Day 1 Open Session. Consolidated MTAC Notes June 12 th & 13 th Parcel Shippers Association. Megan Brennan - PMG. Jakki Krage Strako CMO

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1 Consolidated MTAC Notes June 12 th & 13 th 2018 Parcel Shippers Association MTAC Representatives: P. Kovlakas, G. Tierney, J. Medeiros Day 1 Open Session Megan Brennan - PMG Board of Governors (BOG) Two of the BOG nominates are out of committee. Want to have these in place as soon as possible. Not about the quantity but the quality President s Task Force open and transparent process. This is an opportunity to educate and help create comprehensive reform. Opportunity to discuss what is expected from the USPS and how to fund that need. The USPS does not plan on making public comment during the task force period. Understand the risk of not commenting. Megan said it s encouraging that so many key stakeholders have met with the Task Force. Q. Can you tell us about the secret meetings with the Administration? No. Our goal is to define the USPS role in the marketplace. Will continue to push for legislative and regulatory reform. USPS and the PMG look at the Task Force as an opportunity to educate. The USPS continues to urge congress to pass pending legislation, citing an urgent need to move it forward and reiterating that fixing the USPS requires management action, legislative and regulatory reform. Jakki Krage Strako CMO Thanked the audience for your continuous support, enthusiasm, and dedication during ramping up in her new role. This year s NPF saw increased attendance from industry over last year. Mail is still exciting to most. This is the same across age groups: 79% Millennials 78% Generation X 81% Boomers Average daily time spent sorting the mail (minutes): 13.1 Millennials 9.5 Generation X 7.8 Boomers

2 The average has been increasing over the past 4 years. Adding a name increases response rate by 44%. Adding full color increases response rates 45%, increase when both are used is 135%. Applying variable data information resulted in a 500%. Personalization and color, analytics used to design the perfect piece to the right person drives the excitement and engagement they are seeing. Informed Delivery: 10.1 million registered users, 8.74 million households, 5.46 million enabled users. 2,673 campaigns created, 574 brands represented, 67% average open rate. Since the National Postal Forum (NPF) informed delivery has grown 24k daily users, 99% opt in for e- mails rates, 95% user retention rate. There has been 423 campaigns since NPF with 127 Brands participating. Platform changes coming in 2018: One user with multiple addresses Personalized campaigns, reporting on individual transactions on a per piece basis Package campaigns (enables mailers to include interactive ride-along content for packages) USPS had an Informed Delivery Solution Studio at NPF 200 companies visited, 423 campaigns subsequently submitted for rich content on ID, 127 brands represented. Videos including officer led NPF Sessions are available uspsdelivers.com (June 29) and on YouTube USPS/TV. Jakki s Open Session Presentation link: David Williams USPS COO Service Performance: After sub-par performance in Q1-2, due mainly to unexpected storm activity, USPS service performance normalized: First-Class 93.58% (vs % in Q1-2) Marketing Mail 91.07% (vs % Q1-2) Periodicals 87.28% (vs % Q1-2) Dynamic Route Optimization (DRO): Driver shortage and impact of electronic logging is emphasizing the need for DRO.

3 Currently USPS has manually created routes, same route each day, same frequency, and excess capacity is created. In the future routes will be optimized, routes will be dynamically created. Plan to get to all DRO by end of CY Each mile costs USPS over $2 to service, to get an idea of the savings possible. This is outsourced transportation. Goal is to get to 200 sites, to reduce weekly miles by 12.5% and over 50 million miles (could be $100 Million a year in savings). In the expanded pilots, over 3 million miles saved 12.3% miles reduced with a max of 38%. Automatic Guided Vehicles (AGV): AGV are being tested within the facilities. Two types of guidance, vision system and magnetic track. First production facility in Queens April Planned installations Richmond (July 2018) and Portland (October). National program under development. Peak Planning: Additional flexible hiring, match equipment needs to volume forecast, identify capacity delivery units. Expanded drop times. Maximize vehicle use (hours per day), improve and expand current technology for parcel routing and loading of vehicles, expand use of parcel lockers (reduce failed first attempt at delivery). USPS has implemented a retail location at Tysons Corner VA, as an entirely self-service location. 24/7 access looking at the customer experience, this could be part of the retail of the future.

4 New equipment for Fall: New USPS facilities coming online each will consolidate multiple facilities Portland Facility Operations start this week in new ~800,000+ sq. ft. facility, which combines three facilities into one Facility will feature Automated Guided Vehicles (see above), Enhanced Package Processing System (see above only one in the network to date), which will replace at least 4 Automated Parcel & Bundle Sorters Nashville Facility Same approach as Portland put multiple facilities under one roof to reduce footprint, use robotics, state of art sortation, drive efficiency, reduce handlings in the metro area Outside facility done end of July 2018, fully completed Mach 2019 Q. With DRO how do we ensure we don t lose cycle time and service? Service will not be impacted, software factors in the service needs. Q. How does facility help reduce labor? Labor is down 15k in FTE this year so far. Dave Williams Open Session Presentation: Trish Witkowski President Fold Factory (non USPS Industry Guest) Print is an opportunity like never before. Examples of mailings.

5 Jim Wilson USPS Director, Addressing and Geospatial Technology Change of Address Security: Change of Address (COA) support group in Memphis, TN established in 2004 Responds to and investigates COA-related questions from customers, Post Offices, and US Postal Inspection Services. Requests range from Where s my mail to reports of suspicious COA activity In FY17: 36.8M changes of address processed 46.2K COA related contacts handled by COA support 92.3% resolved as valid after discussed with customer Remainder treated as unauthorized COA and directed to US Postal Inspection Service for investigation Only 0.010% of all changes of address filed in FY17 were considered by customers to not be valid Existing security measures: Mover s Guide Online identity verification using credit card Move validation letter Change-of-address suspicious pattern analytics USPS COA Watch list to monitor addresses at risk Enhancement Security Initiatives: USPS cross-functional workgroups working to enhance existing security, COA validation procedures and fraud prevention methods Additional precautions implemented Further pattern analytics Business Partner addresses added to the COA watch list USPS Business Alliance alerted if COA detected for local review Activities in progress Demographic analysis, mail volume fluctuation, etc.

6 Improve timeliness of COA entry / MVL production Additional security measures considered include Requirement for Business COA to use Mover s Guide Online Minimum lead-time (example: 30 days prior to move date) Informed Delivery Addressing update: Issue: address records currently coded in the Address Management System database that share the same 11- digit delivery point are ineligible for participation in the Informed Delivery program Objective: resolve 11-digit conflicts to allow more address records to become eligible Option 1: convert records to high-rise; uniquely assign ZIP + four to addresses with colliding delivery points. Potential 96% of the collisions can be corrected using this method Option 2: create derivative linkage table similar to LACSlink that assigns a unique 11-digit delivery point code to addresses with delivery point conflicts Records removed from exclusion file The Exclusion File is used to determine conflicting addresses that can t participate in Informed Delivery. Initially it contained over 49M address An effort was made to reduce the number of records in it to increase eligibility for Informed Delivery All military APO/FPO records not flagged as firm or business removed as of February 12. This was 12M addresses. Nearly 20M No-Stat records removed Jim s Open Session Presentation:

7 Day 2 Focus Sessions Focus Session - Enterprise Analytics & Data Usage Packages Isaac Cronkhite 2018 PTR Release Schedule See slide in presentation link below IMPB Compliance Adhoc reports are still available. IMPB Quality is running well across industry- continues to improve %, 96.75%, 99.56% for AQ, MQ and BQ. 6.03% of addresses still don t DP validate.

8 1.35% of records have an entry facility mismatch to what s in the manifest. John Medeiros mentioned that there are a lot of false positives, there are exceptions that are permissible. John will send the list of ZIPs to Steve D and Juliaann. Applies to DDUs and only uses 3 digit comparisons. E.G. there are 112 zips serviced by 110 DDUs in NYC. Also a request to watch for locations that have incorrect scanner set-up. New tools (and IMPB Dashboard) in the works to view compliance on an interactive Map and slice by Mailer, Mail Class, etc. Question from the Industry on how the data would or might be made available to a child MID? E.g., a customer of a consolidator might want to see their data. USPS might consider this in the package Platform. WG 185 took a look at Permit Customer and class of mail compliance. Majority of shippers that exceed AQ threshold of 89% mailed less than 100 items 5/1 to 5/31/18 (1,148), 328 mailed less than 500, almost all did less than 10K.

9 Shipment Acceptance Trying to differentiate between customers with highly reliable physical to logical manifest relationship to change the scan type. Current language Package Acceptance Pending and might have language of Shipment Accepted. Container unload Scan New logic will be introduced to treat the first U1 scan event from the 99M as a possession scan on which to base the EDD (Expected Delivery Date) for packages in a container without a mailpiece scan, which will be displayed on USPS tracking page. No date announced. Delivery Delay DX Scan event Update the Delivery Daley (DX) scan event language to enhance the tracking experience. Propose items like Awaiting Delivery Scan or Anticipated Delivery Scan with additional description language. Currently system waits 14 hours to generate the DX event, USPS may extend that. Accurate Addressing Campaign USPS working on cleaning up addresses that in their system cross-state or city lines. USPS shared some examples and the challenges that can exist using government services or voting. There are folks that live in one city, with delivery address that is part of another city, 6,300 addresses are even delivered across state lines. New DPV codes See image in presentation. N,S, and D would result in AQ IMPB compliance error. New DPV codes:

10 CASS Cycle O PIT Meeting held 5/31. New Military designator OMC and UMP. Confirmation and standardization of PO Box Street Address (PBSA), CMRA, and addresses with a primary number with a trailing alpha. Enhanced identification of PO Box only delivery zip codes and matching of R777 phantom routes. Expanded no stat reason codes, if a Y is received on DPV NO Stat table, the N-State Reason code must be correctly returned. DPV Reason Codes Updates: o o o o Y DPV Confirmed N Failed to DPV Confirm Primary Number Missing or invalid (IMpb AQ failure) D Confirmed for primary only, secondary was required but it s missing (IMpb AQ failure) S Address had a secondary, primary requires secondary, but yours doesn t match USPS data (IMpb AQ failure)

11 o P (New) You gave me a secondary, that wasn t required. (e.g. 512 Main St Apt A matched to 512 Main St, Apt A not required) o T (New) Primary confirmed if drop trailing alpha (e.g. 512A matched as 512 without the A) o R (New) Confirmed but USPS doesn t deliver here, R777 Enterprise Analytics and Data Usage: Presentation:

12 Focus Session - Payment & Acceptance, Education Packages - Pritha Mehra Remove/Transfer Mailer IDs: Picture from presentation. Question from the group: how long will a delinked MID be held and not put back into the pool to be reused? USPS took an action item to document the approach and time period. Pritha discussed the approach to assign and use MIDs in the Package Platform. Would use the portal to manage MIDs and how the process will manage delinked MIDs. Discussed option to use an API type approach. Action item from the USPS would come back to the team with a suggested approach to the design of the Portal approach first. Would share with Workgroup 184. Unused Label Refund: Below is the refund process.

13 Currently in testing and below is a list if the Defects.

14 Last item on the list above has an expected deploy date July Goal to be live Aug 1, 2018 with all bugs fixed. Mailing/Shipping Solutions Desk Looking to have a centralized help desk for support.

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16 See link to slides below for additional details and roll out schedule. Business Customer Gateway Screen show below of design.

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18 See presentation link below for additional information. Pritha mentioned that she is looking to have the Platform allow trust and debit accounts. Pritha asked the team what the industry would like to see on the landing page? Action item from the USPS to take it to the Package Council. Question: can this be widget based? Yes, that is the goal to have it be widget based for a drag and drop. Pritha wanted feedback from the industry on the types of items that could be widgets. Question: can we have customized views by user role that might be defaulted. Payment and Acceptance, and Education: Presentation:

19 Focus Session Emerging Technology & Innovation Packages Gary Reblin Steve Monteith and Gary Reblin were not available. USPS Played videos from NPF. Karen Key presented on coming Shipping Products Changes: Adult Signature USPS is working to include an option for 18 years of age or older, in addition to 21 or older. New STC and New Human Readable. May not be available with all combos of services. Pharmaceuticals companies have a need for this option. Price would be same. Bulk Proof of Delivery Delivery name and address to be included in the POD Letter targeted July 15 th. IMD Full Acceptance Can do full acceptance at manual sites from the very beginning. Before you would only see events on 1 st equipment scan. As of June 9 th, will be deployed at all manual site. True Start the Clock. Mapping Group E PO Boxes to Street Addresses. 1.3 million are in use today in lieu of street delivery. Will reduce UAA. Have linkage on 350K addresses but rest still need to be done. Some orders don t allow PO Box as ship to address, this will allow packages to be reassigned to the Group E PO Box. There will be a street address on the label (undeliverable), but this will redirect the delivery to the Group E PO Box. A letter will be sent to affected consumers. PME Label will go from 3ply to singe ply. QR code on back will prepopulate a tracking search. Form 11-B/11-F. PS Form 4004-SP and PS Form 4004-SP C for USPS Packaging supply. Min $250K in annualized revenue minimum to get customized Cobranded packaging. COMING SOON Automate form PS Form 3801, Standing Delivery Order. Redelivery Apps. USPS has 3, merging to 1. By Jan Redelivery to Parcel Lockers. USPS has 27 GoPost and 99 Keyless Parcel lockers across the country. Changing their App in Jan Will be first option listed when you request redelivery. QR Code 1. Return Labels & Applications (to request Pickup) Expedited Packaging Supplies (to request Pickup)

20 3. Collection Box (to run the PO Locator tell you the hours, directions, etc.) ID Verification trough scanning a 2D barcode on Government issued photo ID IMD Full Acceptance See image below Mapping Group E PO Boxes (No Fee)

21 USPS is on the process of linking these Street addresses to the Group E PO Boxes. The USPS have linked 350k of the 1.3million. Goal to link all. When package arrives at the Unit, the USPS scanner will display a

22 message/audible that the package will be delivered to the PO Box and a new label for the delivery to the PO Box. Tracking will have no changes. Priority Mail Express Label changes See link to slides below Forms for Expedited supplies Informed Delivery: See link to slides below Bob Dixon spoke to provide an update on ID. USPS recently integrated Informed Delivery into their Internet COA filing page, which drives sign up. Largest week recently over 235k people signed up. 8.8M households registered. 5.65M enabled. opens is 67%, season dips like last year for summer. 6.9% is National Saturation of Eligible deliveries. Showed a map of penetration levels across the country. Retail Trade segment is seeing 11.05% click through rate, the others are seeing 4 to 6%. A good call to action is a real winner. Starting the Technical Design for support of Packages in ID campaigns (ride along content for fall). Not a photo of package, but if they have tracking data they will add an image you provide and links as is done for mail. Bob is looking for volunteers to work with to test. Not looking to roll out till after the holidays. He s not sure what if anything will be needed in SSF.

23 Product Management Update from Jay Smith

24 Optional SCF Presort and Entry CSR-348 (DMM ) implemented March 2018 The Postal service has implemented an optional SCF preparation level that will allow mailers to presort and dropship machinable parcels to an eligible SCF. This will be allowed only after the mailer has completed a full 5-digit sortation to be dropped at the DDU so that only the residual pieces from that preparation will be dropped at the nearby DSCF. In addition, the current pricing and Service standards DNDC entry will remain in effect for the DSCF option. RDU Master Data Will accommodate one or a bulk upload ability. PRS RDU Master Data Tool Maintains current and potential RDU/RSCF locations for all USPS Partners. 1800/186 locations. Tool produces reports that they can send out to their PRS partners. Shows which facilities are current or possible locations for pickup.

25 Request from the industry to add the Facility ID code into the package tracking information and available on each package. USPS shared that is the goal. Also working on the ability to remove the manual letter 3801 letter. MTAC User Group 13 Below is a summary of the approach for the user group based on feedback and survey information.

26 WG 180 is sunset. Now starting up UG 13 Preparation Optimization. From Parcels perspective, will focus on: 1. Performance Improvement Opportunities 2. Training for USPS facility personnel 3. Acceptance scanning 4. Surface visibility/99m scanning visibility Looking for volunteers for each of these focus areas. Emerging Technology and Product Innovation: Presentation (From what I can tell majority of the Package Session slides are included): Focus Session - Mail Entry, Operations Packages - Robert Cintron Portland Update

27 Discussed the consolidation taking place in Portland OR. 3 facilities merging to one. Will soon go live this summer. No FSS equipment there. Will employ robotic containerization. Sort letter trays and tubs into containers. 789K square feet of space in Portland. Facility will included AGV (Automated Guided Vehicle) and Robotic Containerization System. Includes the EPPS (Enhanced Package Processing System) - capacity of 25K parcels per hour. USPS is working to figure out how to keep it fed with parcels. Working on a test in Peachtree to figure out where the parcels are, to pick them up and get them in for processing earlier. Looking at Nashville as another EPPS location. New Equipment for Fall 2018: 15 Automated Package Bundle Sorters (APBS) expanded 752 additional separations 6 Automated Packages processing Systems (APPS) systems expanded 426 additional separations 22 Automated NDC Parcel Sorter Machine (PSM) Return to Keyer upgrades 2 APBS Feed systems 14 ADUS 1 EPPS

28 2 Universal Sorters (USS) 4 NDC Flays Culling Systems 22 Automatic Tray Unsleevers Automated Guided Vehicle Systems pilot in Queens P&DC, will follow predetermined paths throughout the Plant. 20 Robotic Containerization Systems (RCS) modernized and redeployed Delivery & Customer Service Operations First Delivery Success (trying to increase the number of packages delivered on the first attempt) FDS First Delivery Success trend is positive. Trend is ~97%, YTD up 0.18%. Recent Activities 1,223 Parcel Lockers installed larger lockers (or rather larger cluster boxes) next to existing cluster boxes to accommodate packages rather than a slip put into the box and package at local post office. Will have a Delivered event rather than notice left.

29 Approx 1.1m additional packages FDS Additional target 3130 Parcel Lockers in be installed by September 30 Estimated 2.8M additional packages EDS FY19 USPS is testing Neighbor Post next gen centralized delivery. Also testing Box Lock. Decorative locked cabinet on the porch. Package is scanned, lock unlocks so package can be put it. You buy the cabinet, USPS gives you the lock. PASS Flows Question from industry: does the PASS use the Shipper Partner File or the Shipping Services File? USPS will check and follow up. Remote Forwarding System Questions on why there was an increase in Return to Sender scan. When implementing RFS the RTS scan was not made public/available. The belief is that there was no spike in the RTS but rather the scan event becoming available. RFS (Remote Forwarding System) was implemented June 2016 to Oct shared slides showing volumes Jan 17 to May 2018 May 2018 RFS Volumes: 1.019M Forwarded, 1.984M RTS, VS 669K, 832K CFS, 69K, 139K, VS 580K, 873K RFS Percentage: Forward 93.6%, RTS 93.4% VS Jan %, 48.8%

30 Mail Prep and Entry, Operations: Presentation: