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Supplying Principles and Practices > USPS Supplying Practices Process Step 4: Deliver and Receive Requirements > Shipping
Shipping is the act of transporting goods and materials. Shipping is a material
management function that identifies and provides transportation analysis,
capabilities, and services. Information on shipping needs to be collected for
material accountability.
It is in the best interest of the Postal Service to control its inbound shipments
to minimize total cost of ownership (TCO). Shipping is affected by issues from
internal controls (such as the documentation required for a shipment) to
technology. Accurate information and close adherence to shipping
procedures ensure that required service levels are provided cost-effectively
to the Client. Transportation costs can contribute substantially to the cost of
the end product and are an important element in the TCO. TCO is further
defined in the Develop Preliminary Total Cost of Ownership Estimates topic of
the Conceptualize Need task of Process Step 1: Identify Needs.
The five preferred shipping methods of the Postal Service, in descending
order, are:
• Mail
• Postal freight (Postal Vehicle Service [PVS])
• Freight managed by the Postal Service Transportation
Management Service Provider (TMSP)
• Supplier-owned transportation network
• Free-on-board (f.o.b.) destination
The specific way in which materials move and the costs associated with the
shipment depend upon numerous factors, including:
• When the Postal Service takes responsibility for the shipment
• Origin and destination of shipment
• Size of order
• The characteristics of the product (e.g., weight, density, fragility,
and perishability)
• Transportation modes available to move the material (e.g., ships,
trains, planes, or trucks)
• Delivery time frame (which affects ship date) associated with the
shipment
• International concerns (e.g., manufacturing company, country
shipped from, customs, duties, tariffs, and taxes)
The Postal Service's Transportation Solution Determination Process
establishes a process for analyzing and selecting the most efficient and
effective inbound transportation solution for the Postal Service at the lowest
total cost. The Transportation Solution Determination Process flow chart
depicts the steps taken to determine the shipping solution by Postal Service
personnel from forming the requirement to the contract award.
The Supplier must deliver goods that meet the prescribed physical limitations
of the current Postal Service Domestic Mail Manual either by its own
personnel/equipment or by use of the Postal Service, unless the Contracting
Officer grants a waiver of this requirement. The reasoning for such waivers
must be documented in the contract file. In accordance with paragraph T of
Clause 4-1: General Terms and Conditions, the Supplier is responsible for
ensuring that the packing and packaging are sufficient to protect the goods
and ensure usability upon receipt. In addition, Clause 2-9: Definition of
Delivery Terms and Supplier's Responsibilities may be used to define the
shipping requirements of the contract.
The Postal Service moves mail with a combination of Postal Service vehicles
and contracted air, rail, truck, and ground services. Even though the daily
volume of the mail can be estimated, there must be sufficient excess capacity
to meet any variances and to meet service standards. This often results in
available surplus capacity that can be utilized for inbound shipments of items
purchased by the Postal Service. The Item Manager will analyze
transportation requirements and work with Network Operations Management
(NOM) to determine shipments that can potentially be moved on Postal
freight. Supply Management (SM) Operations will also be made aware of
these opportunities so that they can provide backup support during high
volume or other contingency periods. Property ownership normally transfers
to the Postal Service when it is picked up; however, other arrangements can
be established in the contract if there is a reason to have the Supplier keep
the risk.
SM Operations has established a Transportation Management Service
Provider (TMSP) to manage nonmail freight transactions, which are all
supplies, parts, and equipment used for Postal Service operations. TMSP is a
fourth-party logistics provider (4PL), which manages other logistics providers
under contract. Upon entering a move order into the TMSP's order module,
the TMSP will manage the order through all subsequent phases, including
coordination of pickup and delivery, preaudit of invoices, and carrier payment.
The TMSP is under contract to the Postal Service and responsible for
transactional performance, managing carrier performance and rates, claims
processing, and various other contracted responsibilities. Billings for these
services will be charged back to the "bill to" finance number provided by the
originating office. The Item Manager, with the support of the Purchase/SCM
Team, will analyze transportation requirements and follow the guidelines
provided by SM Operations on any shipments that potentially can move on
nonmail freight. Authorized field sites will be given access to the TMSP for
management of locally generated shipments. Property ownership normally
transfers to the Postal Service when it is accepted by the commercial carrier;
however other arrangements can be established in the contract, if there is a
reason to have the Supplier keep the risk.
Supplier-owned transportation is usually leveraged when a Supplier is in
close proximity to a Postal Service receiving location and the Supplier can
deliver the product directly to the Postal Service. This type of service is
preferable to free-on-board (f.o.b.) destination because it does not involve a
third party in handling/delivering of the product and the cost of delivery is
normally included in the standard commercial price. In a case in which the
Supplier wants to charge for this service, the costs must be analyzed against
the other transportation alternatives by the Item Manager for best value
determination. Property ownership transfers to the Postal Service upon
acceptance by the receiving site.
Delivery instructions for supplies must specify a free-on-board (f.o.b.) point,
which is determined on the basis of overall costs, including rates, delivery
terms, redirection in transit costs, and other factors. Generally, f.o.b. origin
will produce lower costs for large-scale and consolidated purchases or when
the Postal Service may benefit from determining and managing the
transportation provider. The solicitation may require the Supplier's proposal to
include both f.o.b. origin and destination prices for transportation analysis. A
transportation analysis is available from field material management
specialists or nonmail freight transportation at Headquarters.
F.o.b. origin means that the Postal Service makes the arrangements for the
pickup, transportation, and delivery to the required destination. Title passes to
the Postal Service when delivery is made to the carrier. The Supplier's risk is
limited to loss or damage prior to delivery to the carrier or caused by
improper marking or packing of the goods, while the transportation carrier is
accountable to the Postal Service for loss or damage to the shipment. This
payment for transportation services is separate from the price of the
purchased supplies.
F.o.b. destination means delivery, free of expense to the Postal Service, to a
destination or shipment base points specified in the contract. Title to the
supplies passes to the Postal Service when they arrive at the stated
destination. The Supplier pays the carrier and assumes the risk for loss or
damage until delivery to the specified destination. Under this arrangement,
freight costs are likely to be much higher because Suppliers add on a markup
and the cost of freight is hidden in the purchase price of the product.
However, some Suppliers have sufficient volume to get excellent discounts
or, more frequently, there are program-related activities such as installation
where the program-risk of transportation problems or early property transfer
are unacceptable. The Item Manager is responsible for analyzing
transportation requirements and determining the best value solution.
Decisions will be documented in the contract files.
Paragraph t of Clause 4-1: General Terms and Conditions or when included
by the Purchase/SCM Team, Clause 2-9: Definition of Delivery Terms and
Supplier's Responsibilities addresses delivery terms.
The following Supplier requirements and inbound shipment guidelines must
be followed. Suppliers must:
• Comply with all country-of-origin marking instructions and all
instructions for exports to the Postal Service
• Comply with all packaging and labeling requirements in the
related contractual documents
• Comply with the transportation routing guidelines in the contract
or agreement and any subsequent Postal Service instructions or
procedures
• Not use premium transportation unless specifically authorized by
the Postal Service
• Not declare a value or purchase additional insurance on any
shipments unless authorized by the Postal Service
The Postal Service's inbound shipments must have:
• Complete relevant shipping documentation (i.e., a bill of lading) to
establish the physical legal transfer of ownership
• Clearly marked cartons
Shipping requests are initiated by Postal Service entities and certain
suppliers. The order entry portal provided by the Postal Service TMSP is the
avenue through which shipping requests are entered. TMSP users include:
• Headquarters SM Operations staff
• Designated shipping and receiving staff at Material Distribution
Centers (MDCs) and Critical Parts Centers (CPCs)
• Material Service Center staff
• District Material Management Specialists
• Approved and trained staff at Postal Service operating entities
• Designated Supplier staff
The Postal Service monitors demurrage, detention, and storage charges to
ensure that loading and unloading procedures keep these charges to a
minimum. Demurrage and detention both refer to the delaying of
transportation equipment, by shippers or receivers, beyond specified lengths
of free loading and unloading time allowed by carriers. Carriers may impose
demurrage or detention charges for such delays. They may also impose
storage charges when they must hold shipments on their own premises
awaiting delivery or redelivery. If a delay is anticipated or temporary storage
is required, the original shipping requestor or Item Manager should be
contacted for assistance. All additional charges will be charged to the billing
finance number designated in the original request.
Suppliers are responsible for any loss or damage to the material occurring
prior to Postal Service acceptance. The Supplier is required to pack and mark
packages to be in compliance with paragraph t of Clause 4-1 or Clause 2-9,
and other contract requirements. In the absence of such specifications, the
shipment should be prepared in conformance with carrier requirements to
protect the property and ensure assessment of the lowest applicable
transportation charge.
If there is evidence that a shipment has been damaged in transit, receiving
personnel should follow the instructions included in the Receipt and
Inspection topic of the Complete Delivery task of Process Step 4: Deliver
and Receive Requirements.
The Supplier must promptly notify the Contracting Officer if it is unable to
comply with delivery dates specified in the contract. The Contracting Officer
coordinates the information and alternatives with the Client and the
Purchase/SCM Team. Following these discussions, the Contracting Officer
can:
• Accept the delays and establish a new delivery schedule. The
Contracting Officer must notify all receiving sites of the new
schedule. This acceptance would normally include some
additional considerations (price, performance, quantity, or
service) from the Supplier.
• Accept partial deliveries of completed products and reschedule
the remaining quantities. Again the Contracting Officer must notify
all receiving sites of the revisions. This acceptance would
normally include some additional considerations (price,
performance, quantity, or service) from the Supplier.
• Reject the delay and terminate the contract for default. Further
information on terminating a contract for default can be found in
the Terminate Contract topic of the Make Payment task of
Process Step 5: Measure and Manage Supply.
Clause 4-1: General Terms and Conditions addresses delay of performance
or delivery.
Early delivery can increase the storage, handling, and cash flow costs to the
Postal Service, as well as cause backups and traffic problems at loading
docks and staging problems in receiving areas. Purchase/SCM teams who
anticipate the possibility of early delivery should ensure that the contract
addresses the topic and requires the approval of the Contracting Officer
before early delivery is made. When the Contracting Officer accepts early
deliveries, he or she must notify receiving sites of the changes in delivery
schedule.
Controlling Shipping Costs
The emphasis for controlling costs should focus on compliance with the
Transportation Solution Determination Process and provide more notice and
lead time to the TMSP for transportation moves so that better planning can
occur. Proper planning and coordination can avoid most instances of
expedited or air shipments. The Perform Value Chain Mapping and Analysis
topic of the Prepare Project task of Process Step 2: Evaluate Sources aids in
obtaining these cost reduction measures. Examples of how the Item Manager
can use some factors to improve savings include:
• Streamlining shipping and receiving - opportunities for
streamlining inbound processes include:
- Managing dock operations of incoming goods, as well as
mandating delivery appointments, which reduces
dock-to-stock time
- Reducing documentation and copies of documentation and
generalizing all shipping forms
- Processing orders by a certain time of the day to take
advantage of shipping rates for multiple orders or same day
service
• Working closely with suppliers - working more closely with
suppliers can result in more accurate forecasts and provide
opportunities to assess supply chain processes for improvement
• Teaming up with the TMSP and other departments - working
with Clients to forecast when materials or products will be needed
may lead to transportation or freight cost savings
• Leveraging technology - information technology can be
leveraged to automate manual processes (e.g., order and
inventory tracking, interfacing with the TMSP)
Internal Shipping Procedures
Various equipment and supply items across commodities are stocked
internally and ordered directly through the Material Distribution Center
(MDC), the Critical Parts Center (CPC), the Express and Priority Mail Supply
Center (E&PMSC), Mail Equipment Shops (MES), and elsewhere.
Information on shipping the requisitioned equipment and supply items from
these organizations and shipping procedures may be found in
Publication 247, Supply and Equipment Catalog. Issues addressed include:
• Shipping options for ordering methods for Express Mail® and
Priority Mail® supplies
• Incorrect or incomplete shipments
• Instructions for shipments of special orders less than, greater
than, or equal to 200 pounds
• Ship dates of special orders and shipping charges (e.g., included
in the price of the items)
• Automatic shipments and special requests
Global Sourcing
Global sourcing is the purchase of goods and services from foreign countries
and requires the Postal Service to account for trade regulations, duties, and
tariffs when selecting sourcing locations. Costs related to shipping in global
sourcing include:
• Transportation costs - transportation, drayage, fuel, surcharges,
and other freight-related fees
• Inventory carrying costs - warehousing, handling, taxes,
insurance, depreciation, shrinkage, obsolescence, and other
costs associated with maintaining inventories
• Cross-border taxes, tariffs, and duty costs - often referred to as
"landed costs," which are the sum of duties, shipping, insurance,
and other fees and taxes
• Supply and operational risks - including geopolitical factors,
such as changes in country leadership, tariff and policy changes,
transit delays, and instability resulting from war, terrorism, natural
disaster, and other matters
Cost/benefit analysis should be performed to address the challenges
associated with accounting for these cost factors when selecting sourcing
locations. Cost/benefit analysis should be completed for any complex
nondomestic or domestic shipping decisions. To make an intelligent sourcing
decision, all costs for each potential location must be determined.
Develop Preliminary Total Cost of Ownership Estimates topic, Conceptualize
Need task, Process Step 1: Identify Needs
Update/Refine Total Cost of Ownership (TCO) Analysis topic, Prepare Project
task, Process Step 2: Evaluate Sources
Perform Value Chain Mapping and Analysis topic, Prepare Project task,
Process Step 2: Evaluate Sources
Receipt and Inspection topic, Complete Delivery task, Process Step 4:
Deliver and Receive Requirements
Evaluate and Analyze Actual Total Cost of Ownership (TCO) topic, Implement
Investment Recovery Plan task, Process Step 6: End of Life
Clause 4-1: General Terms and Conditions, paragraph t
Clause B-23: Guaranteed Shipping Weight
Clause 2-9: Definition of Delivery Terms and Supplier's Responsibilities
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