[Federal Register Volume 67, Number 161 (Tuesday, August 20, 2002)]
[Rules and Regulations]
[Pages 53880-53882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21189]


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POSTAL SERVICE

39 CFR Part 111


Optional Increase in Minimum Number of Pieces Required for 
Preparation of 5-Digit Packages of Standard Mail Flats

AGENCY: Postal Service.

ACTION: Final rule.

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SUMMARY: This final rule sets forth Domestic Mail Manual (DMM) 
standards adopted by the Postal Service to allow mailers to select a 
number from 10 to 17 as the minimum number of pieces at which 5-digit 
packages may be prepared in a Standard Mail job of flat-size pieces 
(DMM C050.3.0) that are not more than \3/4\-inch thick. Currently 
mailers must prepare 5-digit packages whenever there are 10 or more 
pieces to a 5-digit ZIP Code destination.

EFFECTIVE DATE: September 5, 2002.

FOR FURTHER INFORMATION CONTACT: Cheryl Beller (703) 292-3747; or 
Patricia Bennett (703) 292-3639.

SUPPLEMENTARY INFORMATION: Under these new standards, mailers can 
select a minimum number of pieces greater than 10 at which 5-digit 
packages of automation rate and Presorted rate Standard Mail flat-size 
pieces not more than \3/4\-inch thick, including co-packaged pieces 
(DMM M950), are prepared within a mailing job. Mailers must use a 
consistent minimum for 5-digit packages throughout a mailing job. The 
minimum may not be set higher than 17 pieces, which means that whenever 
there are 17 or more pieces to a 5-digit ZIP Code destination, those 
pieces must be prepared in 5-digit packages. The preparation standards 
for other package levels and for containers are unchanged, and mailers 
must continue to prepare 3-digit and area distribution center (ADC) 
packages whenever there are 10 or more pieces to those destinations. 
Pieces now prepared in 5-digit packages using the current 10-piece 
minimum will move either to an existing 3-digit package or be 
consolidated into fewer new 3-digit packages when a higher minimum of 
11 to 17 pieces is selected. In either case, the overall number of 
packages prepared by mailers and processed by the Postal Service should 
decrease. For example, a 4-ounce catalog prepared in four 5-digit 
packages for the same 3-digit destination that each contain 10 pieces 
could be combined in one new 3-digit package (that weighs less than 20 
pounds) under the new standards if the minimum 5-digit package size is 
set at 17.
    Any movement of pieces from 5-digit packages to 3-digit packages 
that results from this new option will not impact postage paid by 
mailers or Postal Service revenues because Standard Mail flats are 
eligible for the 3/5 presort rates whether prepared in 5-digit or 3-
digit packages. Pieces moving from small 5-digit packages to larger 3-
digit packages would not be subject to any additional postage, and 
mailers are encouraged to set their 5-digit package minimum at 17 
pieces to prepare fewer packages. However, anyone wanting to use the 
current 10-piece package minimum, or to set the minimum between 10 and 
17, could do so. Mailers are reminded that the 3/5 Presorted rate for 
Standard Mail flats is applicable to 5-digit or 3-digit packages 
prepared in 5-digit or 3-digit sacks containing a minimum of 125 pieces 
or 15 pounds of pieces or placed on any level pallet. Automation rates 
are always based on the package presort level and the 3/5 automation 
rate applies to any pieces in 5-digit and 3-digit packages. It is 
possible that the selection of a higher 5-digit package minimum may 
improve the presort level of some pieces that would otherwise fall to a 
lower package level after all 5-digit packages are prepared. For 
example, after all 5-digit packages are prepared using the current 10-
piece package minimum, less than 10 pieces may remain for the 3-digit 
destination and the remaining pieces would be prepared in an ADC or 
mixed ADC package and be subject to the basic rate. When combined with 
pieces from one or more small 5-digit packages to the same 3-digit 
destination, these pieces could move to a 3-digit package and be 
subject to the 3/5 rates.
    Because of the operational efficiencies that are expected for 
mailers and the Postal Service due to the creation and handling of 
fewer flats packages as a result of this new optional preparation, the 
Postal Service finds no need to solicit comments or to delay 
implementation.

Background

    Exploratory modeling of piece, package, and container handling 
costs indicates that the appropriate minimum for 5-digit packages of 
Standard Mail flat-size pieces is clearly above 10 and could be 
increased to 17 pieces for flats likely to be processed on the 
automated flat sorting machine (AFSM) 100. The modeling, conducted by 
the Postal Service in conjunction with its product redesign efforts, 
indicates that changing the minimum package size for 5-digit packages 
is not likely to increase the Postal Service's combined package and 
piece handling costs. It also suggests that the net gain from reduced 
package handling using the 17-piece minimum will be greatest for pieces 
that weigh less than 6 ounces and somewhat less for heavier pieces. 
Because of the 20-pound maximum package weight (DMM M020.1.8), the 
elimination of 5-digit packages of heavier pieces will result in the 
creation of an almost equal number of 3-digit packages and the costs 
for additional piece handlings will not be offset by reduced package 
handling costs. As with any change of this type, the impact on a 
specific mailing will vary based on mail characteristics such as piece 
weight and presort density. However, it is expected that this optional 
change should help to reduce overall Postal Service processing costs as 
well as mailer production costs, and that it should not have any 
negative impact on service for pieces that move from 5-digit to 3-digit 
packages.
    The expected benefits of this change are based, in large part, on 
productivities and piece processing efficiencies of the AFSM 100, which 
can process pieces up to \3/4\-inch thick. Pieces greater than \3/4\-
inch thick may be processed on the FSM 1000, on the small parcel and 
bundle sorter (SPBS), or manually, all at lower productivities than if 
processed on the AFSM 100.

[[Page 53881]]

Furthermore, very little incoming secondary processing of pieces to 
carrier routes occurs on FSM 1000s, and it is more desirable to have 
mail prepared in 5-digit packages that can be sent directly to the 
delivery office for distribution to carrier routes. For this reason, 
the optional higher minimums are limited to flat-size pieces likely to 
receive AFSM 100 processing, and mailers must continue to use the 
current 10-piece minimum when preparing 5-digit packages of automation 
rate flat-size pieces greater than \3/4\-inch thick.
    Two important goals of product redesign are to align rates and 
preparation requirements with customer needs and capabilities, and to 
provide products that reduce combined Postal Service and customer costs 
and fit within the future postal operations environment. The Postal 
Service believes there are major opportunities to improve flats 
processing efficiency and that, in the mid-term (within approximately 2 
to 5 years), these opportunities can be fully captured only by 
restructuring rate categories and the corresponding preparation 
requirements for flats. Although approximately 40 percent of Postal 
Service mail processing costs for Standard Mail flats are in package 
and container handling, there are currently few rate incentives to 
induce customers to package and containerize their mail in ways that 
reduce Postal Service costs. Beyond the minimums and maximums for 
packages and containers, there is very little guidance or flexibility 
for preparing packages and containers. In contrast, to reduce Postal 
Service piece handling costs, customers are offered a detailed 
structure of rate incentives for presorting, barcoding, and 
dropshipping. Implementation of a flexible minimum for 5-digit packages 
of Standard Mail flats is an attempt to provide guidance for preparing 
more efficient packages.
    The Postal Service discussed the potential for implementing this 
change with software vendors and major flats printers and mailers at 
the Mailers Technical Advisory Committee (MTAC) Presort Optimization 
Work Group meeting in May 2002. Attendees were receptive and indicated 
that software revisions necessary to implement this preparation change 
would not be difficult. However, they also noted that the Postal 
Service would need to act quickly to formalize the changes and inform 
the mailing industry of their value in order to obtain the greatest 
benefit for the 2002 fall mailing season, when the Postal Service 
normally experiences a Standard Mail volume peak. If mailers take 
advantage of this option quickly, the associated reduction in the 
volume of packages of flats could help the Postal Service avoid more 
costly manual processing that may occur during volume peaks.
    Although mailers who want to select a higher 5-digit package 
minimum than 10 pieces will not be required to use Presort Accuracy 
Validation and Evaluation (PAVE)-certified software, PAVE tests are 
available for presort software vendors who will support this option.
    Based on the expected efficiencies resulting from this change, the 
Postal Service plans to raise the minimum quantity for preparation of 
5-digit packages of Standard Mail AFSM 100 flats from the current 10 
pieces in conjunction with the next omnibus rate case.
    The Postal Service is interested in receiving feedback about the 
volume shift in specific mailings from mailers who change their minimum 
package size. The following information may be sent to Cheryl Beller, 
Product Redesign, U.S. Postal Service, Room 4039, 1735 N Lynn St, 
Arlington, VA 22209-6360 (E-mail address: [email protected]): 
Total number of pieces in mailing; mailpiece weight; number of pieces 
prepared in 5-digit packages and the number of 5-digit packages; number 
of pieces prepared in 3-digit packages and the number of 3-digit 
packages; and the maximum package parameter (weight or number of 
pieces). If the maximum package size setting reflects a total package 
weight lower than 20 pounds, please indicate the maximum package height 
that correlates to the maximum package size. The number of pieces and 
number of packages (5-digit and 3-digit) should be shown using both the 
current 10-piece minimum and the new minimum selected for presort (from 
11 and 17).

List of Subjects in 39 CFR Part 111

    Postal Service.

    For the reasons discussed above, the Postal Service hereby adopts 
the following amendments to the Domestic Mail Manual (DMM), which is 
incorporated by reference in the Code of Federal Regulations (CFR). See 
39 CFR part 111.

PART 111--[AMENDED]

    1. The authority citation for 39 CFR part 111 continues to read as 
follows:

    Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 3001-
3011, 3201-3219, 3403-3406, 3621, 3626, 5001.


    2. Amend the Domestic Mail Manual (DMM) as follows:

Domestic Mail Manual (DMM)

* * * * *

M  Mail Preparation and Sortation

* * * * *

M600  Standard Mail (Nonautomation)

M610  Presorted Standard Mail

* * * * *
4.0  FLAT-SIZE PIECES AND IRREGULAR PARCELS
* * * * *

4.3  Package Preparation

    Package size, preparation sequence, and labeling:

[Revise item a to read as follows:]

    a. 5-digit:
    (1) Flats: required with 17 pieces, optional with 10 to 16 pieces 
(use of a consistent minimum is required for a mailing job); red label 
D or optional endorsement line (OEL).
    (2) Irregular Parcels: required (10-piece minimum); red label D or 
optional endorsement line (OEL).
* * * * *

M800  All Automation Mail

* * * * *

M820  Flat-Size Mail

* * * * *
5.0  STANDARD MAIL

5.1  Package Preparation

    Package size, preparation sequence, and labeling:

[Revise item a to read as follows:]

    a. 5-digit:
    (1) Packages containing pieces not more than \3/4\-inch thick only: 
required with 17 pieces, optional with 10 to 16 pieces (use of a 
consistent minimum is required for a mailing job); red label D or 
optional endorsement line (OEL).
    (2) Packages containing pieces with a thickness greater than \3/4\-
inch: required with 10 pieces; red label D or optional endorsement line 
(OEL).
* * * * *

M900  Advanced Preparation Options for Flats

* * * * *

M950  Co-Packaging Automation Rate and Presorted Rate Pieces

* * * * *
3.0  STANDARD MAIL
* * * * *

3.2  Package Preparation

    Package size, preparation sequence, and labeling:


[[Page 53882]]


[Revise item a to read as follows:]

    a. 5-digit:
    (1) Packages containing pieces not more than \3/4\-inch thick only: 
required with 17 pieces, optional with 10 to 16 pieces (use of a 
consistent minimum is required for a mailing job); red label D or 
optional endorsement line (OEL).
    (2) Packages containing pieces with a thickness greater than \3/4\-
inch: required with 10 pieces; red label D or optional endorsement line 
(OEL).
* * * * *
    We will publish an appropriate amendment to 39 CFR 111.3 to reflect 
these changes.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 02-21189 Filed 8-19-02; 8:45 am]
BILLING CODE 7710-12-U