DOCKET SECTION
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BEFORE THE POSTAL RATE COMMlSSlON
r.k
30 II 54 jj)f ‘97
%:.;1,“;r: ,.:
Postal Rates and Fee Changes,
1997
TESTIMONY
of
FRANK E. DAVIS
In Behalf of
FLORIDA GIFT FRUIT SHIPPERS ASSOCIATION
Maxwell W. Wells, Jr.
Maxwell W. Wells, Jr., P.A.
P. 0. Box 3628
105 E. Robinson St., Suife~201
Orlando, FI 32802
Due Date: December
30, 1997
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DIRECT TESTIMONY
I.
IDENTIFICATION
INC. 801 North Expressway,
I received
Harlingen, Texas.
a BA and a BSBA from Trinity University
continued
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read extensively
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seminars presented
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OF WITNESS
My name is Frank E. Davis and I am the President of PITTMAN & DAVIS,
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OF FRANK E. DAVIS
my education
by taking every class on citriculture
on direct
marketing
matters,
and
in ,1978.
I have
at Texas A&l, have
have
attended
several
by Direct Marketing Association,
I have been employed by Pittman & Davis since 1978.
Since 1988 I have
served as President of the company.
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II. DESCRIPTION
Pittman
continuously
OF MAILER
& Davis
is a family-owned
business
and operated a packing facility in Vero Beach, Florida.
Our business
is a catalog
of gift packages.
mail order
undertaking
distribution
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but the product lines also include other fresh and processed
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Parcels
contiguous
operated
Since 1984, it also has
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has
since 1926.
The principal office is located in Harlingen, Texas.
maintained
which
are
48 states.
shipped
for the sale and
The principal products are grapefruii: and oranges,
from
Florida
and Texas
food products.
to destinations
in all
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Products
are packaged
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order placed by customers
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Ill
and shipped under our own label in response
by mail or phone.
USE OF THE POSTAL SYSTEM FOR PARCEL DELIVERY
All parcels are transported
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transportation,
to the destination
tractor-trailer
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45,000
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some trips, there may be partial unloads en route to the final destination
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point.
pounds.
Parcels are drop-shipped
Rate minimization,
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utilizing refrigerated
delivery area with line-haul
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inter-BMC
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in our selection of destination
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movements,
avoidance
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We tender
parcels
facilities,
including
various
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coordinated
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itemized postage system.
at destination
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Business
delivery
handlings
in
delivery points.
to the Postal Service from destination
BMCs
and SCFs.
Selection
Postage
delivery
at
of the facilities
is
is deterrnined
using an
citrus season
delivery.
is conducted
year-round,
- from November
but the heaviest volume is during the
through April.
/
about 690,000 parcels were handled.
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On
Most parcels are mailed as parcel post, although some are sent by air to
obtain expedited
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postal facilities.
of zone 3 rates and additional
closely with the Postal Service.
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trucks loaded to a capacity of
and expedition of delivery time are major factors involved
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to
IV. WEIGHT
RELATED
HANDLING
COSTS
During the 199E-1997
season,
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The proposed
parcel post rates are designed to cover costs (a) on a per
2
piece basis to cover non-transportation
costs, (b) on a per pound basis to cover
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weight
(c) on a per
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transportation
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There
related
handling
costs
and
pound
basis
costs.
are no known
studies
to identify
or quantify
nontransportation
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handling costs which are weight related, and no one has identified
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Even so, the rate includes
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unquantified
2 cents per pound to cover these
such costs,
unidentified
and
costs.
l know of no justification
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to cover
to impose a charge of 60 cents on a 30# parcel,
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and only 20 cents on a lO# parcel.
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From my experience
and observations
of handling parcels of various sizes
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and weights, it appears clear that space related and other processiing costs may
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vary according
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distinguishing
to the size or cube of the parcel,
is not a
factor.
The established
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but that weight
relationship
of transportation
between weight and cube is currently
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for the allocation
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feet. That same relationship
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non-transportation
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related to the size, or cube, of the parcel.
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should
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relationship.
be determined
and
costs, which are incurred on the basis of cubic
should be used for the allocation
costs which
used
are said to be weight
allocated
of the unidentified
related,
but in fact are
The amount of the 2 cents per pound
in accordance
with
the weight-cube
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We urge the Commission
to correct the per pound element
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related non-transportation
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size or cube, rather than that straight line per pound elements.
for weight
costs to more closely reflect cost causing factors of
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V. IMPACT OF PROPOSED
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The proposed
RATE INCREASE
rates for parcel post are for essentially
a 30% increase for
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all rates which we use.
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increase
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increase would cause an increase in our prices by at least 5%, if we were to be
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Postage is a significant part of our direct costs, and an
of this magnitude
will have major and significant
impact.
Such an
able to pass through the increase.
The gift fruit industry is highly competitive with alternate products, and this
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degree of increase
would likely send our customers
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the gift shipments.
Customers
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are highly dependent
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blood of the direct marketing
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from about
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customer
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drops to about 20%.
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their sense of loyalty to the direct marketing company.
of direct marketing react to price increases.
on repeat customers.
then the repeat business
Any drastic price increase causing
for all products,
is the life
if they repeat the first year. But, if the
due to a price increase,
Recent price increases
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Loyalty from old customers
We
gift food business. Usually we receivse repeat orders
70% of our customers,
does not repeat
to these other sources for
in the 6% range hai;
many people to lose
demonstrated
ranging from a 3% decline to over 32%.
a decline in
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volumes
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increase across the board to cover the postage increase could have very severe
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consequences
in the loss of volumes.
A further
We presently employ 200 people in Texas
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and 150 in Florida on a seasonal basis. A sales volume decrease
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probably
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employment
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result
in reduced
employment
by at least
that
of 10% would
much.
Loss
for seasonal workers can be dramatic.
We urge the Commission
and to require satisfactory
to moderate the increase in parcel post rates,
evidence to support the costing methodology
has been used by the Postal Service.
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which
of
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CERTlFlCATE
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l certify that a true and correct copy of the foregoing
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date to all parties of record in accordance
Dated this 30th day of December,
OF SERVICE
has been mailed this
with the Rules of Practice.
1997.
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Florida Gift Fruit Shippers Assoc:iation