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BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON,
D.C. 20268-0001
POSTAL RATE AND FEE CHANGES, 1997
REBUTTAL
I
Docket No. R97-1
TESTIMONY
OF
JULIE F. RIOS
ON BEHALF OF
UNITED STATES POSTAL SERVICE
USPS-RT-10,
Docket R97-1, page i
TABLE OF CONTENTS
TABLE OF CONTENTS .. . . . . . . . . . . . . .. . . .. . . . .. .. . . .. . .. . .. .. . . ... .. . .. . . . . . . .. . . .. . . .. . .. . . .. .. . .. . ... . .. .. . . . .. . . .. .. . . .. .. .. . .. . . . i
SKETCH . .. . .. . . . .. . . ..._._............................................................................
I
I. PURPOSE AND SCOPE OF TESTIMONY _.._..........................................................................
2
AUTOBIOGRAPHICAL
II. IMPORTANCE
TO THE POSTAL SERVICE OF 1NFORMATlON
SYSTEM .__._____...._.___._.__....
2
Ill. IMPORTANCE OF PROPOSED DELIVERY CONFIRMATION FEES AND FEE
STRUCTURE .............................................................................................................................
A. Standard Features .............................................................................................................
B. Appropriate Price.. ............................................................................................................
C. Reliable and Consistent Service ........................................................................................
IV. POSTAL SERVICE INVESTMENT IN MOBILE DATA COLLECTION DEVICES (MDCD)
SYSTEM .....................................................................................................................................
V. SUMMARY AND CONCLUSION
3
4
.4
5
6
.._______._._____......................................................................... 7
USPS-RT-10,
Docket R97-1, page 1
Rebuttal Testimony
of
Julie F. Rios
AUTOBIOGRAPHICAL
My name is Julie F. Rios. I am employed
and Package Information
Services.
and customer support for expedited
these responslbllltles
SKETCH
by the U. S. Postal Service as Manager, Expedited
I am responsible
for the development,
and package information
based services. I have had
since October, 1995.
I have been employed by the Postal Service since 1972. In field operations,
clerk, carrier, and supervisor.
Strategic Planning,
implementation,
Distribution
Since joining Postal Headquarters
Operations,
Delivery Operations,
primary focus of my work has been developing
I have been a
in 1983, I have worked in
and Marketing. The
services and policies that improve the ways
the Postal Service meets customer needs.
IO
I have a Bachelor of Arts degree in Studio Art from the University of California,
11
completed
graduate courses in Business Administration
Irvine. I
at San Diego State University.
USPS-RT-10,
Docket R97-1, page 2
1
I.
PURPOSE AND SCOPE OF TESTIMONY
2
The purpose of my testimony
3
for delivery confirmation
4
commitment
5
witnesses Treworgy (USPS-T-22),
6
testimony addresses the business judgment underlying
7
fees and fee structure.
6
identify the fees and fee structure customers prefer. The formal research was documented
9
in USPS-LR-H-166
is to rebut witness Luciani’s (UPS-T-4) alternative
service. My testimony also emphasizes
to offering delivery confirmation
Extensive
proposals
the Postal Service
service as proposed by the ,testimonies of
Sharkey (USPS-T-33),
and Plunkett (USPS-T-40).
My
the proposed delivery confirmation
formal and informal market research was conducted
and USPS-LR-H-163,
to
which were both filed on July 10, 1997. The
10
informal research derives from my professional
11
with customers held over many years. It is my belief that if witness Luciani’s proposed rates
12
and rate structure were implemented,
13
substantially
14
benefits that the service and system were designed to provide.
15
II. IMPORTANCE
16
I cannot overemphasize
17
Device (MDCD) information
18
Service to offer delivery confirmation
19
MDCD information
20
Governors
21
several important Postal Service initiatives: the provision of new services such as delivery
22
confirmation;
23
services, particularly
24
monitor, manage, and improve the provision of collection,
less, thus jeopardizing
responsibilities
and consists of discussions
demand for delivery confirmation
the significant
customer and internal Postal Service
TO THE POSTAL SERVICE OF INFORMATION
the importance
would be
SYSTEM
to the Postal Service of the Mobile Data Collection
system in which it has invested and which will enable the Postal
service, in addition to many other applications.
system represents
a major investment,
approved
by the Board of
on May 6, 1997, of up to $704.3 million. The system is intended
a means of updating
and automating
The
to support
the handling of data relating to existing
special services; and the collection of information
processing,
needed to accurately
and delivery services
USPS-RT-10,
1
generally. Details concerning
2
contained in the testimony
Docket R97-1, page 3
uses of the scanners other than for delivery confirmation
are
of witness Lewis (USPS-RT-9).
The specific proposals for delivery confirmation
made in this docket are a crucial beginning
to the Postal Service’s ability to recoup its investment
in this system and should not be
modified, either as proposed by witness Luciani or in any other significant way. Adoption
witness Luciani’s proposals could potentially
generate the expected
threaten the Postal Service’s ability to
return on its investment
in this system and would be inconsistent
with managements
goals in meeting customers’
9
10
Ill. IMPORTANCE
STRUCTURE
OF PROPOSED DELIVERY
11
The delivery confirmation
12
(USPS-T-40) are consistent with the following three principles
that the Postal Service has
13
adopted as part of its strategy to meet the needs of expedited
and package services
14
customers.
15
l
Standard
16
.
Appropriate
19
needs.
CONFIRMATION
FEES .AND FEE
fees and fee structure proposed in witness Plunkett’s
- Provide customers with the standard marketplace
Price - Set a price that meets marketplace
testimony
features
demands and expectations,
increases the overall value of the services, and covers costs.
17
18
Features
of
.
Reliable and Consistent
essential for customers
Service - Provide the reliable and high quality service that is
in the marketplace.
20
In the following three sections, I describe how the proposed delivery confirmation
21
structure are consistent
with the adoption
of these three principles.
fees and
USPS-RT-10,
1
Docket R97-1, page 4
A. Standard Features
2
The ready provision of information
3
delivery companies’
4
this service only for Express Mail. Based on market research and discussions
5
customers,
6
providing
7
for delivery confirmation
0
electronically,
9
with a number of ways to access delivery information.
overnight
about delivery status has become a standard feature in
and 2-day products. The Postal Service, however, provides
it is clear that delivery confirmation
information
with
is a necessary service. In addition to
about the delivery status of a package, the supporting
infrastructure
has been set up so that customers can easily access information
another important
customer need. Delivery confirmation
provides customers
Among these are downloading
10
electronic files from the Postal Service, calling the Postal Service call center through a toll-
11
free number, and querying
12
B. Appropriate
the status of specific mail items through the Internet.
Price
13
The fee structure for Priority Mail delivery confirmation,
14
testimony
15
services, by providing
16
service at no additional
17
a surcharge
78
delivery information
19
keeping, perhaps, with the competitive
20
appears, UPS witness Luciani’s proposal to impose a per-use fee on users of Priority Mail
21
electronic
22
Through discussions
with bulk customers, the Postal Service learned that they expect
23
delivery confirmation
to be included in the base rate for Priority Mail. I expect that many bulk
24
customers will not use delivery confirmation
25
Indeed, faced with a surcharge,
26
company (which could be exactly why UPS structured
(USPS-T-40),
is intended to be consistent
as presented in witness Plunkett’s
with the standard features of expedited
Priority Mail customers with the electronic delivery confirmation
charge. Retail (manual) delivery confirmation
customers would pay
in addition to Priority Mail postage, thus benefiting from the ability to access
while paying for the greater costs they impose. In contrast, and
delivery confirmation
interests of the intervenor
on whose behalf he
service fails to reflect this market reality.
if it requires a surcharge over Priority Mail rates.
many customers would instead use a non-postal
its proposals as it (did.)
delivery
USPS-RT-IO.
Although
delivery confirmation
is provided to bulk Priority Mail shippers for no additional fee,
those mailers who want to take advantage
with applying barcodes,
integrating
information
Docket R97-1, page 5
manifesting,
of it must incur the additional costs associated
downloading
and uploading information,
into their systems. Accordingly,
bulk Priority Mail shippers using delivery confirmation,
while no additional
they nonetheless
costs not borne by shippers who do not use delivery confirmation.
customers will benefit from information
and
fee is required of
incur additional
Notwithstanding,
collected by delivery confirmation,
all
as discussed in
the next section.
9
Boxes provided by the Postal Service at no charge for Priority Mail are comparable
to the
10
proposal that electronic
11
fee. Both pertain to a feature paid for by all Priority Mail users, although use by customers is
12
by no means universal,
13
standard features of Priority Mail.
14
Through discussions
15
learned that even among bulk customers, some customer segments have a need for
16
delivery confirmation
17
the standard in the ground parcel delivery market. Because both bulk and non-bulk
18
Standard B customers want to apply delivery confirmation
19
Service proposal that these customers pay only when opting to use the service is consistent
20
with market expectations.
21
information
22
service for Standard
23
delivery confirmation
for Priority Mail should not require a separate
and both amount to strategic business decisions, regarding the
with ground parcel (Standard
B) customers, the Postal Service has
while others do not. Until recently, optional delivery confirmation
In order to meet respective
barcodes selectively,
was
the Postal
retail and electronic customers’
access needs, the Postal Service proposes two levels of delivery confirmation
B, each with an appropriate
C. Reliable and Consistent
24
Consistent
25
delivery confirmation
fee.
Service
and reliable service is the most important
service attribute for customers.
provides customers with delivery infomlation,
the information
While
system
USPS-RT-10,
that supports delivery confirmation
Docket R97-1, page 6
is the same system that has been designed to provide
the Postal Service with valuable diagnostic
Postal Service will use this information
and service performance
to improve the consistency
information.
The
and reliability of service
for all Priority Mail and Standard B mail items. Information derived from the delivery
confirmation
diagnostic
system will constitute a vast improvement
service information
Postal Service’s
expedited
9
now available.
on the limited end-to-end
The limited information
has hampered the
ability to provide the level of service currently expected
delivery market and, increasingly,
and
by customers in the
in the ground parcel market.
A portion of the cost of Priority Mail delivery confirmation
is incorporated
into the base rate
10
for Priority Mail, which is consistent with customer expectations
11
who choose not to use delivery confirmation
12
confirmation
13
Service identify and fix service problems. In this regard, all customers who incur any costs
14
associated
with delivery confirmation,
15
customers,
or the associated
16
17
IV. POSTAL SERVICE INVESTMENT
SYSTEM
ia
The Postal Service’s investment
19
multiplicity
20
information
21
direct testimony
22
Witness Luciani asserts: “It is clear that the onset of delivery confirmation
23
purchase of the scanners.”
24
however, is stated in USPS-LR-H-247,
25
the Board of Governors
will nonetheless
will provide service and diagnostic
and the fact that customers
benefit from it. Delivery
information which will help the Postal
whether from Priority Mail rates, fees paid by retail
overhead costs borne by electronic users, will realize benefits.
IN MOBILE DATA COLLECTION
in the MDCD information
DEVICES (MDCD)
system was intended to support a
of uses. The system enables carriers to use a single device to collect
that serves many purposes. The variety of expected uses are described in the
of Postal Service witness Treworgy,
Tr. 26/14533.
USPS-T-22, at 2-4.
The justification
for investing
precipitated
in the system,
which consists of the documentation
in approving the investment.
the
See also Tr. 3/1226.
relied upon by
The very first
USPS-RT-10,
of the executive
Docket R97-1, page 7
1
paragraph
summary identifies three primary justifications
2
investment:
3
and increased value of accountable
4
elaboration
5
testimony
6
that all volume variable MDCD system costs be borne by Priority Mail anid Standard (B) Mail
7
is not consistent
a
V. SUMMARY AND CONCLUSION
9
The structure for delivery confirmation
delivery confirmation
of the applications
services, operational
for the
and service performance
indicators,
mail through improved access to information.
other than delivery confirmation
of witness Lewis, USPS-RT-9.
Accordingly,
are presented
Further
in the rebuttal
witness Luciani’s recommendation
with the facts.
proposed by the Postal Service soundly reflects
10
features that have become marketplace
standards, and an appropriate
fee structure and
11
fees. The MDCD information
12
benefit all mailers by providing
13
quality of service. The lack of a separate fee for electronic delivery confirmation
14
Mail reflects a strategic positioning
15
consistent
16
proposed by the Postal Service is also consistent with the additional workload
17
electronic
18
in the existing rate structure, and more generally with the expected system-wide
19
benefits. Given the distinct customer preferences,
20
confirmation
21
The Postal Service continually
22
best to improve service. This includes monitoring the costs of technology
23
the best match of features, customer expectations,
24
confirmation.
25
testimonies
26
providing
system which supports delivery confirmation
management
delivery confim’ration
better tools for improving the reliability and
of Priority Mail in the expedited
with customer expectations
service will
and marketplace
for Priority
delivery market that is
standards. The fee structure
expected of
Priority Mail customers, the treatment of Priority Mail boxes
similar structuring
service
of the delivery
fees for Standard B is not warranted.
evaluates
customer needs as a means of determining
and determining
and rate and fee structure for delivery
I believe that the rates and fees, and rate and fee structures,
of witnesses
how
Plunkett and Sharkey are fair, appropriate,
proposed in the
and necessary for
the features customers desire at the service level they deserve.