Mailing services represent about 88 percent of all revenue. These services include First-Class Mail, Periodicals, Standard Mail, single–piece Parcel Post, Bound Printed Matter, Media Mail, Library Mail, single-piece International Mail, and Special Services such as Delivery Confirmation, Certified Mail, and Post Office Box service.
Implementation of the May 11 price change for mailing services proceeded smoothly. Information for customers and employees was disseminated through multiple outlets. The amount that the Postal Service may increase mailing services prices is based on the CPI–All Urban Consumers plus any unused authority from previous changes. The chart below shows the percent of price adjustment authority and price increases by class.
May 11, 2009 Price Changes
First-Class Mail includes business and personal correspondence, bills, invoices, remittances, financial statements, and advertising weighing 13 ounces or less. Matter containing personal information, partially or wholly handwritten or typewritten matter, or bills or statements of account must be mailed as First-Class Mail, unless mailed as Express Mail or Priority Mail, or otherwise exempted by the Postal Service. First-Class Mail is sealed against postal inspection and cannot be opened except as authorized. First-Class Mail that is undeliverable-as-addressed (UAA) is entitled to be returned to the sender or forwarded without additional charge.
First-Class Mail consists of six separate products with distinct price structures and preparation requirements: single-piece letters/postcards; presorted letters/postcards; flats; parcels; outbound single-piece First-Class Mail International; and inbound single-piece First-Class Mail International.
First-Class Mail revenue was $35.9 billion, with a volume of 83.8 billion pieces. First-Class Mail revenue decreased 6.0 percent and volume decreased an unprecedented 8.6 percent. The volume decline continued a downward trend that started in 2002. In addition to impacts from the downturn in the economy, this volume decline can be attributed to electronic diversion of bills and statements, alternate payment methods, and the absence of sufficient new hardcopy applications. Despite volume declines, the Postal Service continued to make important service improvements with First-Class Mail.
Bills and statements still represent about half the volume of First-Class Mail that is presorted and, along with payments, represent nearly half of total First-Class Mail volume. The Postal Service has made significant service and process improvements to help stem the decline of this mail segment. The most recent Phoenix-Hecht Survey, conducted in April and October, showed that the Postal Service overall maintained its scores in handling remittance mail in spite of aggressive postal cost reductions. The survey measures the time in hours that it takes for remittance mail to travel from 170 originating cities into approximately 100 sites in 29 destination cities. Phoenix-Hecht, an independent research firm, has tracked remittance mail processing times for more than 10 years. Technology, transportation, and mail processing enhancements have decreased nationwide processing times by more than 8 hours since 1996.
The May 11 price changes for First-Class Mail continued to improve price relationships between various categories and fostered a long-term pricing strategy that promotes automation and maintains shape-based pricing. Standards for machinable and automation First-Class Mail letters were aligned so that both price categories must now have the same physical characteristics. All sort levels for automation letters were made optional, giving mailers more flexibility and encouraging lower-volume mailers to design mail for automation prices. A Full-Service Intelligent Mail barcode incentive of 0.3 cent per-piece became available on November 29, 2009 for automation letters and flats.
Customers and the Postal Service continued to find new applications for First-Class Mail. One opportunity exists with Election Mail, including voter registration materials and absentee ballots. Twenty–eight states currently allow “no excuse” absentee voting. The Postal Service works closely with election officials nationwide to provide assistance with their efforts. Election Mail is promoted extensively through expanded outreach and new support materials, including an action plan, handbooks, Web pages, and a new tag to flag containers carrying ballots.
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 prices. Standard Mail items typically include advertising letters, circulars, catalogs, fundraising appeals, and lightweight parcels. Standard Mail receives deferred handling.
Standard Mail consists of five separate products with distinct price structures and preparation requirements: letters; flats; parcels and not flat-machinables (NFMs); high density and saturation letters; high density and saturation flats; and carrier route letters, flats, and parcels. For each product there is a regular price and a lower nonprofit price that is available only to qualifying organizations as permitted by law.
Standard Mail revenue was $17.4 billion, with 82.7 billion pieces. Standard Mail revenue decreased 15.7 percent and volume decreased 16.5 percent. The revenue decline is a direct result of economic conditions, especially in the financial sector, which led to reduced spending for direct mail advertising.
Generally, direct mail has been a major contributor to overall revenue growth. Except this year, Standard Mail volume has exceeded First-Class Mail volume every year starting in 2005. The long-term shift has implications for Postal Service finances since it currently takes 2.5 pieces of Standard Mail on average to achieve the same contribution provided by one piece of First-Class Mail.
Overall, the importance of Standard Mail has been aided considerably by the increasing strength of direct marketing channels. Direct mail allows marketers to target specific customers, measure their return on investment, and complement multichannel efforts. Standard Mail pricing has been a further 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, as a percentage of advertising spending, has seen consistent growth in recent years. Its share of total advertising expenditures is projected to be 11.9 percent in calendar year 2009.
The May 11 price change for Standard Mail Flats was lower than average to moderate the impact on catalog mailers. As with First-Class Mail, standards for machinable and automation letters were aligned and sort levels for automation letters made optional. Prices for high density/saturation products were set below the price authority while parcel prices were set higher. Drop-ship incentives were enhanced to encourage more efficient transportation and entry. A Full-Service Intelligent Mail barcode incentive of 0.1-cent–per–piece became available November 29, 2009, for automation letters and flats, and for basic and high-density carrier route flats.
May 11 was the official start date for the first Standard Mail Saturation Mail Incentive Program. The program is for mailers who mail letters or flats at saturation prices. The program gives mailers per-piece credits for annual saturation volume increases over last year (May 11, 2008 to May 10, 2009). The one-year program may be extended on a year-by-year basis. There are 495 customers registered for the program, representing 27.5 percent of all Standard Mail Saturation Mail. Anticipated incremental revenue for the first year is $50 million with $20 million in contribution.
The Postal Service implemented the Standard Mail Incentive Program, or “Summer Sale,” which ran from July 1 to September 30. Eligible customers received a 30 percent postage rebate on incremental volume that exceeded thresholds based on the mailer’s history. Service providers were not eligible. Of the 941 customers participating, 441 of those customers mailed collectively more than 950 million pieces above their assigned threshold volume.
Periodicals include magazines, newspapers, and other publications whose primary purpose is the transmission of information to an established list of subscribers or requesters. Publications must meet qualifying criteria established by law and specified in the Domestic Mail Manual. Periodicals mailed by qualifying nonprofit organizations and those mailed within their county of publication (primarily local newspapers) pay reduced prices.
Periodicals revenue was $2.0 billion, with a volume of 8.0 billion pieces. Total Periodicals revenue decreased 11.2 percent and volume decreased 7.6 percent.
The Periodicals May 11 price changes targeted reducing costs by rewarding efficient preparation and refining the relationships between the various price elements and discounts that make up the final price for mailing a publication. (Periodicals is the only mail class that did not cover its attributable costs in 2008.) Starting November 29, 2009, Periodicals mailers who adopted the IM Full-Service option receive a 0.1-cent-per-piece incentive and qualify for no-fee Address Change Service (ACS). (Free ACS became available earlier in May.) This provides added relief because Periodicals are required to use ACS and pay a fee for any address changes.
Periodicals volume has continued to decline as other media channels have increased while the number of ad pages and publication frequencies have decreased. Businesses and consumers increasingly rely on the Internet as a substitute for hardcopy publication of news, information, and entertainment. To help maintain the affordability of the Periodicals mail class, pricing and product innovations focus on reducing the number of postal handlings, increasing the entry of Periodicals closer to destination, and reviewing individual price elements.
Package Services 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.
Package Services consist of five separate products with distinct price structures and preparation requirements: Single-Piece Parcel Post; Bound Printed Matter Flats; Bound Printed Matter Parcels; Media/Library Mail; and Inbound Surface Parcel Post (international).
Single-Piece Parcel Post may be used by any customer. Parcel Post is generally the most economical shipping service for parcels weighing one pound or more. Bound Printed Matter, Media Mail, and Library Mail are content-restricted products by law. Bound Printed Matter may be used only for permanently bound printed materials such as heavy 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 Services revenue was $1.7 billion, with 730 million pieces. Package Services revenue decreased 8.8 percent and volume decreased 13.7 percent.
The May 11 price changes for Package Services were designed to improve contribution, especially from Media Mail, Library Mail, and single-piece Parcel Post, while remaining within the price cap. The overall 3.8 percent increase was well below competitors’ published ground increases of 5.9 percent. The single-piece Parcel Post price structure was simplified (by merging intra-Bulk Mail Center (BMC) and inter-BMC prices and eliminating the nonmachinable surcharge) to create a single price at each weight in each zone. This same structure is used for Priority Mail and for competitors’ products, providing ease of use and positive comparability to competition.
The Postal Service offers a number of Special Services that can be purchased separately for a fee or obtained at no charge as an added feature to a mailing or shipping service. Special Services include Post Office Boxes and money orders, 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 service), forwarding and return of mail, and address information.
For most Special Services, fees were set close to the price cap percentage and rounded to simplify transactions. A significant portion of Address Correction Service was incorporated within the design of the Intelligent Mail Full-Service option. Although some Special Services contribute only modest revenue, as a group these services represent an important revenue source, providing $2.8 billion.
The Postal Service has made it easy for customers to manage their Post Office Box accounts online.
Post Office Box service is offered for a fee to any customer requiring an alternative to free carrier delivery or general delivery. The service, which serves more than 14 million customers, generated revenue of $911.9 million, an increase of 1.7 percent. The fees vary by box size and facility location. Customers can search, select, apply, and pay for new Post Office Boxes online. Current customers can sign up online for one-time or automatic payments using their credit card. Customers can also renew their semi-annual or annual Post Office Box payments (excluding caller service boxes) at any Automated Postal Center kiosk. A campaign to boost overall Post Office Box occupancy was initiated.
All Insured Mail labels are barcoded and only items valued over $200 require the recipient’s signature. Click-N-Ship customers who purchase shipping labels on usps.com have the option to add domestic insurance to purchases. Click-N-Ship customers can add insurance to Express Mail and Priority Mail; eBay customers can add insurance to Express Mail, Priority Mail, First-Class Mail, Parcel Post, and Media Mail. Previously, only online customers who purchased insurance could file claims online. As of April, all customers can now file domestic insurance claims online (except for COD and Registered Mail), even when insurance is purchased at a retail unit. Claims filed online have since grown to constitute nearly 50 percent of all filed claims. At the same time, the Postal Service launched more streamlined, centralized customer claims processes and policies designed to decrease the average turnaround time for claims resolution and improve overall customers’ experiences. All claims are now adjudicated centrally by Accounting Services regardless of the claim amount.
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. As a proactive measure aimed at further deterring fraud, domestic and international Money Orders were redesigned. The new Money Orders include a new color scheme and additional security features. When the money order is held up to a light, repeating images of the first Postmaster General, Benjamin Franklin, can be seen, making it easier to detect counterfeits. A new holographic, multicolored security thread weaves in and out of the paper to thwart counterfeiting.
