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Information Security Identification: Confidential
Impact of U.S. Postal Service Network Consolidation on Remittance Mail
Lex Litton, Phoenix-Hecht
Blaine Carnprobst, BNY Mellon
Three Rivers Financial Forum
April 23, 2013
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Phoenix-Hecht®
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Session Outline
Three-year plan of U.S. Postal Service changes Assessment of the overall impacts to First Class
Mail & Remittance Mail Recent news from the U.S. Postal Service Remittance processor perspective Billers’ perspective
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Mail Volume Shifting to a Less Profitable Mix
Volume in Billions of Pieces
Mail Volume Shifting to a Less Profitable Mix
Mail Processing Facility FootprintNetwork Changes
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Mail Processing Redesign
Source: USPS
Interim Delivery Stds (1-day intra-plant)Loss of 1-day
Full 8a – 4a plan
Did 46 including Pasadena.
150+ now scheduled .
5-day delivery in
2013?
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Atlanta
Phoenix-Hecht®
Impact of 5-day Delivery on Remittance
Transportation continues to run 7 days; caller delivery continues to operate 7 days
No delivery to physical addresses on Saturday (residential or business). Delivery to PO Box units.
No mail origination operations at any plant on Saturday
B2B – relatively minor impacts.
C2B – loss of volume receipt Monday – with shift toward Wednesday. First Class mail origination on Saturday was 10% of weekly volume.
Consumer confusion regarding Saturday as a mailing day because retail operations at Post Offices continue.
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CONFIDENTIAL
Trend of Average Site in Nationwide Total Float Days
99-1
99-2
00-1
00-2
01-1
01-2
02-1
02-2
03-1
03-2
04-1
04-2
05-1
05-2
06-1
06-2
07-1
07-2
08-1
08-2
09-1
09-2
10-1
10-2
11-1
11-2
12-1
12-2
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
Phoenix-Hecht Postal Survey™
Ch
an
ge
in M
ail
Ho
urs
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Trend of Average Site in Nationwide Total Float Days
National Regional Local0
10
20
30
40
50
60
Better Worse No Change
Sit
es
Source: Phoenix-Hecht Postal Survey™
Phoenix-Hecht®
CONFIDENTIAL
Average Site Regional Change in 2012-2 Postal Survey
Mail Hours
Mail Days
Availability
Total Float
Nationwide Avg. 2.9 0.13 -0.02 0.12
Regional Average 3.9 0.16 -0.01 0.15
Local Average 5.4 0.26 -0.05 0.21Source: Phoenix-Hecht Postal Survey™
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CONFIDENTIAL
Fastest Cities in Nationwide Hours (Ten versus 19 last survey sub-50)
City Hours
City Hours
Boston, MA 40.1 Baltimore, MD 50.1
Atlanta, GA 41.5 Detroit, MI 51.4
Chicago, IL 46.5 Pittsburgh, PA 51.9
Dallas, TX 46.7 Portland, OR 51.9
Louisville, KY 47.2 Kansas City, MO 52.0
Houston, TX 47.9 Milwaukee, WI 52.1
Philadelphia, PA 48.2 Denver, CO 54.1
Cincinnati, OH 49.0 Los Angeles, CA 54.2
Saint Louis, MO 49.2 Cleveland, OH 54.3
Memphis, TN 49.3 Minneapolis, MN 54.7
Phoenix, AZ 55.3Source: Phoenix-Hecht Postal Survey™
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Most Deteriorated Cities (Nationwide Mail Hours)
City Increase
San Francisco, CA 17.7Charlotte, NC 14.4Los Angeles, CA 8.4Phoenix, AZ 6.4Cleveland, OH 6.2Baltimore, MD 6.0Memphis, TN 6.0Detroit, MI 4.8Cincinnati, OH 4.4New York, NY 3.9Denver, CO 3.9Seattle, WA 3.9Pittsburgh, PA 3.2Milwaukee, WI 2.1Minneapolis, MN 2.0Dallas, TX 2.0
Source: Phoenix-Hecht Postal Survey™
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Disadvantage of Non-remittance Address versus City Average
Atlanta Chicago Dallas LA Philadelphia
Mail Hours
29.0 25.5 19.8 18.8 23.2
Mail Days 0.16 0.09 0.04 0.02 (0.05)
Availability
0.85 0.71 0.55 0.80 0.90Source: Phoenix-Hecht Postal Survey™
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Recent U.S. Postal Service News
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OPERATE IN 36 COUNTRIES AND OVER 100 MARKETS
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BNY Mellon employees
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Wealth management for individuals and families
Full range of financial operations, cash management and global payments services
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$11.6 trillion outstanding debt serviced1
$2 trillionglobal collateral serviced1,7
$1.4 trillionaverage payments processed daily1
Investment Management Investment Services
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Remittance Processor Impacts:Changes Will Continue Through 2014
Impacts will likely be gradual and will likely have “swings”
Don’t want to respond with a knee-jerk reaction Will continue keeping customers aware of
changes as we’re seeing them
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Remittance Processor Impacts:Lockbox Operation Staffing Changes
Anticipated incoming mail for each shift Assess changes over time; will need some staffing
flexibility Customer awareness
of volume “challenges” Feb 2014 change to the
shift operations
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Remittance Processor Impacts:Evaluation of Customer Daily “Deadlines”
Lockbox “Cut Off” times Deposit reporting deadlines Transmission times:
• A/R data & images
• Non-lockbox transmission sources:
− ACH, EDI & Wire
Image access commitment times Recognize that end-client systems processing
times will limit changes to transmissions
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Remittance Processor Impacts:Float Impact Projections For Clients
Estimated average mail time delays• Ongoing mail sampling, though not scientific
• Phoenix-Hecht Mail Study results
Service Level Agreement (SLA) timing impacts(ie. Processing timeline commitments)
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Remittance Processor Impacts:Consideration of 3rd Party Mail Receipt And Scanning Locations
Pros:• Opens other geographic receipt locations
Cons:• Not having an established remittance address
(e.g. does a Seattle non-remittance address perform any better than a Los Angeles remittance address?)
Information Security Identification: Confidential25
Remittance Processor Impacts:BNY Mellon’s Experiences Thus Far
Closure of Pasadena Processing & Distribution Center (P&DC)• Mail processing in LA with pickup in Pasadena
• Potential further change to pickup location
Overall network mail time observations• Impacts observed in Phoenix-Hecht 2012-2 Postal Survey
• Since October survey, mail distribution has moved a little later in Dallas
• 2013-1 Postal Survey in process
• Meetings with USPS have helped lessen some impacts, particularly Pasadena. Efforts coordinated with other processors.
• Experiences among presentation attendees (providers & billers)?
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Biller Impacts: Different responses by industry
“Open Account” bill payment (typically C2B)• Property & Casualty Insurance – buying a claim
• Credit Card Processor – late fees & interest
• Mortgage – late fees
• Utilities – late fees & possible shut-off
Transaction payments, e.g. invoices (typically B2B)• Could cause product shipment delay
• Could lead to a decline for additional orders / purchases
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Marketing electronic payment alternatives
ACH pre-authorized debit Electronic Bill Presentment & Payment Debit Cards Credit Cards Home banking payments
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Where can you get more information?
U.S. Postal Service Network Rationalization Information• http://about.usps.com/news/facility-studies/
welcome.htm
Information Security Identification: Confidential
Impact of U.S. Postal Service Network Consolidation on Remittance Mail
Lex LittonPhoenix-Hecht, Senior Vice [email protected]
Blaine CarnprobstBNY Mellon, Managing Director, [email protected]
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Phoenix-Hecht®
