2010 Comprehensive Statement on Postal Operations - USPS.com

Chapter 2: Products and Services
Product Development
The Postal Act of 2006 divided postal products and services into two
distinct categories — market dominant (also referred to as mailing
services) and competitive (also referred to as shipping services).
Different rules for each category allow the Postal Service to bring
new products and services to market more quickly, with greater
pricing flexibility.
Price changes on average for any class of mail within mailing
services may not exceed the rate of inflation based on the Consumer
Price Index (CPI) for the previous 12 months. Price changes for
shipping services must produce sufficient revenue above a price
floor that covers attributable costs and, for shipping services as a
whole, an appropriate share of institutional costs.
Mailing Services
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 <strong>2010</strong> to
promote stability and continued use of mail in the face of severe
economic challenges affecting the mailing industry.
FIRST-CLASS MAIL
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. Undeliverableas-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
<strong>2010</strong> <strong>Comprehensive</strong> <strong>Statement</strong> on Postal Operations | 9