Chapter 2 Our Customers

Standard Mail

Standard Mail is bulk-entered mail that weighs less than 16 ounces. Any mailable matter may be sent as Standard Mail except matter required to be sent as First-Class Mail or copies of publications authorized to be entered at qualifying Periodicals rates. Standard Mail items typically include advertising letters, circulars, catalogs, fundraising appeals, and light-weight parcels. Standard Mail receives deferred handling. Regular Standard Mail generally includes targeted advertising or other messages based on recipient demographics such as income, previous purchases, or other characteristics. Enhanced Carrier Route (ECR) Standard Mail, with pricing based on the geographic density of the mailing, is often used to target customers within specific neighborhoods or defined geographic locations.

Nonprofit Standard Mail prices, including Nonprofit Enhanced Carrier Route prices, are available to certain categories of qualified nonprofit organizations and to political committees and state or local voting registration officials, if those organizations, committees, or officials are authorized by the Postal Service.

Standard Mail revenue in 2007 was $20.779 billion, with 103.516 billion pieces. Standard Mail revenue increased 4.5 percent and volume increased 1.0 percent compared with 2006. Total automation presort continues to be the primary contributor to this growth.

Direct mail in particular has become a major contributor to overall revenue growth for the Postal Service. In fact, total Standard Mail revenue increased 20.6 percent between 2003 and 2007, with a 14.4 percent growth in volume for the same 5-year period. Since 2005, Standard Mail volume has exceeded First-Class Mail volume. This change has implications for Postal Service finances since it takes 2.5 pieces of Standard Mail on average to achieve the same contribution provided by one piece of First-Class Mail.

Continued strong growth in retail sales and a favorable investment environment led to increases in advertising spending and spurred Standard Mail growth. In addition, Standard Mail volume growth was aided considerably by the increasing strength of direct marketing channels and surges in credit card marketing. Direct mail allows marketers to precisely target specific customers and accurately measure their return on investment.

Standard Mail pricing has been a catalyst to the emergence of a competitive direct mail industry. Various market developments have contributed to continued growth, including the Do Not Call Registry established in 2003, the Anti-Spam Act of 2003, and increased consumer expectations for targeted and personalized messaging. Direct mail has seen consistent growth in recent years, and its share of total advertising expenditures is projected to be 21 percent in calendar year 2007.

On May 14, the Postal Service introduced new pricing for Standard Mail to expand the differentials using shape along with weight to determine prices since different shapes have different processing costs. The PRC recommended prices different from postal proposals that further differentiated shape.

Package Services

Package Services is composed of Single-Piece Parcel Post, Bound Printed Matter, and Media Mail/Library Mail. These products can be used to send mailable items weighing up to 70 pounds (except Bound Printed Matter, which has a maximum weight limit of 15 pounds) not required to be sent as First-Class Mail, prepared as Customized Market Mail, or entered as Periodicals.

Single-Piece rate Parcel Post may be used by any customer to mail parcels, thick envelopes, and tubes. Parcel Post is generally the most economical postal shipping service for parcels weighing 1 pound or more.

Bound Printed Matter and Media Mail/Library Mail are contentrestricted products. Bound Printed Matter may be used only for permanently bound printed materials such as catalogs, books, and telephone directories. Media Mail and Library Mail may be used only for books, sound and video recordings, certain films and film catalogs, printed music, manuscripts, media, and other eligible items. Only qualified schools, colleges, libraries, and similar organizations may use Library Mail.

Package Service revenue in 2007 was $2.306 billion, with 1.163 billion pieces. Parcel Post revenue decreased 1.4 percent and volume decreased 4.2 percent compared with 2006. Package Service prices increased effective May 14. The increases were significant so that each sub-class would cover its attributable costs and make a contribution to institutional costs.

Special Services

The Postal Service offers a number of Special Services that can be purchased for a fee, either separately or as an added feature to a mail product. These include money orders and Post Office boxes, as well as services that provide customers additional security (such as Registered Mail and Insured Mail), information about delivery (such as Certified Mail, Return Receipt, Delivery Confirmation, Signature Confirmation, and CONFIRM), forwarding and return of mail, and address information. Although some Special Services contribute only modest revenue, as a group these services represent an important revenue source for the Postal Service, providing over $3.6 billion in revenue in 2007.

Effective with the May 14 price changes, all Insured Mail labels are now barcoded and only items valued over $200 require the recipient’s signature. Customers may purchase up to $5,000 of domestic insurance for packages at all Post Offices and up to $500 at Automated Postal Centers. Customers can purchase shipping labels on usps.com with the option to add domestic insurance to Click-N-Ship purchases. Click-N-Ship customers can add insurance to Priority Mail and Express Mail; eBay customers can add insurance to Priority Mail, Express Mail, First-Class Mail, Parcel Post, and Media Mail. Fees are the same as those at the retail counter. Online insurance coverage increased from $200 to $500. In addition, customers who purchase domestic insurance shipping labels through Click-N-Ship and eBay can now file their claims online at usps.com.

Postal Money Orders are a safe, convenient and economical alternative to sending money through the mail. They can be purchased from any Post Office or rural carrier. Specimen postal money orders were distributed to help financial institutions and law enforcement communities prevent negotiation of fraudulent postal money orders. These specimens highlight the embedded security features of the existing document and assist financial institutions in determining whether money orders presented for cashing are authentic.

Post Office box service is offered for a fee to any customer requiring an alternative to free carrier delivery or general delivery. The fee varies by box size and postal facility location. Publication 431, Post Office Box Fee Groups, was updated with the new rates effective May 14. Customers can now search online for box availability.

Premium Forwarding Service (PFS) forwards all mail from a household customer’s primary address to a temporary address via a weekly Priority Mail parcel for a minimum of two weeks and up to one year. PFS was created to meet customer demand for an alternative to temporary forwarding service. Originally launched as a 2-year experiment in August 2005, the Postal Service filed a case with the PRC in August 2007 to make PFS a permanent classification. More than 141,000 customers enrolled in PFS in 2007. Since its inception in 2005, PFS has attracted more than 245,000 customers as an affordable and efficient service.

Passports Application Acceptance

The Postal Service responded quickly to the increased demand for passports created by the passage of the Western Hemisphere Travel Initiative. Effective January 23, 2007, the law requires Americans to present a U.S. passport when traveling by air between the United States and Canada, Mexico, Central America, South America, the Caribbean, and Bermuda. The law drove a 64 percent increase in passport application revenue compared with 2006. Total 2007 passport-related revenue reached $359 million. The Postal Service now handles 65 percent of all passport applications, and plans to increase service availability in the future.