FGFSA-T-1
BEFORE THE
POSTAL RATE COMMISSION
DOCKET NO. R2000-1
Postal Rate and Fee Changes, 2000
TESTIMONY
OF
JOSEPH E. BALL
In Behalf of
FLORIDA GIFT FRUIT SHIPPERS ASSOCIATION
MAXWELL W. WELLS, JR., AITORNEY
MAXWELL W.WELLS, JR., P.A.
POST OFFICE BOX 3626
14 EAST WASHINGTON ST., SUITE 600
ORLANDO, FLORIDA 32802
Due Date:
May 22,200O
INDEX
I.
IDENTIFICATION
OF WITNESS
3
II.
IDENTIFICATION
OF INTERVENORS
4
Ill.
DESCRIPTION
IV.
TRANSPORTATION
V.
DISTRIBUTION
OF INDUSTRY
4
OF GIFT FRUIT PACKAGES
OF PURCHASED
HIGHWAY
TRANSPORTATION
COSTS
VI.
6
11
ATTRIBUTION
OF PURCHASED
HIGHWAY
TRANSPORTATION
COST
14
VII.
WEIGHT
RELATED
NONTRANSPORTATION
VIII.
ASSIGNMENT
OF INSTITUTIONAL
CERTIFICATE
OF SERVICE
COST
COSTS
15
16
DIRECT TESTIMONY
I.
1
;
4
5
6
OF JOSEPH E. BALL
IDENTIFICATION
OF WITNESS
My name is Joseph E. Ball and I am the Executive President
Shippers Association,
of Florida Gift Fruit
521 North Kirkman Road, Orlando, Florida 32808-7645.
I received my Bachelor’s
1964 and a MBA in Personnel
Degree in zoology (pre-med)
ministration
University of Arkansas
from George Washington
University
in 1969.
7
I am a retired Captain, United States Naval Reserve.
8
From 1970 to 1982 I was employed with the Housing Division, University of
9
10
Florida, Gainesville,
Florida, and served as its Business Manager from 1976.
I have worked with the Florida Gift Fruit Shippers Association
11
serving as Associate
12
Executive Vice President of the Association
13
present time.
14
since 1982,
Vice President until 1988, at which time I was elected as
I have served in that capacity to the
I am a member of the Board of Directors of Parcel Shippers Association,
15
served as Chairman of the Parcel Sub Group of the Competitive
16
and presently serve as a member of the parcels sub-committee
17
Advisory Committee,
18
appeared
19
R90-1, MC93-1, and R97-1.
20
in
both of which were organized
before the Postal Rate Commission
My duties and responsibilities
to gifl fruit shipments
Services Task Force
of the Mailers Technical
by the Postal Service.
I previously
as a witness in Dockets
have involved all aspects of transportation
21
pertaining
and my work has included development
22
rates for pickup, handling,
23
officials of the Postal Service, Canada Post and United Parcel Service in the
line haul and delivery at destination.
3
I
matters
of charges and
I participated
with
1
development
of rates and charges for use in connection
2
ministered
3
include the general supervision
4
Association.
by the Association
(the truck program is described
hereinafter)
My duties
and direction of the entire truck program of the
The truck program presently administered
5
with the truck program ad-
6
1968 under the direction and supervision
7
Vice President
of the Association
8
Transportation
Consultant
by the Association
was initiated in
of William A. Stubbs, who was Executive
from 1951-I 988 and who now serves as
to the Association.
9
10
II. IDENTIFICATION
OF INTERVENORS
11
Florida Gift Fruit Shippers Association
12
shippers of fresh citrus from Florida in gift packagesThere
13
shipper members,
14
transportation
15
and operates a transportation
16
Association,
17
program.”
The Association
is a cooperative,
represents
the members of which are
are approximately
112
the industry in all matters dealing with
in the conduct of the gift fruit business.
The Association
also maintains
program to handle products for members of the
This transportation
program is hereinafter
referred to as the “truck
18
Ill.
19
DESCRIPTION
OF INDUSTRY
The gift fruit industry is a part of the Florida citrus industry and approximately
20
21
3,000,OOO gift fruit packages
are shipped from Florida during each fruit season, which
22
runs from November to May. Gift fruit shipments
23
quality
essentially
fruit direct from the grove to the consumer.
4
provide for delivery
of
Sales result from mail orders,
1
tourists
2
gifts by businesses
3
and practices
4
according
5
other factors.
6
and vacationers
in Florida, regular shipments
and individuals,
by gifl or purchase,
and other similar occasions.
are varied, with no uniformity among all shippers.
Christmas
Marketing
methods
Marketing will differ
to the sales method, location of point of sale, type of customer, and many
Shipments
of gift fruit are made in many different types of packages.
These
I
depend on the type of fruit -- variety, straight or mixed, or size -- type of package --
8
carton, basket, wrapped
9
combination.
10
11
12
For shipment,
cartons of corrugated
Generally,
categories:
or tray -- and type of content - plain fruit, fancy or deluxe
however,
all packages
are standardized
or fiberboard.
the shipment of fresh fruit may be separated
into eight size
7 Ibs., IO Ibs., 13 Ibs., 15-18 Ibs., 20 Ibs., 26 Ibs., 35 Ibs., and 44 Ibs.
The average weight per package of shipments
13
in rectangular
14
approximately
25 Ibs. About 50% of the packages
15
.package accounting
for approximately
are over 20 Ibs., with the 26 lb
22% of the total.
5
of Florida gift fruit is
1
IV.
TRANSPORTATION
OF GIFT FRUIT PACKAGES
Florida gifl fruit packages
2
are shipped from Florida to destinations
3
the United States and Canada with some shipments to European
4
by each shipper is varied with no uniformity.
destinations.
Pricing
For many years, gift fruit packages were shipped from Florida direct to the
5
6
consumer via Railway Express and the successor
I
provided
8
claims increased,
9
service was coupled with continuing
by rail deteriorated
R.E.A. Agency.
with a higher degree of customer dissatisfaction.
to the necessity
11
transportation.
for the development
12
become a very efficient truck program.
From this, the Association
of a substitute
sponsored
may be divided into essentially
15
the line haul, and destination
16
The Association
The deterioration
in
four components;
method of
and developed
The truck program carried on by the Association
14
and damage
increase in rates. These factors contributed
substantially
13
The service
with the result that delivery time worsened
10
what has
for the benefit of its members
the pickup, classification
and sorting,
delivery.
provides pickup service as a part of the truck program for
17
ninety-eight
18
the citrus-growing
19
Florida.
20
which are routed to each member as required.
21
route number designated
22
to the terminal facility maintained
23
throughout
of the members of the Association.
Pickup service is provided throughout
areas of Florida, which essentially
Pickup service is provided by over-the-road
by the Association.
At the Orlando terminal
include all of Central and South
tractor-trailer
The shipper marks each package with a
After pickup,
by the Association
all packages
are delivered
in Orlando.
facility, all packages are unloaded
6
units or trucks,
on a conveyer and
1
sorted by route number in approximately
2
a particular
3
packages
4
portion of the movement.
twenty-two
route number may be accumulated
bays in the building.
Packages for
within a bay until a sufficient number of
are received or they may be direct loaded onto a trailer for the line haul
As each parcel is sorted into a bay, it is placed on a scale to determine weight.
5
6
While on the scale, the operator keys in the zip code from the parcel address and
I
electronically
8
computer calculates
9
weight,
scans the bar code on the parcel reflecting the member number,
the appropriate
The
rate for the parcel based on the zip code and
This would include rating for intra-BMC, inter-BMC or DBMC.
10
includes an automatic classification
11
The computer then generates
12
bar code for the parcel identification
13
is a DBMC rate or a schedule 400 rate. A second label is affixed to each parcel
14
destined for delivery in Arizona, California or Texas to show that the parcel was
15
processed
in accordance
between non-machinable
This process
and machinable
a label to be affixed to the parcel, which would include a
number and identification
with agricultural
requirements
as to whether the parcel
concerning
fumigation.
From the scale, each parcel is either loaded directly into an out-bound
16
17
placed on the floor in a bay for later loading into the trailer.
18
each trailer, a postal Form 8125 is prepared, along with a bill of lading.
Since the 1992-l 993 season,
19
20
Service
21
verified drop ship program.
22
Association’s
23
Association
parcels.
the Association
in a program for the determination
trailer or
For the parcels loaded on
has participated
with the Postal
of postage, which is referred to as the plant
The Postal Service sends a team of inspectors
to the
office to inspect, review and approve the system utilized by the
in the determination
of postage for the parcels handled through the
1
terminal.
This inspection
includes the computer hardware
2
rate schedule, and the quality control program designed to assure a correct
3
determination
4
beginning
5
to verify the operation and the sufficiency
of postage.
This entire system was reviewed and approved prior to the
of the season and has been spot-checked
computer-generated
8
been loaded that day. The disk includes:
9
number, and for each parcel, the parcel identification
postage.
11
disk.
periodically
provides to the Orlando SCF a
I
10
by postal inspectors
of the quality control verification.
In lieu of a printed manifest, the Association
6
and software programs, the
floppy disk which reflects a manifest for each truck which has
the manifest number, the date and the truck
number, zip code, weight and
The total amount of postage is paid by check which accompanies
the floppy
12
Line haul transportation
13
delivery is provided by over-the-road
14
to final destination
15
usually approximates
16
the 1999-00 season, typical flat rates per trailer to destinations
17
zones are: Zone 5-$1,060 to $1,663; Zone 8-$3,034 to $3,922.
In addition,
18
stopoff charge of $30.00 for stops for partial unloading
Partial unloadings
19
be as many as six on a trip, but the average is less than three.
20
minimum number of packages to establish a stopoff for partial unloading
21
five.
22
23
from the Orlando terminal to the point of destination
tractor-trailer
units, Transportation
city is a flat rate per trailer regardless
of weight.
Trailer loading
41,200 Ibs. with an average of 1,603 packages
mainly during December,
enroute.
8
to enable
per trailer.
For
in various post office
Some of the larger shippers (members of the Association)
to certain destinations,
from Orlando
there is a
may
As a general rule, the
is seventy-
have sufficient volume
them to ship direct to
1
destination
2
that described for the Association,
3
costs of delivery, time in transit and the number of handlings.
4
delivery facilities.
Destination
The procedure used by the individual
Direct shipment is desirable
delivery in the U.S.A. is accomplished
5
parcel post, For destinations
6
except in Canada, where destination
I
made by various carriers.
8
9
outside of continental
since it reduces the
by USPS using fourth class
U.S.A., delivery is by priority mail,
delivery is by Canada Post, European delivery is
Factors taken into consideration
are to use the respective
of the selection of destination
avoid the additional
11
delivery time, and to meet the operational
12
lowest zone is the preferred objective in selecting destination
13
primarily as a result of the level of rates and charges compared
14
delivery.
16
19
handling involved in an inter-BMC movement and to expedite
requests of the Postal Service.
distribution
Parcelpost
points,
to alternative
modes of
If Zone 1 and 2 rates apply, selection of the delivery carrier is determined
several factors, including -service,
by
unloading and rates.
During the season 1999-00, the total packages handled by the Association
17
18
delivery points
local zone rate, if possible, to avoid higher zone rates, to
10
15
shipper is similar to
terminal
exceeded
1.12 million,
Currently, the Association
including Canada.
tenders parcels to a total of thirty-two
cooperates
postal
20
facilities, including all 21 BMC’s. The Association
with USPS by making
21
drop shipments at entry points designated
22
Association
may be increased
23
distribution
to AC’s serviced by the SCF or to other SCF’s having a direct link. These
by USPS, even though the cost to the
as a result. Parcels delivered to an SCF are for
9
1
parcels generally are not processed
2
transportation
3
used at the request of the Postal Service, because of diverse three digit zips served
4
over a wide area. Parcels tendered to the BMC rather than the SCF avoid handling at
5
the SCF and transportation
6
cost from the BMC to the SCF.
has been undertaken
s
available rate.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
The BMC’s, rather than SCF’s, are
to the BMC.
The rather complex system for delivery of parcels to the Postal Service at SCF’s
7
9
through a BMC, and avoid BMC handling cost and
to expedite handling and delivery and to qualify for the lowest
Analysis of the gift fruit parcels handled by the Association
for the 1999-00
season reveals volume by weight category as follows:
Size
Packaqe (Ibs)
No. Pkgs.
Shipped
99-00 Season
Percentaqe
(1)
Under 8
B-10
11-15
16-18
19-21
22-29
30 - 37
38 and over
93,622
64,431
202,015
35,910
76,536
202,545
72,854
186,929
10.01
6.89
21.61
3.84
8.19
21.67
7.79
20.00
Totals:
934,842
100.00
(1) Excludes Canada
Each delivery of parcels to a postal facility will include a mix of packages
30
representing
31
all parcels are handled in the same manner with no distinguishment
32
Actually, machinability
various weight categories,
When given to the Postal Service at an SCF,
as to machinability.
is not a factor for most parcels, since at most SCF’s sorting and
10
1
handling is manual rather than mechanical.
2
3
4
V.
DISTRIBUTION
quarterly distribution
6
The distribution
I
categories.
9
HIGHWAY TRANSPORTATION
COSTS
TRACS is the sampling system used by the Postal Service to develop the
5
8
OF PURCHASED
keys for the costs of purchased
keys are based on the calculated
highway transportation,
C.S. 14.
cubic foot miles for each of the mail
The TRACS system has been modified since the last rate case in several areas,
including
the selection
of the samples
for Intra-BMC
transportation.
Previously,
the
10
samples taken were heavily weighted,
68%, on the in-bound trip to the BMC This has
11
now been changed so that only 51% of the samples are taken on the in-bound trip and
12
49% are taken on the out-bound
13
exists in the selection
14
considerably
15
the utilization
16
in-bound trip.
17
the TRACS
18
sampling non-representative
19
The sampling
trip.
This change still does not cure the bias which
of the samples.
The mail volume out-bound
greater than the mail volume on the in-bound
of the vehicles
(Response
samples
of Witness
does
Xie to interrogatory,
not reflect
the relative
This is evidenced
each of the mail categories,
21
the empty
22
“expansion”
TR 6760)
mail volumes,
This selection
and makes
23
utilization
of
the
and biased.
However,
in the container
is to penalize
by
trip, but only 39.25% on the
system should measure the use of the transportation
20
space
- 71.25% on the out-bound
trip.
from the BMC is
TRACS continues
and in the vehicle.
the mail on the in-bound
to “expand”
by
the sample for
The consequence
of this
trip, which has a lower vehicle
and also has a lower volume of mail in the containers
11
vehicles
which
are being
I
1
returned to the BMC.
As the Commission
noted in the decision in Docket No. R97-1, paragraph
3391”
It appears to the Commission that TRACS would better serve the purpose
of supplying information for a rate proceeding if the data collection and
reporting were kept separate from the imputation that is made when the
contents of trucks and containers are “expanded” to full unused capacity.
The Commission
9
10
11
went on the recommend modification
of TRACS “so that the
data collection and reporting omit the expansion calculation,”
Unfortunately,
the
Postal Service has not followed that recommendation
12
13
The TRACS
samples
are randomly
14
sample should have equal weight
15
distribution
16
measure
17
“expansion”
18
samples to be more heavily weighted
19
20
key is applied
procedure
key.
cost, and should
of the transportation
alters data from each sample,
in the determination
by e.ach
The
be a
system.
The
and causes
some
of the distribution
key.
TRACS has other problems which make the results unreliable
For example,
the data for the Inter-BMC
21
3.375% for DBMC parcels,
22
transportation,
23
of the distribution
the total transportation
mail category
improperly
and the data produced
in the development
against
of the use by each
selected,
Similarly,
By definition,
samples
reflect a distribution
a DBMC parcel
the data for the Intra-BMC
samples
does not use Inter-BMC
reflect
24
DBMC parcels on the in-bound trip. A DBMC parcel originates
25
for distribution
26
parcels cannot properly
21
can be attributed
to SCF and other postal facilities
served
a significant
of the postage
12
number
at the destination
by the BMC.
be found on the in-bound trip back to the BMC.
only to mis-reading
key of
of
BMC
The DBMC
These data
indicia or a mis-direction
of the
1
original sort of the DBMC parcel which requires
2
processing.
3
distribution
4
Such Postal
Service
errors
it to be returned
should
not provide
to the BMC for reany support
for the
of costs.
For Intra-BMC
transportation,
the TRACS developed
distribution
key shows a
5
key of 20.477 for parcel post (which would include the final leg of the transportation
6
Inter-BMC
I
parcels,
8
combined,
a total of 103,250,331,
9
developed
from the TRACS
10
distribution
of transportation
11
12
trips),
but only 11.533 for DBMC parcels.
209,409,172,
The TRACS
Since the volume
is more than twice as much as Intra-BMC
(see USPS-T-26,
Attachment
data is clearly wrong,
and cannot
and
of DBMC
Inter-BMC
E) the distribution
key
be relied on for the
costs.
developed
Parcel Post mail and Standard
distribution
keys for Standard
A mail, Standard
Intra- BMC
Inter-BMC
14
Standard A
25.150
33.924
15
Parcel Post
20.477
19.924
16
DBMC
11.533
03.375
reflects
B -
B - DBMC mail are, averaged for the four quarters:
13
the record
of
17
However,
that the estimated
18
materially different from these distribution
Standard A
21
Parcel Post (b)
22
DBMC (b)
23
(a) Weight per USPS-T-27,
and cubic feet of each is
keys, The cubic feet for each is:
19
20
volume
(a)
Intra-BMC
Inter-BMC
304,977
125,035
14,153
34,214
207,674
attachment
13
-O-
B, with density factor from
1
TRACS
2
(b) USPS-T-26,
The distribution
3
Attachment
L
keys developed
by TRACS for Standard
A, parcel
post and
DBMC mail do not reflect the actual mail volumes and should be adjusted
to
conform with the known volumes and cubic feet of each of these mail categories.
Cubic foot miles for Standard
A does not seem to be available from the record,
so I have shown only the cubic feet.
7
I
8
recommend
transportation
9
according
10
to
the
cost distributed
Commission
that
purchased
to these three mail categories
highway
be redistributed
to the cubic feet of each category.
I do not have the data to make similar
11
the
analyses
of the other
mail
categories.
12
13
14
15
VI.
ATTRIBUTION
OF PURCHASED
It has been well established
on a causal relationship
HIGHWAY TRANSPORTATION
that attribution of costs for postal rate-making
16
be founded
17
attribution
with a class or subclass
18
the changes in costs with changes in mail volume.
19
USPS witness Bradley, USPS-T-18,
transportation
BMC purchased
21
highway transportation
22
the cost of highway contract with the capacity being purchased.
to be 97.9%.
He did not take into account
is to
For there to be
Variability
is
estimates the variability of the costs of Intra-
20
23
of mail
of costs, there first must be shown that the costs are variable.
highway
COSTS
to be 98.3%
and of Inter-BMC
purchased
However, his estimate is made from an analysis of
mail volumes being transported
14
or any changes
in
the mail volumes.
volumes,
Vehicle
capacity
Actual or estimated
cannot
Without
5
method of measuring
6
USPS
use of changes
Bradley
in purchasing
in those mail volumes, are
of variability or attribution
in mail volumes transported,
the variability
witness
be used as a proxy for mail
mail volumes, and changes
essential elements in the determination
4
properly
there is no reasonable
of the costs of purchased
outlined
highway transportation.
factors
transportation,
which
are taken
7
consideration
8
requirements
9
Volume of mail is not known, and is not a factor taken into account in negotiating
of receiving
highway
the various
of costs.
postal facilities,
numbers of containers
10
transportation
contract,
11
considerations
taken into account in negotiating
new or renewal.
13
24% of the samples
14
vehicle at the time of the TRACS sample.
15
the contention that the variabilities
In addition,
16
the utilization
and continues
18
decline from FY 98 to FY 99. (TR 6760)
19
BY98 and FY99.
21
transportation
22
transportation,
23
USPS witness Bradley,
that
the
Attached
variability
and
transportation,
and
of empty vehicles refute
mail has been low for
has continue
to
is Table A for vehicle utilization
for
attribution
cost be based on the vehicle utilization
utilization
of
purchased
for Intra-BMC
as shown in Table A, rather than on the unsupportable
15
the
by Witness Bradley can be accurate.
The vehicle
to diminish.
to evaluate
reflect that there was no mail on the
of vehicles for transporting
several
I recommend
in Inter-BMC
These percentage
determined
for a
new or renewal contracts.
transportation
17
20
years,
in Intra-BMC
commitments,
normally transported.
There is no data available
It is known that 13% of the TRACS samples
12
such as service
into
highway
and Inter-BMC
estimates
of
16
1
2
3
VII
4
The proposed
5
WEIGHT RELATED
NONTRANSPORTATION
rate structure
for parcel post includes
factor to cover weight related nontransportation
However,
6
notwithstanding
HANDLING
repeated
COSTS
a two cents per pound
handling costs,
recommendation
from the Commission
for
7
further study of this issue, there are no studies to identify or quantify to effect of weight
8
on handling
9
absence
costs, and no one has been able to identify
of any study or knowledge,
10
factor in the rate structure.
11
nontransportation
12
rate.
there can be no justification
14
include
60 cents for unidentified,
15
include
only 20 cents for such costs.
16
justification
related
costs, all
by the per piece element of the
for this difference,
unquantified
There
costs, whereas
is not shown,
a lO# parcel
or known,
would
to be any
based solely on the weight of the parcel.
There may be some costs, such as floor space and number
18
container or sack, which differ according
19
are determined
20
The relationship
21
costs, as shown in attached Table B, and that same curvilinear
22
applied to apportion the weight related nontransportation
23
of the use of this
Except as noted below for size/cube
handling costs should be recovered
In the
This per pound element of the rate structure results in rates for a 30# parcel to
13
17
any such costs.
of parcels
in a
to the size, or cube, of the parcels. Such costs
by the size, or cube, of the parcel, rather than the weight of the parcel.
between
I recommend
weight
and
to the Commission
cube has been established
relationship
should be
costs.
that the unidentified
17
for transportation
additional
weight
related
1
nontransportation
handling
2
relationships.
3
same arbitrary
4
Failure to use this weight/cube
5
heavier parcels, charging
6
justified.
be apportioned
The amount to be recovered
amount which
An alternative,
I
costs
using
the Table
from this size/cube
relationship
has been used for the weight
relationship
B cube/weight
can be the
related cost allocation.
will result in discriminatory
treatment
of the
those parcels with a greater portion of the costs than can be
since there has not been any study, and since the amount of
8
weight related nontransportation
handling cost has not been identified or determined’,
9
propose
that the rate factor
10
pound.
This would serve to moderate
11
the rate element.
12
undertake
be reduced
from 2 cents per pound to only 1 cent per
the injustice and lack of any data in support of
I urge the Commission
a study to determine
to again recommend
that the Postal Service
such weight related handling costs.
13
VIII.
14
15
ASSIGNMENT
For postal ratemaking
purposes,
OF INSTITUTIONAL
institutional
COSTS
costs are those for which there is
16
no established
17
which are not variable with volume.
18
which are incurred to maintain and operate the system.
19
causal relationship
with any particular class or subclass of mail and
These are in the nature of overhead expenses
Every piece of mail benefits from the system and the postage rate for every
20
piece of mail should include some amount in excess of its attributable
21
for the benefit of participating
22
23
I
cost as payment
in the system.
All mail does not equally benefit from the system, since some mail receives
varying degrees of preferred or expedited service, and other mail is subject to a
18
1
2
deferred or slower level of service.
Fourth class parcel post is in the latter category.
Value of service, both to the mailer and the addressee,
3
account, necessarily
4
each piece of mail toward the total of institutional
5
on a judgmental
basis, in determining
The amount to be added to attributable
to as the “mark-up”
I
sufficient, in total amount, to cover all such costs,
9
An appropriate
costs.
costs. The total mark-up for all mail must be,
starting point for the determination
amount for each piece of mail. From there, appropriate
10
reflect the relative benefits from participating
11
the ratemaking
12
the amount to be paid by
cost to establish the rate may be referred
6
8
for institutional
should be taken into
of the mark-up is a uniform
adjustments
should be made to
in the system, the value of service, and
criteria of the Postal Reorganization
Act.
Since parcel post, and other fourth class mail, is subject to deferral in delivery
13
and also is handled by surface transportation,
14
each piece of such mail should have a mark-up of less than a piece of first class mail.
15
which is slower than air transportation,
However, the Docket No. R97-1 contribution
to institutional
cost per piece is
Except for the
16
25.303 cents for parcel post and only 14.670 cents for first class letters.
17
expedited classes, such as priority mail and express mail, no other class of mail has a
18
higher per piece contribution
19
result in a reasonable
20
to institutional
allocation
costs than does parcel post. That does not
of the institutional
costs,
Weight should not be a factor in determining the mark-up or the amount to be
21
paid toward institutional
costs. A 30 lb. parcel receives no greater benefit from the
22
system than does a 5 lb. parcel, and there should be no difference
23
mark-up.
19
in the amount of the
1
In the past, assignment
2
a mark-up percentage
3
processing
4
piece. Those differences
S
percentage
6
costs and institutional
7
of institutional
to attributable
costs has been made by the application
costs.
Differences
in the cost of handling and
each piece of mail are reflected in the amount of attributable
should not be compounded
for institutional
Continued
cost.
cost for that
by the application
There is no relevant relationship
of a mark-up
between attributable
costs.
application
of this methodology
means that, if the Postal Service
8
becomes more efficient in handling and processing
9
resultant lower costs, then, due to the improved service, that type of mail will make a
10
11
12
13
lower contribution
to institutional
Such a consequence
institutional
a particular
type of mail, with the ’
costs.
is inconsistent
with reasonable
costs, which brought about the improved efficiencies
For all mail, the amount of attributable
However, only for zone-related
transportation
assignment
of the
and cost reductions.
cost increases with
14
distance.
1s
based on zone destination.
16
having a larger mark-up amount than a piece of mail destined to Zone 4. The only
17
difference
18
a part of the system of operating
19
from independent
20
from purchased
21
mark-up is applied.
22
Preservation
23
of
mail is the difference
I find no justification
between the two is the transportation
attributed
for a piece of mail destined to Zone 8
cost. Transportation
the Postal Service, but rather
providers outside of the Postal Service.
transportation
separately
costs are not
are services purchased
Attributable
costs resulting
should not be included in the base against which the
of parcel post as an integral part of the postal system is vital to all
parcel mailers,
20
.
1
The steady decline of parcel post volume was curtailed by the creation of the
2
DBMC rate in Docket No. R90-1.
3
of the volume of parcels from business mailers, who had previously
volume to competitive
That has enabled the Postal Service to regain some
delivery services.
diverted parcel
The recovery of volume, enabled by the
DBMC rate, has been gradual, but is essential to assist in restoring volume which is
necessary for efficient operation
7
I recommend
8
institutional
9
or downward
10
of the bulk mail system.
to the Commission
a change in the process of allocating
cost, and begin with a uniform per piece allocation,
to reflect to ratemaking
to be adjusted upward
criteria of the Act.
The factors which have justified low cost coverage for parcel post in prior rate
11
cases continue to apply.
We urge the Commission to moderate the cost coverage for
12
parcel post in this case so that the recovery of volume,
13
the DBMC, DSCF and DDU rates, can have the opportunity
21
principally
through utilization
for success,
of
6760
FGPSA - T - 1
TABLE A
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS XIE
TO INTERRbGATORIES OF FLORIDA GIFT FRUIT SHIPPERS ASSOCIATION
yooo-1
-
USPS-T-26
Attachmen! K
Page 1 Of 3
TABLE B
PGFSA - T - 1
Summary of Cube-Weight
Relationship
Results
Parcel Post Cube-Weight Relationship by Rate Category
Model Specification:
LN(CF/PC) = a + b(LN(Lbs)) + c(LN(Lbs))’
a=
b=
C’
-2.40267
1.37654
-0.14155
I41
LBS
2
Estimated
CF/PC
0.21947
3
4
0.34603
0.46468
5
6
7
0
9
PI
PI
111
Intra-BMC
a=
b=
C=
Inter-BMC
-2.095821
I .202857
-0.101297
151
Estimated
CFlPC
0.26962
0.40795
DBMC
a=
b=
C=
-1.982081
1.203942
-0.092312
(61
Estimated
CF/PC
0.30364
0.53634
0.46263
0.61234
0.57473
0.67661
0.65555
0.76660
0.88580
0.77103
0.85873
0.94039
0.87046
0.96796
1.059~0
10
11
1.01660
1.14659
1.08789
12
1.15475
13
14
1.21756
I.22882
1.30693
1.38129
1.27669
1.33246
1.45222
1.52000
1.38513
1.43497
1.48218
1.52697
1.56952
1.60997
1.64847
1.68516
7.58488
1.64709
1.70680
2.06795
1.76421
1.81945
2.14369
2.21701
i .a7268
1.92402
1.97357
2.28804
2.35691
1.72015
2.02146
2.48869
25
1.75355
2.55179
26
27
I .78545
1.81596
I.84514
2.06777
2.11250
15
16
17
18
19
20
21
22
23
24
28
29
30
31
32
33
34
35
1.67307
i .a9984
1.92549
1.95009
1.97370
1.99636
2.01613
2.156OG
2.19808
2.23880
2.27840
2.31695
0.75312
1.01120
1.13007
1.24307
1.35076
1.45362
I ,552oa
1.64650
1.73719
1.82445
1.90852
1.98962
2.42376
2.61317
2.67291
2.73109
2.78779
2.39065
2.84306
2.89698
2.94960
3.00099
2.42598
2.46036
3.05118
3.10024
2.35432
Column [l): Inlra-BMC parameter estimates are from USPS LRI-104.
Column (2): Inter-BMC parameter estimates are from USPS LR-I-104.
Column 131:DBMC parameter estimates are from USPS LR-I-104.
Column 14): Exp (a + b * (LN(LBS)) + c’ (LN(LBS))‘), using wlumn 1 parameters.
Column (51: Exp (a + b * (LN(LBS)) + c’ (LN(LBS))‘), using column 2 parameters.
Column 16): Exp (a + b * (LN(LBS)) + c* (LN(LBS))‘). usir.g c~iumn 3 parameters.
USPS-T-26
Attachment K
Page 2 of 3
Summary
of Cube-Weight
Parcel Post Cube-Weight
III
Intra-BMC
LBS
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
Estimated
CF/PC
2.03905
2.05916
2.07850
2.09710
2.11501
2.13225
2.14885
2.16484
2.18025
2.19510
2.20941
2.22322
2.23653
2.24937
2.26177
2.27372
2.28526
2.29640
2.30715
2.31753
2.32756
2.33724
2.34659
2.35561
2.36433
2.37275
2.38089
2.38874
2.39633
2.40366
2.41074
2.41758
2.42418
2.43056
2.43672
Relationship
Relationship
Results
by Rate Category (Continued)
PI
Inter-BMC
Estimated
CF/PC
2.49384
2.52644
2.55821
2.58919
2.61939
2.64885
2.67761
2.70568
2.73310
2.75988
2.78605
2.81163
2.63665
2.6611 I
2.88505
2.90647
2.93139
2.95384
2.97582
2.99735
3.01844
3.03911
3.05937
3.07923
3.09870
3.11779
3.13653
3.15490
3.17293
3.19063
3.20800
3.22505
3.24179
3.25624
3.27436
[31
DBMC
Estimated
CFIPC
3.14820
3.19511
3.24100
3.28593
3.32991
3.37300
3.41521
3.45658
3.49713
3.53691
3.57592
3.61420
3.65177
3.68664
3.72486
3.78042
3.79536
3.82968
3.86342
3.89656
3.92916
3.96124
3.99278
4.02379
4.05431
4.08435
4.11391
4.14300
4.17165
4.19986
4.22764
4.25501
4.28196
4.30652
4.33470
Column [1]: Exp (a + b + (LN(LBS)) + c * (LN(LBS))‘). using column 1 pammeters from page I.
Column (21: Exp (a + b * (LN(LBS)) + c + (LN(LBS)y). using column 2 parameters from page I.
Column (31: Exp (a + b * (LNILBS)) + c * (LN(L6S)Y). using column 3 parameters from page I.
USPS-T-26
Attachment K
Page 3 of 3
Parcel,Post Cube-Weight Relationship
Average Cube/Piece vs. Weight Increment
t
1
4
7
Inter-BMC
10 13 16 19 22 25 26 31 34 37 40 43 46 49 52 55 56 61 64 67
Pounds
1
2
3
4
CERTIFICATE
OF SERVICE
I certify that a true and correct copy of the foregoing has been mailed this date to
all parties of record in accordance
with the Rules of Practice.
Dated this 22nd day of May, 2000.
5
6
22