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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:


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.

Mailable Items

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.

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Postal Freight

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.

Transportation Management Service Provider (TMSP) Freight

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.

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Supplier-Owned Transportation

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.

Free-On-Board (F.O.B.) Destination

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.

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Shipping Requirements

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

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

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Demurrage, Detention, and Storage

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.

Receiving and Responsibility of Shipping

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.

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Early 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)

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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.

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Other Topics Considered

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

Clauses & Provisions

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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