Mailing services represent roughly 87 percent of all revenue. It includes First-Class Mail, Periodicals, Standard Mail, Package Services (single-piece Parcel Post, Bound Printed Matter, Media Mail, and Library Mail), single-piece International Mail, and Special Services and Ancillary Services such as Delivery Confirmation, Certified Mail, and Post Office Box service.
In October 2009, the Postal Service announced that it would not increase prices for mailing services during calendar year 2010 to promote stability and continued use of mail in the face of severe economic challenges affecting the mailing industry.
First-Class Mail is a “flagship” product for a range of applications used by households and businesses. It may be used to send virtually anything up to 13 ounces that is eligible for mailing, such as cards, letters, large documents, or parcels. First-Class Mail is confidential and sealed against postal inspection except as authorized by law. Mail containing personal information — including all handwritten or typewritten material, bills, and statements — is required to be sent by First-Class Mail, Express Mail, or Priority Mail. Undeliverable-as-addressed First-Class Mail is forwarded or returned to sender without additional charge. The service standards for First-Class Mail are 1 to 3 days in the 48 contiguous states, depending on distance and level of presort.
First-Class Mail consists of six products with distinct prices and preparation requirements that meet an array of retail and commercial uses: single-piece letters/cards; presorted letters/cards; flats; parcels; international outbound single-piece; and international inbound single-piece. Single-piece (sometimes referred to as retail) requires no mailer sortation; and presort (sometimes referred to as commercial) requires mailer sortation. Prices do not vary by distance.
Single-piece is mostly used by households and small businesses for personal and business correspondence and transactions such as bill payments. No minimum number of pieces or sortation is required. Prices vary by ounce and shape (card, letter, flat, or parcel). Presorted First-Class Mail is used mostly by medium and large businesses for statements, bills, and advertising. Presort prices are lower than single-piece prices because mailings must meet certain requirements including a minimum number of pieces, accurate addressing preparation, and presorting by ZIP Code ranges to qualify for the lower prices. Prices vary by ounce, shape, and sortation level, and whether the pieces are prebarcoded and can be run on automation equipment and meet addressing standards.
First-Class Mail revenue was $34.0 billion, with a volume of 78.2 billion pieces. Revenue decreased 5.2 percent and volume fell 6.6 percent. The overall volume decline, largely in the single-piece category, continued a downward trend that started in 2002. Besides impacts from the recent economic downturn, the decline can be attributed to continued electronic diversion of bills and statements, alternate payment methods, and fewer new applications for this service.
Even with volume declines and efforts to eliminate costs, the Postal Service continued to maintain excellent First-Class Mail service. Bills and statements represent about half the volume of presorted First-Class Mail, and along with the single-piece volume of remittances for those bills, make up nearly half of total First-Class Mail volume. The Phoenix-Hecht Surveys in January and July showed an overall improvement of nearly an hour (0.8 hour) for the year in handling remittance mail. Technology, transportation, and processing improvements have reduced average processing times by more than 8 hours since 1999. The Phoenix-Hecht Survey measures in hours the time that remittance mail travels from 170 originating cities to 100 sites in 29 destination cities. Phoenix-Hecht is an independent research firm that has tracked remittance mail processing times for more than 10 years.
The Postal Service works closely with customers to simplify and streamline the preparation and barcoding of presorted mail. All sort levels for automation letters are 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 for automation letters and flats became available on November 29, 2009.
For commercial customers, the Postal Service ran a First-Class Mail Incentive program from October through December 2009. Eligible companies were offered a 20 percent postage rebate for specific qualifying presorted volumes of letters, cards, and flats mailed during that period. A qualifying volume needed to exceed a mailer’s predetermined threshold. The short-term incentive program generated 212 million pieces and $75 million top-line revenue with a $19 million net contribution.
Thirty states and the District of Columbia allow “no excuse” absentee voting by mail. The Postal Service works with election officials nationwide to assist with their efforts to expand the adoption of voting by mail. Election Mail is promoted extensively through outreach and updated support materials, including an action plan, handbooks, Web pages, and a special tag to flag containers carrying ballots.
To help simplify First-Class Mail for consumers, the concept of alternate postage payment is currently testing with Hallmark Cards, Inc. No postage stamps are necessary for customers who purchase Hallmark’s Postage Paid Greetings product — postage is included. An Intelligent Mail barcode preprinted on each envelope allows postage to be automatically deducted from Hallmark’s account as mailed cards are scanned in regular postal processing. Customers avoid the need to buy stamps, the Postal Service avoids the cost of selling them, and mailing a greeting card is easier than ever.
Standard Mail is a cost-effective bulk mail class with a large range of applications for businesses and nonprofit organizations, including advertising, fund-raising, product samples, newsletters, and catalogs. Any mailable matter weighing less than 16 ounces may be sent by Standard Mail except matter required to be sent as First-Class Mail such as bills and correspondence or publications authorized at Periodicals prices. Standard Mail may receive deferred handling and is not sealed against postal inspection. Service standards for delivery are 2 to 9 days in the 48 contiguous states, depending on distance and level of presort.
Standard Mail consists of six products. Each has a regular price and a lower nonprofit price for qualifying organizations as established under law. There are no retail single-piece prices for Standard Mail. Standard Mail prices vary by weight, shape (letter, flat, or parcel), and sortation level; whether the mail is prebarcoded and can be processed on automation equipment; and whether the mail is transported by the mailer to postal facilities closer to the final delivery addresses. Prices do not vary by distance. A Full-Service Intelligent Mail barcode incentive of 0.1 cent per piece for automation letters and flats and for basic and high-density carrier route flats became available November 29, 2009.
The pricing structure for Standard Mail is designed to meet the diverse needs and capabilities of mailers and to encourage mailers to perform additional mail preparation (workshare) that reduces Postal Service costs.
Standard Mail revenue was $17.3 billion, with 82.5 billion pieces. Standard Mail revenue decreased only 0.1 percent and volume increased 0.1 percent.
Standard Mail volume is a major contributor to overall revenue. However, the possible long-term volume shift from First-Class Mail to Standard Mail has serious financial implications because it takes roughly three Standard Mail letters to produce the same profit, or contribution, as one First-Class Mail letter.
The strategic pricing of Standard Mail has been a catalyst to the development of a robust and highly competitive direct mail industry. Direct mail enables marketers to target specific customers and measure their return on investment. Intelligent Mail has only increased the ability of marketers to capture valuable data for analysis and decision-making.
The Postal Service offered two Standard Mail incentive programs to increase volume and stimulate the use of advertising mail. The Saturation Mail Incentive Program ran from May 2009 through May 2010. Participating mailers of saturation letters and flats received a postage rebate on volumes that exceeded a predetermined threshold. The program attracted 540 applicants. The reprised Standard Mail Incentive Program (“Summer Sale”) ran from July 1 to September 30. Eligible mailers received a 30 percent postage rebate on incremental volumes that exceeded predetermined thresholds. The program attracted about 1,700 online applicants.
Periodicals is a mail class that authorized publishers use to send newspapers, magazines, and trade and scholarly journals at preferred prices, if the publications meet Periodicals privileges criteria and Postal Service approval.
Prices vary by weight, shape (letter, flat, or parcel), by distance in some cases, and sortation level; the percentage of editorial and advertising content; the number of bundles and containers in a mailing; whether the pieces can be run on automation equipment; and whether the pieces are transported to postal facilities closer to the final delivery addresses. By law, certain prices are available for authorized nonprofit and classroom publications. Periodicals consists of two products: Outside County and Within County, with several price categories and discounts designed to meet the requirements of small and large publishers. Since November 29, 2009, Periodicals mailers who adopted the Full-Service Intelligent Mail option can receive a 0.1 cent per piece incentive and may qualify for no-fee Address Change Service (ACS). The service standards for Periodicals are 1 to 9 days in the 48 contiguous states, depending on distance and level of presort.
Periodicals revenue was $1.9 billion, with a volume of 7.3 billion pieces. Total Periodicals revenue decreased 7.8 percent and volume decreased 8.0 percent. The Periodicals volume decline closely matched that of last year as other media channels, such as the Internet, continued eroding public reliance on publications for news, information, entertainment, and advertising. Pricing strategies and product innovations focus on reducing the number of postal handlings, increasing the volumes that mailers deposit closer to destination addresses, and modifying preparation requirements as technologies change.
Package Services is an economical class for sending items up to 70 lbs. (except Bound Printed Matter, which has a 15-lb. limit) not required to be sent as First-Class Mail, prepared as Customized Market Mail, or entered as Periodicals. Package Services is primarily used to ship merchandise and mail catalogs and other bound items too heavy to be sent as Standard Mail. Package Services may receive deferred handling and is not sealed against postal inspection. The service standards for all Package Services products are 2 to 8 days in the 48 contiguous states, depending on distance and level of presort.
It consists of five products with distinct prices and preparation requirements that meet an array of retail and commercial uses: Single-Piece Parcel Post, Bound Printed Matter Flats, Bound Printed Matter Parcels, Media Mail/Library Mail, and Inbound Surface Parcel Post (international).
Single-Piece Parcel Post is generally the lowest priced general shipping service for retail parcels weighing one pound or more. Bound Printed Matter, Media Mail, and Library Mail, available with single-piece and presorted prices, are content-restricted products. Bound Printed Matter may be used only for permanently bound printed materials such as catalogs and books. 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 $1.5 billion, on 658 million pieces. Revenue decreased 10.0 percent and volume decreased 10.0 percent. The volume decline reflects the impact of the overall economy on the package industry and the benefits of Priority Mail.
The Postal Service offers several additional services, generally designated as special services and ancillary services. They are purchased for a fee as a stand-alone service or as a feature that may be added to a mailing. Special services include Post Office Boxes and Postal Money Orders; ancillary services include those that provide added security (such as Registered Mail, Insured Mail, and Collect on Delivery), information about delivery (such as Certified Mail, Return Receipt, Delivery Confirmation, Signature Confirmation, and Confirm), forwarding and return of mail, and address information.
Post Office Box service is available as an alternative to free carrier delivery or general delivery. Fees vary by box size and facility location. The service generated $910 million in 2010.
Insurance covers loss or damage of a mailable article based on its actual value for domestic and international packages. 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 via usps.com can add domestic insurance to Express Mail and Priority Mail purchases; eBay customers can add insurance to Priority Mail, Express Mail, First-Class Mail, Parcel Post, and Media Mail purchases.
Merchandise Return Service (MRS) is a premier end-to-end returns solution using the Postal Service network to move packages to their destination. MRS permit holders pay the postage and any special service fees on parcels returned by the permit holder’s customers. Mailers continued to use First-Class parcels with MRS as a low-cost solution for the return of items weighing 13 ounces or less. First-Class Mail parcels represent an unmatched price for delivery anywhere in the U.S. For time-sensitive returns weighing 1 pound or more, Priority Mail continued to be a strong offering with 2 to 3-day service and enhanced visibility in transit. Merchants pay full postage for each package returned based upon weight, destination, and the level of service they select or charges can be passed to a third-party permit holder upon delivery.
