So far, the Flats Sequencing System seems to be increasing rather than decreasing the Postal Service’s sorting and delivery costs, according to a postal expert.
“The FSS has at times been seen as the technological fix that would reduce flats costs” and make the Periodicals class less of a money loser for the U.S. Postal Service, noted Halstein Stralberg in comments Time Inc. submitted Friday to the Postal Regulatory Commission. But based on USPS’s data for fiscal year 2011, “FSS processing was in fact very costly and most likely made Periodicals costs higher than they would have been without FSS.”
“In FY2011, far too many flats were rejected from the FSS, and some either disappeared or had unacceptable delays. Additionally, relative to the volumes sorted by the FSS, there must have been far too many manhours spent on a system that was supposed to be highly automated,” Stralberg wrote on behalf of Time Inc., which is challenging the way USPS calculates the Periodicals class’s costs.
“It appears most likely that the majority of the flats that were rejected in some way by the FSS during FY2011 were diverted to manual processing,” Stralberg concluded. “Considering that the majority of flats processed by FSS are flats that without FSS would have been carrier route presorted [making their handling costs low], the flats that are diverted to manual from FSS will experience higher delivery costs, as well as much higher processing costs, than they would had they simply remained as carrier route presorted flats going directly to the carriers.”
USPS’s $1.4 billion investment in FSS was supposed to revolutionize the labor-intensive process of delivering catalogs, magazines, newspapers, and other flat mail. The last of the 100 machines was fired up several months ago, but the system is still plagued by machine downtime, late deliveries, and other problems.
The efficiency problems Stralberg noted in FY 2011 continue in FY 2012.
“At a recent meeting with USPS management, we were informed that FSS is now finalizing for delivery approximately 50% of the available volume in the FSS zones,” wrote Jim O’Brien, Time’s Vice President of Distribution & Postal Affairs, in comments the big magazine publisher also filed with the PRC on Friday. “This means that the other 50% of the available volume is being manually cased. While specific cost and mail-processing data are unavailable, it makes intuitive sense that having two systems processing mail for the same zones will add cost.”
One problem Stralberg pointed out is that more than 1 out of 10 pieces fed into the FSS do not end up in delivery-point sequence. That can lead to a lot of manual work and delayed deliveries.
“If a piece is rejected, for whatever reason, in the [FSS's] second pass, it is already too late for it to be entered into Pass 1 for that particular zone on that day,” Stralberg noted. “In one case, a subscriber to three Time Inc. weeklies reported that none of them had arrived in a given week. The Postal Service could not explain, but when provided with the IMB [Intelligent Mail Barcode] codes for the three copies, they could confirm that all three had been read into the first FSS pass, but none had made it to the second pass.”
Stralberg found one piece of good news for USPS in the data: Overall, the proportion of flats that undergo expensive manual processing has dropped dramatically – probably by more than a third -- in the past two years.