7 Reasons the Jury Is Still Out on Flats Sequencing

It's still not clear whether the U.S. Postal Service's $1.4 billion investment in the Flats Sequencing System will pay off, according to the chairman of the Postal Regulatory Commission says.

"The full batch of 100 FSS machines has been deployed, but it still remains to be seen whether FSS will produce economic benefits," Ruth Goldway told Multichannel Merchant recently in a wide-ranging interview about USPS's future. She indicated that postal officials had provided extensive information to the PRC about "its experiences and challenges in the deployment and operation of the FSS equipment."

"These extremely complex machines have experienced many problems. Mailers have expressed frustration with mail preparation changes necessary to accommodate FSS requirements, changes in Critical Entry Times, and service degradation," she told the publication.

Mailers had hoped FSS would reduce the Postal Service's costs of handling catalogs, magazines and other flat mail. But, more than ever, USPS claims it is losing money on the two main sources of mail sorted by FSS -- Periodicals and Standard flats.

The football-field-sized machines have helped USPS reduce costs by reducing the manual handling of mail by letter carriers, clerks, and other postal workers. But for at least seven reasons, it may be many months or even years before postal officials will know whether the investment will pay off:

1. Declining Volume: The FSS system was designed for a relatively fixed volume of mail, but the machines are already serving larger-than-optimal territories because of decreases in the number of catalogs and publications being mailed. Further significant volume declines would hurt efficiency even more.
2. Start-Up Woes: Reports from the field indicate recurring problems with shredded mail and machine breakdowns, but some of these problems may dissipate after USPS gets more experience with the complex machines.
3. Wear and Tear: FSS is supposed to eliminate manual casing of flat mail, thereby enabling letter carriers to serve more addresses. But what will increases in "street time" do to maintenance costs of USPS's aging delivery fleet -- not to mention the healthcare and workers compensation costs for the carriers?
4. Peaks and Valleys: One challenge is having machines that can sort all of the mail for their designated ZIP codes during peak periods but can also operate efficiently during slow months. Many of the machines have not been through a Christmas mailing season yet.
5. Packaging: The rules governing how customers bundle and palletize flat mail were not written with FSS in mind. Implementing a different set of rules for FSS facilities could enable those operations to run more efficiently, but testing of alternative bundle and pallet standards has been limited.
6. Consolidation: The Postal Service's ambitious plan to close more than half of its 400-plus mail-processing facilities would apparently result in a higher percentage of flat mail being served by FSS, as explained in USPS Consolidation Plan Means Moving or Closing Some FSS Machines. But it's not clear whether the plan will run into Congressional delays or other roadblocks.
7. Shifting Equipment: When an FSS machine completes its shakedown, some other mail-processing equipment is freed up to be used in non-FSS facilities. But with the consolidation plans on the books, it may take years for the Postal Service to see the full benefit of moving such equipment around.

Related articles:

• Is The FSS A Boondoggle?
• USPS Speeds Up FSS Start-Ups
• The Unofficial Guide to Flats Sequencing