BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON,
D.C. 20268-0001
IRECEIVEII
h
29
5 07 PM ‘97
postal RATeCOHH,,‘C,,>,,
OFFICEIOi Tl,f. sfc”Eyd;ll
POSTAL RATE AND FEE CHANGES, 1997
ERRATA TO TESTIMONY
Docket No. R97-1
1
AND EXHIBITS
OF WITNESS
CRUM
The United States Postal Service hereby files errata to the testimony
of witness Crum.
Revised pages incorporated
and exhibits
these minor changes are provided, with
each change shown in the attached table. The changes all result from a change in one
figure, namely, the proportion
of pieces sorted on the Parcel Sorting Machine
secondary.
Rather than the 100 percent originally shown in Exhibit J on the line
“Secondary
(Scan),” the correct figure is 83 percent, inasmuch as 17 percent of pieces
are finalized on the primary at the destinating
BMC and do not require a secondary
Respectfully
submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux, Jr.
Chief Counsel, Ratemakinq
Scott L. Reiter
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-I 137
(202) 268-2999; Fax -5402
August 29, 1997
sort.
Page
Line
4
4
4
8
9
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
6
11
16
25
2
DBMC Sort
DBMC Sort
DBMC Sort
Total
Total
A
III
Total
D
D
D
D
D
E
E
E
E
J
J
L.
Secondary
Secondary
(Scan)
(Scan)
10.3 to 10.8
10.3 to 10.8
57.2 to 57.7
,134 to ,140
13.4 to 14.0
,142 to ,136
(0.045) to (0.039)
,104 to .I10
,272 to -266
.I34 to ,140
,104 to ,110
,103 to .I08
,572 to ,577
,104 to ,110
1 .OOOOto 0.8300
-036 to ,030
REVISED
8129197
1
pallets (at least 4 feet high).
Pieces are segregated
by container type for efficiency
2
of entry into the parcel sorting machine or the manual handling process
3
respectively.
4
beginning
5
average costs by the Inter-BMC volume proportion
6
nonmachinable
7
piece (see Exhibit E).
Exhibit D shows the BMC presort related savings incllJding those
at the origin BMC where qualifying
pieces are entered.
of machinable
pieces gives total BMC presort-related
Weighting
the
and
savings of 10.8 cents per
8
9
C.
Summary
10
11
In Exhibit E, BMC presort related savings of 10.8 cents per piece al-e combined with
12
the DBMC-related
13
piece for acceptance
14
which apply to OBMC mail as well as DBMC mail. On the basis of my cost analysis,
15
then, I conclude
16
saves 57.7 cents per piece, at FY 1998 test year cost levels, compared
17
OBMC inter-BMC
acceptance
and mail processing
cost savings (9.2 cents per
and 37.7 cents per piece for mail processing
that origin BMC dropship
(see Section II))
by the mailer with mandatory
BMC present
to non-
parcels..
ia
19
IV.
DESTINATION
A.
Introduction
SCF PARCEL
POST COST SAVINGS
20
21
22
23
I studied the potential cost savings for parcel post pieces dropshipped
24
destination
2.5
BMC, they avoid all the associated
26
incurred there.
27
to the destination
28
from the applicable
29
bulk at the destination
SCF. Witness Hatield
30
transportation-related
savings associated
sectional center facility (DSCF).
to the
When parcels bypass the destination
handling and sorting costs that would be
These pieces would also avoid the transportation
SCF. My testimony
leg from the BMC
describes the mail processing
costs saved
costs for DBMC parcel post if mailers deposit their parcels in
(USPS-T-16)
describes
with DSCF dropship.
4
the
REVISED
a/29/97
1
C.
SUMMARY
2
3
On the basis of my cost analysis, I estimate that DDU-dropshipped
4
save the Postal Service an average of 45.7 cents per piece at FY 1998 test year
5
cost levels, compared
to non-DDU
parcel post will
DBMC mail.
6
7
VI.
BMC PRESORT
A.
INTRODUCTION
PARCEL
POST COST SAVINGS
8
9
10
11
The Postal Service is proposing
12
presorted
13
origin BMC and can be moved through the facility in bulk and routed to its
14
destination
to the destination
a discount for bulk entered Inter-BIW
parcel post
BMC. BMC presort parcel post avoids sorting at the
BMC.
15
16
B.
MAIL PROCESSING
SAVINGS
17
18
To qualify for the BMC Presort discount as proposed,
19
parcels at any designated
20
pieces will be deposited
21
boxes often referred to as “gaylords”
22
deposited
23
network mail processing
24
show the savings for the presorted
25
Presort savings to be $.I40 and nonmachinable
facility.
mailers can cleposit their
My analysis does assume that machinable
in sufficiently (at least 75 percent) full large cardboard
and that nonmachinable
pieces will be
on sufficiently full pallets (at least 4 feet high). I compare the postal
costs to the costs of qualifying BMC Presort parcels to
pieces.
Exhibit D shows machillable
BMC
BMC Presort savings to be $.123.
Revised
e/29/97
Exhibit D
Page 1 of 1
BMC PRESORT
PARCEL
MACHINABLE
POST COST
SAVINGS
PARCEL POST
Nonpresorted
mil)
BMC Presorted
CosffDlece (2)
Origin SCF Load
$
0.049
$
Origin
Origin
Origin
DBMC
DBMC
$
$
$
$
5
0.027
0.187
0.022
0.024
0 097
$ 0.024
$ 0.041
$ 0.022
$ 0.024
$ 0.136
$ (0.039)
--
$
0.406
5
$
BMC Unload
BMC
BMC Load
Unload
Sort
Total
NONMACHINABLE
Nonpresorted
Costkiece
Ooeration
0.019
Difference
(Savinas)
0.266
$
0.030
$ 0.003
$ 0.146
BMC Savings
= 5.104
0.140
PARCEL POST
BMC Presorted
Costioiece
Difference
(Savinas)
Origin SCF Load
$ 0.109
$
0.075
$
Origin
Origin
Origin
DBMC
$
$
$
$
0.068
0.248
0.101
0.110
$
5
5
$
0.094
0.164
0 086
0.094
5 (0.026)
$ ClLO84
5 0.015 BMC Savings
$ Cl.016 = $.089
--
$
0.636
5
0.513
5
BMC Unload
BMC
BMC Load
Unload
Total
1, USPS-T-29,
2. Exhibit J
Appendix V, page 3.
0.034
Cl.123
Revised
8/29/97
Exhibit E
Page 1 of 1
COSTS AVOIDED BY DEPOSITING INTER-BMC PARCELS AT THE
ORIGIN BMC WITH PRESORT TO THE DESTINATION BMC
DBMC Savinas
I. Mail Processing
(see Section IIC of Testimony)
$
0.377
II. Acceptance
(see SectIon IIB of Testimony)
$
0.092
$
0.110
((1)
$
0.089
I(l)
$
0.108
1:2)
$
0.577
BMC Related Savinos
A. Total Machinable
Savings
B. Total NonmachInable
Savings
Ill. Total BMC Presort Related Savings
Total OBMC Mail Processing
Savings
(I + II + Ill)
1 Exhibit D
2. Machinable and nonmachinable savings weighted by Inter-BMC volume proportions
.I IO*.913 [.913=60,462.052/66.257,981]
+ .089’.087 [.087=5,795.914/66.257,981]
(LKH-135)
Re\,ised
8128197
Exhibit J
PaLIe 1 of 2
Origin
BMC Presort
# of hand
(2)
units/hr
Cost
(3)
cow. fact.
Summary
(4)
PB fact.
(5)
$ oer OD.
SCF
Load Gaylord
Origin BMC
Unload Gaylord
Crsdk Gaylord
Load Gaylord
Destination
1 .oooo
23.9
104.5
1.84
0.019
0.019
1 .oooo
1 .oooo
1 .oooo
21.9
12.6
23.9
104.5
104.5
104.5
2.13
2.13
2.13
0.024
0.041
0.022
0.024
0.041
0.022
1 .oooo
1 .oooo
1 .oooo
1 .oooo
0.8300
21.9
11.9
895.6
104.5
104.5
1 .o
2.13
2.13
2.03
1433.3
1 .o
2.03
0.024
0.043
0.058
0.005
0.036
0.024
0.043
0.058
0.005
0.030
BMC
Unload Gaylord
Dump Gaylord
D. Primary (Key)
Label
Secondary (scan)
1.
2.
3.
4.
5.
Machinable
$ 25.445
Test Year 1998 Wage Rate (LR-H-146) =
Productivity. USPS-T-29, Appendix V,~page 15.
Conversion Factor. USPS-T-29, Appendix V. page 15.
Piggyback Factor. USPS-T-29, Appendix V. page 16.
Wage rate * piggyback factor i (producitiwty * conversion factor)
CERTIFICATE
OF SERVICE
I hereby certify that I have this day served the foregoing
participants
of record in this proceeding
in accordance
upon all
with section 12 of the Rules of
Practice.
Scott L. Reiter
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-I 137
August 29, 1997
document