FSS: Will It Benefit Mailers?The Flats Sequencing System (FSS) should help the U.S. Postal Service manage delivery costs, but what will it mean for mailers? Joe Schick, Quad/Graphics' Director of Postal Affairs, offers an opinion.
You may have read the Postal Service’s Board of Governors approved the implementation of a Flats Sequencing System (FSS) initiative on December 6. But if you’re not familiar with FSS, you might be wondering what it will mean to you as a mailer.
FSS technology represents the next generation of automation for the Postal Service. While the program focuses on the processing of flats (i.e., circulars, catalogs and periodicals), the cost savings associated with FSS are expected to be realized primarily in the delivery function. The goal, as it was with Delivery Point Sequencing (DPS) of letters in the 1990s, is to provide delivery-sorted flats directly to postal carriers, allowing them to spend less time in the office casing mail and more time on the street delivering it.
According to Walt O’Tormey, the U.S. Postal Service’s Vice President of Engineering: "Using technology to sort flat mail into the order of delivery for letter carriers will increase efficiency in the office and allow carriers to begin delivering to their customers earlier in the day. The Postal Service experienced significant benefits in the 1990s by automating the processing and sequencing of letter mail, and we hope to extend these improvements to the processing of flats."
Phase I of the program calls for an initial order of 100 FSS machines to be deployed to 33 postal facilities beginning in the summer of 2008. Deployment – which is scheduled to start in those areas of the country that have the highest concentration, or volume, of flats – is expected to take at least two years. Based on the success of Phase I, the Postal Service will determine whether to proceed with a Phase II and possibly a Phase III stage of the FSS initiative. If this does happen, FSS equipment could be a cost-effective mail processing option for about 75 percent to 80 percent of all ZIP Codes. The remaining ZIPs would represent those areas of the country where flat mail volumes are such that automation would not be cost-effective.
Think about it. With the Postal Service adding more than 1.5 million new delivery points each year, it’s going to need a way to manage additional carriers and their ever-expanding routes. FSS will help the USPS manage its costs which, in turn, drive postal rates.
Behind the scenes, the mailing industry has been working with the Postal Service to help identify the changes resulting from adopting FSS technology. Much of this work is being done through the Mailers Technical Advisory Committee (MTAC) and its working groups. At the same time, industry associations such as the Association for Postal Commerce, Magazine Publishers of America and IDEAlliance have been meeting with USPS executives to communicate mailers' questions and concerns.
What are some of those changes, questions and concerns?
Let’s start with the rate structure. We know that as the machines are deployed, carrier route presort will be eliminated in the ZIP Codes processed by FSS equipment. At this point there is no way of knowing what the rates or rate structure will look like. We can only assume that rates will not increase as a result of carrier route rates going away. In the case of DPS for letters, the 5-digit automation rate became the best presort option and was actually less than the carrier route had been. Let’s hope that was a sign of things to come for flats.
What about mailpiece design? The Postal Service has said that they expect FSS to process almost everything that currently qualifies as an automated flat. At this point, only flats over 4 pounds seem to be in jeopardy of falling out of the automation category (today’s maximum is 6 pounds). We do know that FSS will create the need to have a standardized address location. This is something new for flat-size mail, but has been a requirement for automated and machinable letters for some time. A workgroup within the MTAC has been dealing with this issue for the last year. Much of what they have done was outreach to the mail owners through industry associations and surveys. The group has completed their work, and the Postal Service will be publishing a Federal Register Notice in the next few weeks with details of the proposed address location options. We’ll be sure to let you know when that happens and provide you with a summary of the proposal. At that time, you will have one last chance to comment.
Additional address block changes may include requirements for line spacing, the location of what the USPS refers to as "extraneous" information (i.e., package and pallet numbers) or the need for a clear zone around the next generation 4-State Barcode, which will be required for automation discounts in 2009. All of these could equate to a larger address block area. The MTAC is already organizing a workgroup to tackle this issue.
This represents the tip of the iceberg when it comes to how the world will change with FSS. Other concerns include the impact on: comailing, delivery and dropshipping.
As we begin to learn more about FSS and the overall workflow associated with it, I’m sure we will uncover more issues that have to be resolved. We all support the USPS in this endeavor, and we will continue to work through the issues over the next year and a half to ensure that we meet our mutual goal of "lowest combined costs".
Stay Tuned.
Joe Schick
Director of Postal Affairs, Quad/Graphics
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