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Comparison of Costs for the Distribution of New Digital Talking Book Machines (DTBMs)

Section 2 - Delivery/Shipping Costs

2.1 Proxy for USPS Free Matter Delivery Rates

The USPS will deliver new DTBMs from the Producer/Distributor to MLAs and/or readers via Free Matter standards. Free Matter is not considered part of any particular class of mail, and does not have published or otherwise promulgated rates. It is "treated as First-Class Mail for the exclusive purposes of determining appropriate standards for processing and delivery and for handling if undeliverable" according to the USPS Domestic Mail Manual.

Based upon its volume, dimensions and weight, the individual new DTBM (in carton, with battery and instructions) is considered a "Package," while an Overpack box containing 8 units is considered a “Large Package.” Unfortunately, First-Class mail delivery does not handle packages over 13 oz, so First-Class Mail cannot be used as a proxy for delivery of machines via Free Matter.

Four types of USPS delivery and associated rates are available as proxies for Free Matter delivery of DTBMs:

Express Mail - Provides overnight delivery to most areas. This type of delivery is much more rapid than Free Matter delivery, is unrepresentative, and is thus an unsuitable proxy.

Priority Mail - Provides 2-to-3 day delivery to most areas. This type of delivery, while not as rapid as Express Mail, is unrepresentative of Free Matter delivery, is more rapid, and is thus an unsuitable proxy.

Parcel Post - Provides 2-to-9 day delivery to most areas. This type of delivery, which varies with both weight and delivery distance (straight-line, measured in number of zones), is representative of the speed of Free Matter delivery, is a suitable proxy and, is likely, the best proxy.

Media Mail - Provides 2-to-9 day delivery to most areas. This type of delivery, the rate for which varies with weight but not with delivery distance, is generally representative of the speed of Free Matter delivery and is thus also a suitable proxy, although possibly not as good as Parcel Post. Media Mail rates are apparently based upon an assumed geographic distribution of demand throughout the USPS network, since all routes for a given weight are priced uniformly. However, this distribution may or may not be representative of the distribution of demand (readers) in the Free Library Program. Furthermore, there is also anecdotal evidence that Media Mail is delivered with somewhat slower speeds than Parcel Post due to delays resulting from inspections for content compliance (there are restrictions upon the contents of Media Mail), although the USPS promulgates equal delivery time estimates for Parcel Post and Media Mail for all routes.

Given the above considerations, analyses were performed using both USPS Parcel Post and Media Mail rates as bases for comparison of delivery costs under the Current and Alternative distribution methods. As noted, it is likely that Parcel Post is a better proxy than Media Mail for Free Matter.

2.2  Estimated USPS Delivery Costs

Under the Current Method of distribution, new DTBMs will be distributed by the Producer/Distributor, at NLS direction, to 57 MLAs, a listing of which is shown in Appendix 1. The listing shows the name of the operation, the NLS Code, the USPS ZIP Code, and the type of facility (Regional Library or Independent MLA), which were obtained from the NLS website, and the type of information system used, which was obtained from the NLS Network Services Section.

Under both distribution methods, new DTBMs will be allocated to MLAs (or ultimately their readers) by the Producer/Distributor based upon NLS direction. New machine allocation is based upon readership, which is calculated as the number of individuals served plus six times the number of institutions served. These allocations or quotas, calculated using FY2006 readership statistics (the most current available), are shown in Appendix 2. They range considerably, from a high of 7.35% to a low of 0.02% of production.

For calculations using a Parcel Post rate basis, the delivery distance in number of USPS zones between origin and destination ZIP Codes determines the distance component (as opposed to weight component) of price. This distance is straight-line, which the USPS determines using the location coordinates of the ZIP Codes. Appendix 3 contains a listing of the number of postal zones from the ZIP Code of the Port of Long Beach, CA (90801) to every other ZIP Code.

The most current USPS rate tables for Parcel Post delivery are shown in Appendix 4, and a similar table for Media Mail delivery is shown in Appendix 5. In both tables, the rows for the applicable weights of the individual and Overpack packages are underlined.

Appendix 6 contains a compilation of the number of delivery zones, number of delivery days, and rates for both Parcel Post and Media Mail, by MLA, relative to the location of the Producer/Distributor (i.e., the Port of Long Beach, CA). The rates were extracted from the USPS website-based "Postal Rate Calculator" rather than from the tables. There is agreement between the Calculator values and the table values for all rates except the route between Long Beach, CA and Los Angeles, CA, which is an Intra rather than Inter Bulk Mail Center (BMC) route, and is thus slightly lower than the table-based rate. It should be noted that Alaska, Hawaii, Puerto Rico, and the Virgin Islands have unpublished delivery time estimates; anecdotal evidence indicates delivery times of 2-to-5 weeks for these routes, which vary greatly.

The estimates of Producer/Distributor-to-MLA delivery costs for the Current Method, based upon Parcel Post rates, are shown in Appendix 7. It is noted that, for these analyses of delivery costs, it was not important to use integral numbers of packages (individual cartons or Overpacks) being shipped, so fractional amounts were used and rounded values are displayed in the table. Overpack boxes would be delivered from the Producer/Distributor to the MLAs, each containing eight machines in their own packaging. The total annual cost of these deliveries is estimated to be about $366,000 during a Transition Year.

The estimates of MLA-to-readers delivery costs for the Current Method, based upon Parcel Post rates, are shown in Appendix 8. Individual packages would be delivered from the MLAs to readers, who are distributed throughout the service areas of the MLAs. An examination of the geographic service areas of the 57 MLAs was performed, and each service area was categorized as to the maximum number of postal zones from the MLA in which readers lie, which is shown in the table, and ranges from 1 to 5. The assumption was then made that readers are uniformly distributed in the zones of an MLA service area. An average rate for each MLA was then derived based upon the maximum number of zones served and the assumption of a uniform distribution of readers in the zones. The total annual cost of these deliveries is estimated to be about $717,000 during a Transition Year.

Appendix 9 shows the calculation of Producer/Distributor-to-reader costs, using a Parcel Post basis, for the Alternative Method of distribution. In this method, new DTBMs would be sent directly from the Producer/Distributor to readers all over the US. As a simplifying approximation, it was assumed that all readers are co-located with their MLAs, e.g., all Oregon readers were assumed to be located in Salem, OR. For locations over 1,800 miles distant from Long Beach, CA, this is actually not an approximation since Zone 8 is the maximum delivery zone and any distance over 1,800 miles does not affect the rate. The total annual cost of these deliveries is estimated to be about $1,019,000 during a Transition Year.

A comparison of total USPS delivery costs, using the Parcel Post rate as a proxy for Free Matter delivery of new DTBMs, is shown in Appendix 10. Estimates for Transition years are shown separately from those for Maintenance years, 5-year totals are shown for each of these categories, as are the 10-year total delivery cost estimates. It is estimated that the Current Method will cost the USPS approximately $405,000 more than the Alternative Method over the 10-year planning horizon, based upon Parcel Post delivery costs as proxies for Free Matter costs.

In a manner very similar to that presented for the Parcel Post-based analysis, results of the Media Mail-based analysis of USPS Free Matter delivery of new DTBMs are shown in Appendix 11 (Producer/Distributor-to-MLA delivery costs), Appendix 12 (MLA-to-reader delivery costs), Appendix 13 (Producer/Distributor-to-reader delivery costs), and Appendix 14 (comparison of Current and Alternative methods total delivery costs). It is estimated that the Current Method will cost the USPS approximately $1,028,000 more than the Alternative Method over the 10-year planning horizon, based upon Media Mail delivery costs as proxies for Free Matter costs.


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Posted on 2007-09-27