RECEiYELl
POSTAL
“*Tr co~1!~!ls5loti
BEFORE THE
OFFICErJi l;,i S:;,TtT,$i:y
POSTAL RATE COMMISSION
WASHINGTON,
DC 20268-0001
Postal Rate and Fee Changes,
1997
DIRECT TESTIMONY OF
JOHN V. CURRIE
ON BEHALF OF
UNITED STATES POSTAL SERVICE
Docket Nlo. R97-1
Table of Contents
Autobiographical
Sketch..
........................................................................................
ii
...........
1
..........
3
..........
Ill. Additional
Costs Due to Hazardous Materials.. .......................................
A. Industry Practices and Costs ...................................................................
B. Postal Service Practices and Costs.. .......................................................
6
6
8
I. Purpose
of Testimony
................................................................................
II. Current Postal Service Regulations
for Mailable Hazardous
Materials.. ..............................................................................................
IV. Hazardous
V. Classification
Materials
Criteria..
Charges
Imposed
By Other Carriers.
....................................................
..........................
...................................
...................
VI. Proposed Surcharges,
Pricing Criteria, and Volumes Affected
A. Proposed Surcharges
and Pricing Criteria.. ....... ...................................
B. Volumes Subject to the Surcharges
and Financiial Impaci:. .................
/--‘
VII. C:onclusion
Appendix
.....................................................................
A. Volume
and Revenue
Assumptions
..................................
.............. ................................
12
14
15
15
17
18
A-l
.~_..
1
Autobiographical
Sketch
2
C..
3
My name is John V. Currie.
4
Associates,
5
consulting,
training,
6
dangerous
goods.
7
Mana!ger of Hazardous
6
Corporation,
9
as supervisor
Since 1990, I have served as President
Inc., the primary business
and auditing
services
Prior to founding
Materials
of which is the worldwide
Currie Associates,
Transportation
11
Materials
12
Transloortation
13
observed
the handling
14
including
Bulk Mail Centers
15
(P&D&),
and Associate
Council and on the Hazardous
Research
Trucking
materials
(BMCs), Processing
Offices (AOs).
ii
Associations,
Materials
and
Enforcement
of the Hazardous
Materials
Board of the National Academy
of hazardous
of
I served as Corporate
I have served as a member of the Board of Directors
Advisory
of
for the Digital Equipment
for the New York State Police Hazardous
Unit.
provision
related to the transportation
as Director of Safety for the American
10
of Currie
Committee
of the
of S’ciences.
I have
in a variety of postal facilities,
and Distribution
Centers
,---
1
I. Purpose
of Testimony
2
My testimony
3
4
surcharges
5
types of Hazardous
6
Mail, Priority Mail, or Express
7
(OMHM), generally
9
for the handling
mateiials,
the Postal Service proposal to establish
of two types of hazardous
Medical Materials
(HMM), generally
(1) specifiecl
mailed as First-Class
Mail; and (2) Other Mailable
surcharges
improve the alignment
10
the Postal Service price structure
11
of improving
recognize
Hazardous
Materials
the special costs of handling
these
of prices with costs, increase the conformity
with industry
standards,
of
and provide a means
Postal Service data on these materials.
I refer to and briefly summarize
12
materials:
mailed as surface parcels.’
The proposed
a
,.-
describes
and handling
current Postal Service regulations
13
to the acceptance
of hazardous
materials,
14
materials
subject to each of the proposed
15
overview
of the special methods
16
for handling
and transporting
17
increasingly
stringent
18
concern
about the risks these materials
19
describe
the current handling
20
by the Postal Service and discuss the various types of additional
21
Postal Service incurs due to the presence
surcharges.
and procedures
these materials.
and I specify the
I then provide an
used by private sector carriers
These methods
and costly in recent years as knowledge,
have become
awareness,
may pose have incre,ased.
environment
relaiied
and
I also
in which these items are processed
costs that the
of these items in the mail.
‘For certain materials, llmited quantities are permitted to be transported by air, in which case these
materials may also be mailed as First-Class Mail. Priority Mall. or Express Mail.
USPS-T42,
Docket R97-1, p. 1
1
Next, I review the hazardous
materials
surcharges
imposed
by private-
2
sector carriers susch as United Parcel Service and Federal Express.
Though
3
lower than these Icompetitors’
herein help
4
offset both the routine additional
5
costs of clean-up
activities
6
Finally, I evaluate
the proposed
7
the criteria in sectionss
surcharges,
the surcharges
costs associated
with such materials
that are required whenever
classifications
proposed
and the
a spill or breakage
and surcharges
with respect to
3623(c) and 3622(b) of the Postal Reorganization
USPS-T-42.
Docket R97-1, p 2
occurs.
Act.
1
II. Current
Postal
Service
Regulations
for Mailable
Hazardous
Materials
of numerous
hazard
2
The Postal Service authorizes
3
4
classes of hazardous
5
Domestiic Mail Manual
(DMM) $X021,
6
be prepared
according
to specific postal regulations
7
Accepience
of Hazardous,
a
prescrible limitations
9
prescribe
10
class.
11
Publication
12
materials
the acceptance
Restricted,
or Perishable
Hazardous
materials
Matter.
These regulations
52,
that apply to each hazarcl
to transportation
by air also appear in
in the mail are a cause of concern
14
equipment.
15
solvent cleaners,
16
and diagnostic
17
hazardous
18
commodity”
19
packaged
These risky yet mailable
specimens
materials
materials
testing.
This term applies to many hazardous
and intended
by postal facilities
materials
for personal
of a “consumer
when they are
care or household
use
indicate that while spills or leaks an?
they significantly
increase the operational
“Copies of the postal materials cited in this section are included
connection with Docket No. MC97-2
USPS-T-42,
agents!
In some cases the
may meet the 49 CFR 5171.8 definition
and rarely injurious,
of risks
include paints, inks, perfumes,
medical wastes, etiologic
bound for laboratory
in a limited quantity
because
who handle mail, and to mail processing
small aerosol dispensers,
Reports tendered
infrequent
in Publication
52 at Chapter 6.
they present to other mail, to individuals
21
must
detailed
requirements
applicable
13
20
in the
of certain hazard classes and further
and packaging
requirements
as described
C023, and CO24.’ Thesie materials
on the mailability
documentation
Additional
in mailable quantities,
Docket R97-I,
p3
in Library
Reference
costs
PCR-26 filed in
1
associated
2
Instructions
(Mlls) are distributed
3
instructions
on proper response
4
96-l
5
policies of the Postal Service on preventing
6
Action Plans and Emergency
7
exposures
a
Materials
lncid’ent Reports (Forms 1770).
9
incidental
spills and leaks involving
10
provided
11
to use it. All ernployees
12
action plans and specialized
13
response
14
EL-810-96-1
15
some state environmental
16
releases
17
Management
18
Acceptance
19
associated
20
21
witlh the collection,
and EL-810-96-2
handling,
to hazardous
in Library Reference
Response
with certain personal
of hazardous
to determine
PCR-26.
These instructions
incidents,
developing
materials,
‘HAZWOPER
CFR 1910.120)
Emergency
up spills, responding
materials
must be
equipment
to be provided
(PPE) and training
training
First Responder
Headquarters
the mailability
is required
levels of
See
by federal and
responses
to
Safety and Risk
coordinates
of hazardous
on how
requirements.
to provide appropriate
to the environment.
of
on emergency
must be trained to different
the Postal Service
to
and filing Hazardous
mailed hazardous
with Business
materials
Mail
and arly
requirements.
Over the past ten years, the Occupational
Administration
include
in the cleanup
regulations
special packaging
See EL-810-
engaged
in the HAZWOPER3
at Postal Service
and in&de
Employees
employees
materials
Management
releases.
Plans, cleaning
protective
In addition,
materials
hazardous
are required
at 15-16.
of mail.
to all Postal Service facilities
and/or injuries involving
as specified
and distribution
(OSHA), the Environmental
stands for Hazardous
Protection
Waste Operations
USPS-T-42.
Safety and Health
Agency
and Emergency
Docket R97-1, p.4
(EPA), and the
Response
(OSHA standard
29
8.1
1
International
Air Transport
Association
2
trainilng requirements
3
incre:ased costs for training,
4
there have been no significant
5
accepts for mailing.
(IATA) have institutecl
related to hazardous
equipment,
materials.
and strengthened
This has resulted in
and medical surveillance
changes
in the materials
even though
the Postal Service
6
7
Proposed
The Postal Service is proposing
a
9
,-
hazardous
materials.
The proposed
10
applies to the six categories
11
§C023.10.2a-f;
12
(c) clinical (or diagnostic)
13
other medical devices.
14
medical items that a customer
15
them for shipment
16
Publication
described
in DMM
agents, (b) etiological
(d) biological
labeling,
surc:harge
agent preparations,
products,
(e) sharps, and (If)
and quantity
requirements
for
must meet before the Postal Service will accept
52.
Other Mailable
19
a wide range of materials
20
labeling
items described
2’1
additional
and packaging
Hazardous
requirements,
restrictions
surcharge
quantities,
modes of transportation.
52.
for the domesttc shipment
of these hazardous
are in DMM §5CO21, C023, C024, and in Publication
USPS-T-42,
applies tlo
- 6.0 ancl 9.0. These include
on acceptable
and allowable
in Publication
regulations
Materials
in DMM §§CO23.1.0
with varying
detail is provided
Acceptance
materials
Medical Materials
of material currently
specimens,
for these mailable
are found in DMM ~~CO21, CO23.10.3 - 10.7, and in
those mailable
23
Hazardous
The packaging,
18
22
two surcharges
these are (a) etiologic
The proposed
17
r-
Surcharges
Docket R97-1.
p.5
52.
1
III. Additional
Costs
Due to Hazardous
Materials
2
3
4
A. Industry
Practices
and Costs
Carriers by all modes of transportation
5
operational
6
common systerns
7
consignor
a
Service to collect, transport,
9
may be different,
10
11
costs associated
have experienced
with the transportation
an increase
of hazardous
in
materials.
The
utilized by private sector carriers to move freight from a
to a consignee
may be compared
to the system used by the Postal
and deliver mail; although
the special handling
the quantity
required for hazardous
per package
materials
in either
system is quite similar.
For motor carriers,
packages
are picked up from the consignor
12
up and delivery
driver and taken to a pick-up and delivery terminal.
13
packages
14
where they are unloaded
15
bulk facility in the region nearest the consignee.
16
loaded and reloaded
17
the consignee.
16
materials
19
the packages
20
movement
21
are loaded on the vehicle,
22
communicate
23
hazardous
are then consolidated
and transported
and reloaded
on another
on a trailer destined
alre properly
and segregated
blocked,
for another
secured
quantity
and placards
are separated
of hazardous
against
of these materials
must be displayed
thle hazards carried. At each facility, packages
materials
which contain
from the main stream of other cargo and
USPS-T-42.
to
for loading must ensure that
If a sufficient
specific markings
break-
route truck for delivery
braced, and otherwise
as required.
facility
are then off-
of loading the packages
the person responsible
These
break-bulk
The packages
pick-up and delivery
In each of these instances
into the vehicle,
to a regional
by a pick-
Docket R97-1. p.6
to
,,---.
/--.
I
stored in a designated
2
transporltation.
3
and to use only approved
Employees
materials
storage area pending
are trained to exercise
The regulations
5
carriers Imust provide training
6
hazardous
materials
7
presented
by each material,
6
from exposure,
9
associatmed with their jobs, and knowledgeable
for employees
further
in this storage area
hazardous
of several federal and state authorities
who prepare,
materials.
mandate
that
handle, or transport
in order to ensure that they are aware of the hazards
familiar with the methods for protecting
able to perform specific regulatory
10
cargoes safely.
11
employees
12
hours expended
13
every three years the recurrent
The typical cost of providing
is approximately
this training
In spite of this intensive
occur during transportation
16
environmental
17
these costs, Department
16
who transport
19
the case of self-insured
20
to their operational
restoration
compliance
training,
accidental
releases
and may result in expensive
of four
or for meeting
do occasionally
clean-up
and
In order to ensure that carriers, are able ,to pay
of Transportation
these materials
these
to motor carrier
with an average
to new employees
requirement.
costs.
for handling
this type of training
training
themselves
functions
about methods
$15 per hour per employee,
for delivering
15
21
caution
tools or devices when handling
4
14
/.--
hazardous
(DOT) regulations
must provide additional
carriers, that they guarantee
require that carriers
insurance
financial
coverage,
security;
or in
this adds
costs.
To prevent dangerous
reactions
22
accidental
release, the regulations
23
hazard classes must be segregated
from occurring
in the evsnt of an
require that certain materials
USPS-T-42,
from one another
Docket R97-I
P7
of incompatible
during transportation.
1
Regulations
2
hazardous
3
including
4,
CFR s177.848
5
for each transportation
materials
mode provide specific segregation
and may also specify special handling
restrictions
on the use of mechanized
Based upon my experience,
tools.
I am aware that hazardous
constitute
app,roximately
7
However,
I also know that these materials
a
percentage
9
costs, carriers have imposed a surcharge
hazardous
requirements,
See, eg., 49
and IATA 9.3.
6
IO
handling
charts for
five percent of all materials
of a carrier’s operational
offered for transportation.
constitute
costs.
materials
a significantly
higher
In order to recoup a part of these
on commodities
that are regulated
as
materials.
11
12
B. Postal
Service
13
In-Office
Handlinq
14
Hazardous
Practices
and Costs
Procedures
Medical Material generally
15
processed
16
its packaging
17
mailstream
10
Moreover,
19
HMM pieces appear to have higher processing
20
understandabl,y
21
22
on ;automated
be designed
safety considerations
so that it is diverted
by the facer-canceler
generally
more cautious
(if not previously
thrpugh
in handling
Hazardous
Materials
the regular mailstream.
require that
to the manually-processed
culled out manually).
even relative to other items in the manually-processed
Other Nlailable
delivered
equipment;
cannot and should not be
costs because
mailstream,
employees
are
them.
are processed,
However,
distributed,
and
postal employees
are
-.
USPS-T-42,
DocketR97-1.
p.8
1
instructed
to handle as “outside”4
2
contain such materials.
3
than regular mail.
pieces all items that are labeled or known to
Outside pieces necessarily
This does not apply to all medical mailings.
4
5
specimens
not required
6
“Etiologic
7
transport.
8
are alctually processed
9
employees
10
speciimens.
Agent Preparation”
However,
are apprehensive
“Etiologic
Agent,”
labels should be placed in sacks for dispatch
and dispatched
costs
Any clinical/diagnostic
Substance,”
it appears that many medical
Due to employee
11
to bear the “Infectious
incur greater handling
or
alld
mailings that could be sacked
as outside pieces because
postal
about coming into contact with clinical or diagnostic
concerns
about these potentially
12
handling
time is increased. 5 Thanks to comprehensive
13
adherence
14
these pieces of mail are handled without
15
points.
by postal employees
to safe handling
incident
dangerous
training
procedures,
substances,
and diligent
the vast majoriiy
of
and safely reach the delivery
16
17
18
Clean-LID
costs
Of course, hazardous
19
and transportation.
20
for automated
materials
packages
When they do, high cleanup
mail handling
equipment
‘See Handbook EL-812 at 13, in LR-PCR-26.
being combined with other parcels in a sack.
result.
“Outside”
occasionally
costs and extended
downtime
The most selrious incidents
pieces
5Recenily. due to employee concerns. the Memphis BMC had to
biological materials moved through the facility.
USPS-T-42,
fail during handling
are handled
mdividually
are
rather than
m.titute special handling procedures for ail
Docket R97-1. p.9
1
systematically
reported
2
that occurred
3
Library Reference
between
using Form 1770.
October
Reports received
1991 and November
regarding
incidents
1994 are summarized
in
PCR-26.
4
5
Costs Related to Air Transportation
There has been an increase
6
hazardous
materials.
Restrictions
in pilot/airline
7
contains
8
is that the articles fail to comply with acceptance,
9
documentation,
The prime reason hazardous
and other transportation
of hazardous
transport
substances.
Governing
11
the guidelines
12
International
13
Federal
14
articles are outlined
15
denied boarding
16
aircraft or are not approved
17
airline’s FAA Certificate.
16
a given aircraft is subject to the discretion
19
are refused by the airlines
20
contact the sender, advise the customer
21
what action should be taken regarding
22
must either be returned
23.
Whether
set forth by the International
Re!gulations
returned
Organization
(49 CFR).
regulations
are identified
Association
as a substance
the final approval
of these
articles are
from transport
to be transported
via passenger
on a particular
for boarding
an item onto
of the Pilot in Command.,
Articles that
must be returned
to the AMClAMF,
of the airline’s
the item.
to sender or forwarded
whic:h must then
refusal, ancl determine
If 11is safe to do so, the item
via Domestic
the item must be dispatched
USPS-T-42,
within
(IATA),
for air transport
In many instances,
they are totally prohibited
or forwarded,
for the safe
(ICAO) and Title 49 of the Code of
Specific procedures
In addition,
labeling,
mandated
Air Transport
in 49 CFR 5§171-177.
because
articles are refused
packaging,
regulations
10
Civil Aviation
refusals to carry mail that
Docket R97-1, p.10
Surface
Mail.
to the respective
,--.
1
P&DC or BMC network for transportation
2
is recluired to notify the receiving
3
handling
of such articles.
4
Required
Traininq
materials
in the mailstream.
training
6
hazardous
7
expanded
6
the mail and respond to spill and leak incidents.
9
OSHA and the EPA.
training
curriculum
11
1. The most significant,
12
are the “Awareness”
13
training
for employees
courses mandated
Level” training
and o’ther employees
who frequently
16
hazardous
This training
17
Training
materials.
is required
are summarized
level HAZWOPER
materials
in
by
in MI EL-810~‘36overall cclsts,
First Responder
by OSHA.
15
16
who handle hazardous
This training
of
a revised and
in terms of number of people and probable
and “Operations”
The “Awareness
14
costs due to the presence
It has recently instituted
The various types and levels of training
IO
The AMC/AMF
facility of the arrival and need for special
The Postal Service incurs substantial
5
./-
to its final destinatil3n.
is required
for mail halndlers, supervisc’rs
handle packages
is provided
through
that relay contain
the Postal Service
Network system, and lasts two hours.
The “Operations
19
personnel,
20
incidental
supervisors,
spills.
Level” training
is required
for maintenance
and other persons designated
This training
requires
to manage
eight hours per employee
and custodial
and (clean up
for initial
‘1 understand that Postal Service training costs are generally not “attributeti” to individual mail
subclasses and special sew~ces. but rather are accounted for as institutional costs. Nevertheless, in the
private sector the costs of special Waning related to hazardous materials have become substantial over
the past 10 years. and I believe that these costs are one important reason that private sector cxriers
impose surcharges on such matenals, or otherwise charge higher rates for txrylng
them.
USPS-T-42,
Docket
R97-1, p 11
_1
training,
with a required
2
of people must receive a three-day
3
Technical
4
training
5
rnailability
Training
annual refresher
training
hazardous
A smaller number
course, usually conducted
C,enter in Norman, Oklahoma.
for window clerks includes
of various
course of two hours.
In addition,
at the
the standard
a module on postal regulations
related to the
materials.
6
7
8
YV. Hazardous
Materials
Charges
By Other Carriers
In order to recoup a part of the increased
9
associated
10
surcharge
11
amounts
12
carrier industry,
13
making it difficult to determine
'I4
transporting
'I 5
conducted
'16
American
17
which would be reciommended
ia
additional
19
Imposed
with handling
hazardous
on those commodities
of these surcharges
discounting
materials
Since the deregulation
transporitation
regulations
shipments.
to establish
for hazardous
Research
is currently
Conference
a unique classification
materials
to
being
of the
and rate
and would reflect these
expenses.
Of the majorr carriers that transport
hazardous
materials
in small palrcels,
20
the Postal Service is the only one that does not currently
charge extra for
21
processing
the mailstream
22
whatever
postage is required for the indicated
23
distance.
United Parcel Service imposes surcharges
these items.
The
of the motor
an average charge which might be attributed
materials
Associations
a
based on trade volume is common,
by the Nlational Motor Freight Classification
Trucking
expenses
carriers have imposed
subject to hazardous
may vary.
competitive
hazardous
materials,
operational
Hazardous
items travel through
class of mail, weight,
at
and
..-
USPS-T-42,
Docket R97-I.
p.12
of $10.00 (ground)
and
,e.,..
1
$14.00 (air) for transportation
2
Federal Express imposes surcharges
3
hazard class.
4
and labeling
5
6
7
.--
are also widely available
According
fee of $10.00 per shipment,
Airborne
Express
infectious
substances
RPS charges
placed in a Lab Pack, an outer packaging
11
Express.
DHL will not accept hazardous
14
when offered by an approved
15
Additional,
by DHL headquarters.
materials
available
materials
surcharge
Air Express
17
hazardous
materials,
Hazardous
18
specimens
are only accepted
materials
19
substances,
properly,
then
has
packaging.
required
of $0.10 per pound for
of $30 per shipment.
Diagnostic
as hazard class 6.2 infectious
even if they do not contain any such substance.
Emery Worldwide
regardless
imposes a $50.00-per-shipment
21
surcharge,
22
prepared
for air transportation.
of the size of the package.
23
surcharge
as other hazards.
Infectious
Diagnostic
USPS-T-$2.
or
are only accepted
handling
imposes a surcharge
if they are shipped
specimens
for $0.75 from Airborne
account and in pre-approved
with a minimum surcharge
of $12.00 per
unless prior authorization
charges are based upon any additional
Burlington
an additional
is packed in dry ice. Diagnostic
10
been granted
packaging
of the hazard class.
in Class 6.2 are required to be packaged
13
on the
for customer
schedule,
imposes a hazardous
9
its system.
on the Internet and in other publications.
regardless
-- $17.00 if the shipment
20
through
of $10.00 or more depending
to a current accessorial
shipment
12
materials
These carriers’ rates and requirements
8
16
,I--.
of hazardous
All packages
substances
specimens
hazardous
materials
must be
are subject to the same
not known to contain any
Docket R97-1, ~~13
1
infectious
substances
must be packaged
2
Emery Worlldwide to avoid the surcharge.
3
diagnostic
4
approved
specimens
in special packaging
approved
Emery Worldwide
only accepts
under the terms of contractual
agreements
by
with pre-
accounts.
5
6
7
V. Classific:ation
Criteria
In consultation
with postal officials,
8
surcharge
classifications
9
criteria in Section 2623(c).
imposes
I have evaluated
the proposed
for HMM and OMHM with respect to the classification
Since the mail covered
10
surcharges
additional
handling
11
and equity (criterion
12
establishment
13
costs, as compared
14
mailers of hazardous
15
such material through
16
recipient,
17
costly (criterion
18
because
19
and they provide a means of determining
20
(criterion
21
despite the fact that new surcharges
22
alternative
costs on the Postal Service, fairness
1) for the entire spectrum
of a classification
by these propos’ed
of mailers are served by the
with an associated
to the present situation
and nonhazardous
surcharge
to oiifset these
in which these costs are born by
material
the mail is of considerable
alike.
The ability to transport
value to the sender and
since for many people other options are less convenient
2). These classifications
are desirable
they permit it to recover the additional
5). The proposed
of prohibiting
classifications
will be imposed,
Docket R97-1.
wrth such mail,
of such mail more easily
may also be desirable
the mailing of such material
USPS-T-42,
to the Postal Service
costs associated
the volume
and/or more
if contrasted
(criterion
p 14
to mailers,
to the
5). Criteria 3 and
_<--
,
4 (desirability
2
not relevant to these proposals.
of classifications
with different degrees
of speed and reliability)
are
3
4
VI. Pioposed
Surcharges,
A. Proposed
Surcharges
Pricing
Criteria,
and Volumes
Affected
5
6
7
The Postal Service is proposing
8
and $1.00 per piece for OMHM.
9
evaluated
10
11
,,---
and Pricing
these proposed
Criteria
surcharges
In consultation
surcharges
of $0.50 per piece
with postal officials,
for HMM
I have
with respect to the pricing criteria in
Section 2622(b).
As described
in section
Ill(B), the handling
12
imposezs additional
13
Service has not been able to quantify
14
of the same order of magnitude
15
per workhour
16
translate
17
extra costs for routine handling
18
spills or leaks occur.
19
for similar materials
of these materials
costs on the Postal Service (criterion
of $3O,‘the
3). Although
these costs, it is my judgment
as the proposed
proposed
surcharges
surcharges.
of these materials,
that they are
Indeed, at a cost
In addition to the
there are clean-up
I would also note that the posted surcharges
costs when
of competitors
higher.
‘I understand that postal costs per workhour for typical manual operati#xs,
factors for indwct labor and non-labor costs, would be this high or higher.
USPS-T-42,
the Postal
of $0.50 and $,l 00 would
into one minute and two minutes of time respectively.
are significantly
clearly
Docket R97-1, p.15
including
“piggyback”
1
It promotes
2
offsetting
3
hazardous
4
fairness
and equity (criterion
these costs instead of spreading
a surcharge
them over the entire volume of non-.
miaterials in the mail.
The vallue of service (criterion
5
high; HMM pieces generally
6
Moreover,
7
provide considerable
8
diagnostic
9
medical materials
2) for mailing these materials
travel as First-Class,
the ability to send medical materials
tests.
convenience
The value of service provided
they generally
10
high given the convenience
and relatively
11
material.
Priority, or Express. Mail.
through
travel as surface parcels, but it is still
low cost of using the mails for such
13
materials
and on private sector providers
14
acceptable.
15
materials
16
less than a pound and paying $2.00 - $3.00 in postage.
17
surcharge
18
will occasionallly
19
surcharges
20
materials
21
of similar services
surcharge
the mail would appear to
to OMHM is less than that of
I believe that the effect of these new surcharges
The overwhelming
on mailers of such
of similar services
(criterion
4) is
majority of pieces subject to the $0.50 medical
are expected
to be clinical/diagnostic
specimens
be paid for heavier
Priority Mail pieces).
materials
effectively
weighing
The level of the HMM
has been set with these typical pieces in mind (although
for hazardous
is relatively
while lowering the total cost for many
because
12
1) to establish
the surcharge
Since these proposed
raise the cost of shipping
such
via the Postal Service, their impact, if any, on private sector providers
will presumably
be beneficial.
USPS-T42,
Docket R97-1, p 16
/--
As noted above, alternate
1
2
subject to the proposed
3
reasonable
surcharges
costs (criterion
Criterion
4
means of sending
are available
and receiving
the materials
from private sector providers
5).
6 (degree of preparation
by the mailer and its effect on reducing
5
costs to the Postal Service) does not apply to the material subject to the
6
proposed
8
schedule,
9
cultural,
10
surcharges.’
The proposed
7
at
surcharges,
are relatively
scientific
though
adding a bit of complexity
simple in structure
and informational
material subject to the proposed
(criterion
7). Criterion
value to the recipient)
to the
8 (educational,
domesnot apply to the
surcharges.
11
/-
12
B. Volumes
to the Surcharges
I am informed that, because
13
and Financial
no surcharges
materials,
the Postal Service has no precise estimate
15
materials
it currently
16
mailable
17
appears to have increased
18
have evolved
handles.
have not changed
specilnens
21
another
exist for hazardous
of the volume of such
While the types of hazardous
significantly,
the volume
materials that are
of such Imaterials in the mail
in recent years as the needs of postal customers
and as other carriers have imposed surcharges
It appears that the current volume of First-Class
20
Impact
currently
14
19
,-
Subject
clinical diagnostic
may be on the order of 10 million pieces annually,
500 thousand
pieces of Priority medical materials,
with perhaps
primarily
used
‘Indeed, the material by its nature increases Postal Service costs Any “preparation” that the mailer
by using required special packaging only serves to mitigate these cost increases
performs
USPS-T-42,
Docket
R97-1, p.17
1
needles.
See Appendix
2
been judgmentally
3
volume,
4
modest percentage
5
proposed
6
revenue
A. For OMHM, the volume subject to the zsurcharge has
assumed
to be about one-half
or 1 .l million pieces.
Because
of the total volumes
surcharges
of one percent of Parcel Post
the hazardous
materials
volumes
are a
in the affected mail classe:s, the
will not have an appreciable
effect on volume or postage
in ithose classes.
7
a
9
VII. Conclusion
The proposed
Hazardous
surcharges
10
Mailable
Materials
11
that are required
12
this material will facilitate
13
The proposed
14
tha,t has emerged
15
shippers’
for Hazardous
appropriately
Medical Materials
reflect the additional
to carry such material safely in the mailstream.
surcharges
incentives
the routine collection
care and costs
Slurcharges
private-sector
closer to the one
carriers, thereby
to burden the Postal Service with such high-cost
USPS-T-42,
for
of data on its volume and costs.
also move the postal price structure
among competitive
and Other
DocketR97-1,
p.16
reducing
mail.
1
Appeindix
A. Volume
and Revenue
Assumptions
2
3
-
From limited information
4
Business
5
“round-number”
6
surcharge.
7
First-Class
6
the $0.50 HMM surcharge
9
revenue would be $5.25 million.
about individual
Reply Mail) of hazardous
estimates
materials,
Mail and another
expected.
11
assumed
a price elasticity
12
elasticity,
and calculated
(as
the Postal Service has developed
of the volume that might be subject to the HMM
It appears that about 10,000,000
10
mailers and/or recipients
pieces are currently
500,000 pieces as Priority Mail.
had no effect on volume,
However,
carried as
If the imposition
the asso’ciated surcharge
some volume reduction
is to be
To obtain a rough estimate this effect, the Postal Service has
of -0.8, roughly equal to the Priority Mail price
the volume response
as follows:
First-Class
13
before surcharge
(000s)
Priority
14
Volume
15
Postage @ 8 oz & 5 Ibs
1.93
6.00
16
Postage
2.43
6.50
plus HMM surcharge
10,000
500
17
Price ratio
1.259
1.083
18
Volume
0.832
0.938
19
Volume
ratio (1)
after surcharge
(000s)
8,317
469
20
21
Total HMM surcharge
revenue
(000s)
22
23
24
25
26
(1) Volume
ratio = price ratio n elasticity
4.393
of
1
For materials
subject to the OMHM surcharge,
2
individual
mailers and recipients
3
volume estimlates, and for the purpose
4
has judgmentally
5
pieces, would be subject to the surcharge.’
6
surcharge
7
with HMM. some volume reduction
0
Service has assumed
9
Post, and cakulated
assumed
was insufficient
information
to construct
of revenue estimates,
even approximate
the Postal Service
that about 0.5% of Parcel Post volume,
had no effect on volume,
If the imposition
a price elasticity
However,
as
For OMHM, the Postal
of -1.0. roughly equal to that for Parcel
the volume response
as follows:
Two-pound
10
or 1.1 million
of the $1.00 OMHM
revenue would be $1 .I million.
is to be expected.
ablsut
piecesTen-pound
800
(000s)
pieces
300
11
Volum’e before surcharge
12
Postage (2)
4.54
5.87
13
Postage plus OMHM surcharge
5.54
6.87
14
Price ratio
1.220
1.170
15
Volume
0.820
0.854.
16
ratio (3)
Volumle after surcharge
(000s)
Total OMHM surcharge
revenue
656
256
17
18
(000s):
912
19
20
(2) Postage
21
surcharge
22
(3) Volume
is calculated
as Zone 3 Inter-BMC
plus non-machinable
ratio = price ratio A elasticity
23
‘Because mucl? Parcel Post volume is originated by households rather than businesses, the Postal
Service’s estlmai!e of 0.5% does not seem unreasonable,
even though It IS significantly lower than the 5%
figure for private-.sector carriers noted in section III(A).
A-2