New Postal Prices

1
New Postal Prices Baltimore PCC Super
Session March 19, 2009 Laraine B. Hope Pricing
Economist
2
Overview

• Economic environment
• Impact of regulation
• Upcoming price changes
• Full service IMb option
• Other resources for pricing info
• Questions

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
3
Challenges

• Tough economic times
• Mail volume declines
• Projected 12-15 billion piece decline FY 09
• Aggressive cost reductions
• 5.9 billion over FY 09 FY 10
• Continue to provide high levels of service

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Mailing Services 65.6 Billion FY 08 Revenue
(89 of total)
First-Class Mail 38B
Standard Mail 20.6B
31
58
4
Special Services 3.1B
4
Periodicals 2.3B
3
Package Services 1.85B
New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Regulatory Environment

• Legislation in 2006 changed how prices are
  developed PAEA
• Mailing Services (market dominant products)
  treated differently from Shipping Services
  (competitive products)
• Shipping Services pricing announced in Jan
• Mailing Services pricing notice in Feb subject to
  CPI cap

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Mailing Services

• Consumer Price Index (CPI) cap
• Annual, predictable price changes
• This years changes effective May 11th

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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CPI Cap (12 month moving average)
2009 Cap
2008 Cap
3.8
2.9
New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Change by Mail Class

• Price cap is 3.8 unused pricing authority

Product Change
First-Class 3.78
Standard 3.78
Periodicals 3.97
Package Services 3.80
Special Services 3.84
includes some (not all) unused pricing
authority
New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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First-Class Mail

• Average 3.78

Product Change
Single-Piece Letters Cards 4.62
Presort Letters Cards 3.08
Flats 3.83
Parcels 2.57
International 4.07
New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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First-Class Mail Single-Piece

• Stamp price increases 2 (4.8 )
• Forever stamps ease change
• Above average cap increase
• Unchanged
• Additional ounce price
• Nonmachinable surcharge

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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First-Class Mail Commercial

• Align auto and machinable letter
  characteristics
• Provide choices
• Optional 5-digit, 3-digit, and AADC preparation
  for auto letters
• Maintain 2.2 incentive for 5-digit
• No change in the additional-ounce prices for
  automation/presort letters, flats, and parcels

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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First-Class Mail International

• Separate prices for Canada and Mexico
• Canada75 (3)
• Mexico 79 (5)
• All other countries 98 (4)
• No change to country price groups
• Inbound rates set by UPU

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Standard Mail

• Average 3.78

Product Change
Letters 3.83
Flats 2.31
Parcels and NFMs 16.40
High Density / Saturation Letters 1.25
High Density / Saturation Flats and Parcels 2.23
Carrier Route Basic Letters, Flats, and Parcels 4.31
New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Standard Mail

• Align auto and machinable
  letter characteristics
• Provide choices
• Optional 5-digit, 3-digit, and AADC preparation
  for auto letters
• Optional AADC preparation for machinable letters
• Move Update compliance. . .

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Standard Mail Move Update

• Move Update requirements changed 11/08 with
  notice beginning in 5/07
• Implementation of the Move Update penalty for
  Standard Mail mailings has been postponed until
  January 4, 2010
• Customers who do not comply are not eligible for
  Standard Mail prices
• Penalty in FCM is to pay single-piece prices (7
  cents)
• Standard Mail price for non-compliance 7 cents
• Requirement encourages correct addresses

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Standard Mail Flats

• Lower than average price increase 2.31
• Lowered pound rate to encourage more content in
  catalogs

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Standard Mail Packages

• Machinable parcels/NFMs (six ounces and over)
• Origin entry
• BMC prices limited to pallets
• MBMC prices for other preparation
• Drop ship entry
• 5-digit prices
• BMC prices

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Standard Mail Packages

• Irregular parcels/NFMs (less than six ounces)
• 3-digit prices change to SCF
• ADC and MADC prices change to BMC and MBMC
• Origin entry
• BMC prices limited to pallets
• MBMC prices for other preparation
• Drop ship entry
• 5-digit, SCF, and BMC prices

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Standard Mail Saturation Mail

• Encourage volume growth
• Additional pieces
• More frequency
• Incentives for new volume
• 4.0 flats
• 3.7 letters
• One-year program
• Enrollment through June 11, 2009

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Periodicals

• Average 3.97

Product Change
Outside-County 3.97
In-County 3.80

• Free address correction service with full-service
  IMb

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Periodicals

• Encourage efficiency
• Piece handlings have larger cost effect
• Lower role of weight in prices
• Larger containers more cost effective
• Recognize pallet handling costs more
• With FSS, value of carrier route sortation falls
  

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Package Services

• Average 3.80

Product Change
Parcel Post (retail) 4.45
BPM Flats -2.00
BPM Parcels 2.50
Media Mail and Library Mail 7.47
New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Package Services

• Improve margin
• Lower the price of BPM flats
• Consistent with Standard Mail catalog strategy
• Simplify Parcel Post
• Remove BMC designations, Local Zone, and
  nonmachinable surcharge

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Special Services

• Average 3.84
• Certified Mail 2.80 (10)
• Return Receipt 2.30 (10)
• Annual Mailing Fees 185 (5)
• Confirm Service
• New Bronze tier for mail owners

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Full-Service Intelligent Mail

• Immediate benefits in May
• Free Address Correction Service
• Start-the-clock information
• Full-service prices (November 29)
• 0.3 less for First-Class Mail
• 0.1 less for Standard Mail, Periodicals, and
  Bound Printed Matter flats
• Same incentives for Nonprofit

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Full-Service Intelligent Mail

• Long-term benefits
• Actionable information
• Operations, marketing, and finance
• Paperless documentation
• For IMb updates and tools, go to
• http//ribbs.usps.gov

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Resources

• USPS.com/prices
• New Price List
• Downloadable price files
• Federal Register notices
• Postal Explorer (pe.usps.com)
• DMM Advisory (dmmadvisory_at_usps.com)
• PCC Insider (pccinsider_at_usps.com)
• MailPro (usps.com/mailpro)

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Questions???
New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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New Prices

• Express Mail
• Priority Mail
• Parcel Select
• Parcel Return Service
• Global Express Guaranteed
• Express Mail International
• Priority Mail International
• Airmail M-Bags

New Postal Prices - Baltimore PCC Super Session
March 19, 2009
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Periodicals Outside-County Percentage Increases
Volume per Issue
New Postal Prices - Baltimore PCC Super Session
March 19, 2009