®
Network Optimization
All Officer Briefing
August 09, 2011
CONFIDENTIAL – For Internal Review and Discussion Only
CONFIDENTIAL – For Internal Review and Discussion Only
1
Network Design – Volume Reality
®
Significant
Significant DECLINE
DECLINE in
in First-Class
First-Class Mail
Mail
110
102
Short-term
Longer-term
Pieces (billions)
100
90
98
86
85
83
80
78
• Excess capacity in Origin
& Dest. processing facility
• Excess capacity in
transportation
70
60
54
50
40
Continued decline in FirstClass single piece volume
impacts:
41
2006
2010
First-Class Actual
First-Class Projected
2013
2015
2018
2020
Shift to standard mail will
increase % of destination
entry mail.
Standard - Actual
Standard - Projected
Source: USPS Revenue & Volume Forecasting
CONFIDENTIAL – For Internal Review and Discussion Only
2
®
Plan for Change – Network Change
‰ Objective: Define the most efficient mail processing network and infrastructure to match current and projected workload
- Determine optimal plant locations and an operating plan to fully utilize equipment
- Revise Service Standards for First‐Class Mail
‰ Results: ~50% Reduction in Plants and Equipment [$2.6 ‐ $3.0 Billion savings]
CONFIDENTIAL – For Internal Review and Discussion Only
3
Plan for Change – Timeline
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File Service Standards
Case with PRC
• Key Activities
Earliest Date for
A PRC Opinion
Publish Final Rule,
Earliest revision to
Service Standards,
Earliest
Implementation
- Integrated Network Planning
- Stakeholder Management
- Regulatory Filing and Rule Changes
- Implementation
- Adjust the workforce
CONFIDENTIAL – For Internal Review and Discussion Only
4