A program is being designed to transform material handling systems in many larger processing facilities to better align processing capacity to the needs of the current and future processing network. Implementation is planned for 2006 to 2008.

To support the planned network changes, deployment began for a new generation of high-speed tray sorters that will automate letter tray sortation at large plants and transportation hubs. The Postal Service also worked on the development of new equipment to automate the unloading of trays from mail transport equipment.

During 2005 installation began on a system to facilitate the safe and efficient management of powered industrial vehicles, such as forklifts and tuggers. Capital funding has been approved to support an additional 35 to 40 sites above the 22 created in 2005.

5. Support Systems

The Postal Service continues to focus on improving the efficiency and effectiveness of critical transportation support systems and replacing or eliminating obsolete systems.

Transportation Optimization Planning and Scheduling (TOPS) is a system designed to plan and optimize the transportation network. TOPS will plan the movement of all mail traveling on all modes, contracted or postal, and is designed to perform both long-range and week-to-week transportation optimization planning and analysis. Approval to complete the full implementation of TOPS was received in 2005. TOPS will begin providing output to help reduce transportation costs in 2006.

Since deployment in 2001, the Surface Air Support System (SASS) has integrated scan data received from transportation suppliers with existing transportation systems and has ensured service performance accountability and accurate payment verification. With SASS, a central visibility database was created to receive assignment data from the Surface Air Management System and scan data from Postal Service facilities and from transportation suppliers. In 2005 SASS began reconciling payment for international air carriers using scans received from these suppliers to measure performance.

F. Delivery Unit Operations

Delivery operations is the Postal Service's single largest cost center, accounting for 43 percent of all expenses. Further, approximately 2 million new delivery points are added to the network each year. Table 2-3 shows the total number of delivery points at the close of 2005. A number of strategies and programs to control growth in delivery costs are described in the following sections.

1. Delivery Point Sequencing

Delivery point sequencing is the arrangement of mail in the order that deliveries are made by the carrier. Currently, 77 percent of letters are distributed to delivery routes in delivery point sequence. The Postal Service has an objective to increase this to 95 percent of letter mail by 2010 and to aggressively pursue the sequencing of flat mail. Today more than 13 thousand delivery units receive letter mail in delivery point sequence. These units account for more than 99 percent of all city routes and 78 percent of rural routes.

A. FLATS SEQUENCING SYSTEM

During 2005 the Postal Service continued evaluating and developing two alternative strategies aimed at fully automating the flat mailstream: a Flats Sequencing System (FSS) and Delivery Point Packaging (DPP).

FSS would complete the automation of flat mail by sorting it into carrier-walk sequence, similar to the process used for letter mail for over a decade. Presently, flat mail is sorted only to the zone (i.e., ZIP Code) and carrier level. This mail then must be sorted manually into delivery order by the carrier prior to beginning deliveries for that day. FSS would significantly reduce this labor intensive process for high flat-volume zones and routes.

Unlike letter mail, which is fairly uniform in size and address location, flat mail covers a broad range of sizes and has highly variable address placement. Advanced mail handling technologies must be developed, refined and/or adapted to allow for the automated sequencing of this diverse mailstream.

At year end, the prototype FSS, having successfully completed the in-plant testing requirements, was being disassembled for shipment to Indianapolis for extended field testing. This prototype system includes such advanced mail handling technologies as automatic feeding, sweeping, and container loading. If prototype field testing is successful, a production contract could be awarded in late 2006 and production deployment could begin in 2008.