The document discusses the dire financial challenges facing the US Postal Service, including multi-billion dollar losses in recent years. It outlines a preliminary 5-year plan with initiatives to cut costs by $8.7 billion annually through measures like facility consolidation, delivery optimization, and a transition to 5-day mail delivery. The plan also calls for legislative actions and investments in technology and innovation to help address the financial issues and position the USPS for long-term viability.

1. Dave Williams
Vice President Network Operations

2. Current State
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3. Ongoing Financial Challenges
■ $15.9B loss in FY2012
■ $11.1B default in FY2012 to the
United States Treasury for Retiree
Health Benefits
■ $15B borrowing authority exhausted
■ Liquidity very low
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4. The Prequel: Fifty-Two Billion Piece Drop
Mail Volume Decline: 25% from 2007 to 2012
Pieces in billions
Dire financial position requires urgent action to ensure continued
mail delivery and to restore long-term self sufficiency.
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5. The Prequel: Losses Weaken the USPS
$41B of Net Losses
$ billions
Dire financial position requires urgent action to ensure continued
mail delivery and to restore long-term self sufficiency.
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6. Continuous Efficiency Improvements Have
Helped Mitigate Effects of Business Threats
Career Employees – Reduced by 168,000 (24%) during last six
fiscal years, without layoffs
(in thousands)
696 685
663
623
584
557
528
496
'06 '07 '08 '09 '10 '11 '12 Feb. 28, '13
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7. Preliminary 5
Year Plan
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8. Expenses Exceed Revenue
and The Gap is Growing
$ in Billions Baseline Expense Expense
$90 Outlook before any
Initiatives
$85
$20 B Gap
$80
$75
RHB Pre-Funding
$70 Net Losses ends
$65
$60
Revenue
$55 Revenue
$50
$45
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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9. Flat Revenue from 2012 to 2017
Total Revenue
$ Billions
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10. Shipping/Packages Increase: $4.8B from
$ Billions
2012 to 2017
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11. First-Class Decline: $6.2B from 2012 to 2017
$ Billions
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12. Profit Margin by Mail Class - 2012
It takes ~$3 in Package
$28.9 revenue to make up the
Revenue
profitability of every dollar
lost in First-Class Mail
revenue.
Margin
$16.4
$11.6
Attributable
Cost
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13. Initiatives –
Increasing Efficiency
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14. Revenue Growth & Cost Reductions
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15. Summary of Operations Initiatives
Annual Savings of $8.7 Billion
Retail &
Acceptance
$1.7B
Processing Transportation
& $3.1B
Delivery
$2.0B
6-Day/5-Day $1.9B
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16. Retail & Acceptance Savings:
$1.7 Billion
Retail & Initiatives Objectives
Acceptance Post Plan • Match hours to transaction activity
• Consolidate low activity Post Offices and
operate longer hours
• Village Post Offices
Retail Channel • Move customers into low-cost channels
Strategy
• Increase assisted self-service
• Provide easy, more convenient access to
postal products on usps.com or 3rd party
partners’ Web site
Commercial
Mail Acceptance
Transformation • Automate acceptance and verification
procedures to:
• Improve customer experience
• Reduce work hours
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17. Processing & Transportation Savings:
$3.1 Billion
Initiative Objectives
Processing Network
Optimization •Consolidate excess network
capacity
Initiative Objectives
Transportation
•Eliminate multiple overnight trips
Reduce
Transportation •Maximize trailer utilization
Costs
•Area transportation network
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18. 417 PROCESSING FACILITIES FY 2013
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19. $3.1B in
savings
by 2017
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20. Delivery Savings:
$2.0 Billion
Initiatives Objectives
Delivery Unit •Reduce number of routes
Optimization
•Combine delivery units
GPS & Real
Time Delivery •Rural contract and efficiency
Delivery Notification
Dynamic
Delivery •The future of delivery
Efficiency
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21. Six-Day Packages/Five-Day Mail Savings:
$1.9 Billion
 Delivery hours = 50% of total
postal hours. Largest cost
category.
 Volumes dropped 25% since
2007
 Five-day mail delivery 70%
supported
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22. New Delivery Schedule Components
Package Delivery Post Offices (P.O.) Mail Delivery
• Monday – • Post Offices • Monday – Friday
Saturday remain open on mail delivery
package delivery Saturdays service
service continues
• Mail delivered to
P.O. Boxes on
Saturdays
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23. Legislative Action
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24. Key Legislative Goals
 Require USPS Health Care Plan
 Resolves RHB Prepayment Issue
 Refund FERS Overpayment
 Streamline Governance Model
 Authority to Expand Products and Services
 Require Defined Contribution System for Future
Postal Employees
 Instructions to Arbitrator
 Reform Workers’ Compensation
 Right to Appeal EEOC Class Action Decisions
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25. Unnecessary Healthcare Costs Lead
to Poor Financial Health
 Approximately $8 billion per
year savings thru 2016
 Same or better coverage at
lower participant and USPS
cost
 USPS and its employees have
paid $26 billion into Medicare
 Competitive bidding
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26. FERS: $6 Billion Refund/$300 Million
Reduction Annually
 Overfunded for decades
 Demographics & pay
increases
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27. Summary of Legislative Initiatives
Annual Savings of $8.3 Billion
Healthcare
$8B
FERS
$300M
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28. Unsustainable Losses will
Worsen without Urgent Actions
Projected Net Losses ($ in billions)
Before the effects of Strategic Initiatives
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29. Projections after Strategic Initiatives
Achieving the Business Plan requires full realization of all the Strategic Initiatives.
Net Profit (1) ($ in billions)
Without initiative impacts-
Average annual net losses (1) of $14B
(1) Excludes impacts of non-cash adjustments (if any) to workers’ compensation liability in 2013 - 2017.
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30. Projected Debt Reductions
Achieving the Business Plan requires full realization of all the Strategic Initiatives.
Net Debt ($ in billions) virtually eliminated
Without initiative impacts-
2017 Debt of $82B
Cash
Debt
(1) Excludes impacts of non-cash adjustments (if any) to workers’ compensation liability in 2013 - 2017.
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31. Innovating for
Tomorrow
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32. Technology Innovations
 Streamlined entry &
payment
 Harness GPS & mobile
technology
 Support world-class service
& efficient operations
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33. Linking Print & Digital
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34. Real Mail Image
Notification
(RMIN)
March 2013
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35. Real Mail Image Notification
• Real Mail Image Notification (RMIN) provides images
of letters and flats directly to USPS PO box holders
• Customers can receive an email notification allowing
them to view mail pieces destined for their PO box
• The image database also enables many other
potential revenue and cost-savings opportunities
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36. Real Mail Image Notification
Good Morning
Dear valued U.S. Postal Service Customer,
Here are some images of mail that we will be delivering to your home address today!
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37. Real Mail Image Notification
System Requirements
 PO Box Notification
 Letter and Flat Images sent to PO Box customers via email and
future web access
 Current Pilot Test at 8 Northern Virginia Delivery Units
 Automated collection of images during the final processing sort
Benefits
 PO Box Holders know what is in their box before they drive to
pick it up
 Provides an additional mail moment prior to customers receiving
the hard copy
 Mailers could provide web links to their web site that get
imbedded in the images
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38. Real-Time Scanning
March 2013
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39. Real-Time Scanning
• Provides real-time
communications and GPS
• Wireless tether for existing
IMD to minimize cost
• Reduce posting of
data from 5 hours to
20 minutes
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40. The Mailing Industry is Critical for the
U.S. Economy.
160 Billion pieces delivered annually
to 150 million addresses
A healthy, financially viable Postal Service is vital to the
U.S. economy.
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