5. Package Services

In 2004, to support the growing customer segment of medium and small businesses, the Postal Service focused on initiatives to improve access, ease-of-use, package tracking information, price, and service.

a. Parcel Select

Parcel Select service is the Postal Service's ground, package-delivery product designed for medium-to-large shippers that transport their packages to destinating Postal Service facilities. Parcel Select service offers excellent value and service. Shippers also benefit from the inclusion of Delivery Confirmation service in the base rate. In 2004 the Postal Service improved access for Parcel Select shippers by standardizing critical entry times and early bird hours at delivery units, as well as expanding the number of offices in the early bird acceptance network. Work is progressing to finalize the Electronic Verification System, an automated payment process that will increase flexibility, product information, efficiency of operations, and the payment process for both the Postal Service and Parcel Select participating shippers.

b. Parcel Return Services

Selling merchandise to customers through the mail results in hundreds of millions of packages a year being returned by consumers. The Postal Service's vast delivery and retail access enables it to provide a convenient returns process.

As a test to serve this growing customer need the Postal Service launched Parcel Return Services in October 2003. Parcel Return Services capitalize on the success of Parcel Select Service by allowing shippers to pick up returns at the same facilities where Parcel Select packages are deposited, providing improved logistics and value. Parcel Return Services provide favorable rates due to worksharing discounts that reflect savings from reduced transportation and handling costs. The Return Bulk Mail Center model has been successful.

c. Residential Delivery Indicator

The Postal Service's Residential Delivery Indicator (RDI) has been embraced by the shipping software industry as an added value for their end-user customers. The RDI data product, in conjunction with Coding Accuracy Support System (CASS) software, identifies whether a delivery type is classified as residential or business, which helps shippers avoid ancillary surcharges imposed by some delivery providers. Sales support material has been developed to promote further integration by merchants.

d. Cost Reduction Initiatives

During 2004 there was continued emphasis on reducing costs that support Postal Service package service products. Examples of these cost-reduction efforts include: managing the expenses of packaging supplies for expedited package products, resulting in significant reduction in total and unit costs; coordinating actions to improve mailer parcel barcode quality, and formalizing, as part of an MTAC workgroup, the testing process for the machinability and readability of items mailed in soft packaging.

e. Ease-of-Use and Access Initiatives

The Postal Service improved ease-of-use and access for Postal Service shipping solutions. Actions included:

In December 2003 the Postal Service rolled out a Priority Mail Prepaid Flat-Rate Envelope which featured a $3.85 Jefferson Memorial stamp printed directly on the envelope. Customers have responded favorably to the convenience.

For additional customer convenience the Postal Service implemented an experimental Priority Mail Flat-Rate Box in two shapes with the same cubic capacity. The rate for each of the two boxes is $7.70.

A new program through which Express Mail Corporate Account customers pay for their postage by credit card, is designed to enhance service and increase financial controls.

Since its introduction in May 2002, there has been continuous volume growth in the use of Click-N-Ship service. In 2004 the number of labels printed is expected to exceed 16 million, with more than half of them printed with postage, an increase of more than 120 percent over 2003. Several new features were added to this online shipping application at www.usps.com. Customers now can create up to 10 labels at a time, view their shipping history, save up to 1,000 addresses, and purchase insurance online.

The Postal Service also offers Carrier Pickup™ Online Notification, a way for customers to notify the local office through www.usps.com of prepaid packages, including Click-N-Ship, that will be available for pickup by the carrier on the next delivery day. Customers have always been able to give prepaid packages to their carriers at the time of normal mail delivery, but online notification makes it simpler for customers to mail packages from their home or office.