Adjustment Factor
DSCF Adjusted Assigned Costs
DSCF Volume
DSCF Per-Piece Assigned Costs
DSCF Calculated Revenue
Plus: 3-Digit DSCF Non-machinable Surcharge
DSCF Calculated + Surcharge Revenue
DSCF Adjusted Revenue
DSCF Per-Piece Revenue
Calculated DBMC Assigned Costs
Parcel Select Revenue Adjustment Factor
DBMC Adjusted Assigned Costs
DBMC Volume
DBMC Per-Piece Assigned Costs
DBMC Calculated Revenue
Plus: DBMC Non-machinable Surcharge
DBMC Calculated + Surcharge Revenue
DBMC Adjusted Revenue
DBMC Per-Piece Revenue
Note: Pickup Fees, Combination Revenue and
Other Fees are not included in revenues.
Contingency is not included in costs.
Subtotals
Totals
537,268,644
(218,592)
(370,272)
(14,087,199)
37,539,347
0.99540883
557,560,267
78,463,162
7.11
651,758,285
8.31
3,700,092
1.01299204
3,748,164
1,731,718
2.16
4,472,420
160,893
4,633,312
4,693,508
2.71
204,099,827
1.01299204
206,751,500
56,301,458
3.67
217,555,396
6,667,245
224,222,641
227,135,750
4.03