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

New Postal Prices Baltimore PCC Super Session March 19, 2009 Laraine B. Hope Pricing Economist. Economic environment Impact of regulation Upcoming price changes Full service IMb option Other resources for pricing info Questions. Overview.

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

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

  2. Economic environment Impact of regulation Upcoming price changes Full service IMb option Other resources for pricing info Questions Overview New Postal Prices - Baltimore PCC Super Session March 19, 2009

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

  4. 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% 3% Periodicals $2.3B Package Services $1.85B New Postal Prices - Baltimore PCC Super Session March 19, 2009

  5. 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 Regulatory Environment New Postal Prices - Baltimore PCC Super Session March 19, 2009

  6. Consumer Price Index (CPI) cap Annual, predictable price changes This year’s changes effective May 11th Mailing Services New Postal Prices - Baltimore PCC Super Session March 19, 2009

  7. CPI Cap (12 month moving average) 2009 Cap 2008 Cap 3.8% 2.9% New Postal Prices - Baltimore PCC Super Session March 19, 2009

  8. Price cap is 3.8% + “unused pricing authority” Change by Mail Class * includes some (not all) unused pricing authority New Postal Prices - Baltimore PCC Super Session March 19, 2009

  9. Average +3.78% First-Class Mail New Postal Prices - Baltimore PCC Super Session March 19, 2009

  10. Stamp price increases 2¢ (4.8% ) Forever stamps ease change Above average cap increase Unchanged Additional ounce price Nonmachinable surcharge First-Class Mail – Single-Piece New Postal Prices - Baltimore PCC Super Session March 19, 2009

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

  12. Separate prices for Canada and Mexico Canada:75¢ (+3¢) Mexico: 79¢ (+5¢) All other countries: 98¢ (+4¢) No change to country price groups Inbound rates set by UPU First-Class Mail International New Postal Prices - Baltimore PCC Super Session March 19, 2009

  13. Average +3.78% Standard Mail New Postal Prices - Baltimore PCC Super Session March 19, 2009

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

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

  16. Lower than average price increase +2.31% Lowered pound rate to encourage more content in catalogs Standard Mail – Flats New Postal Prices - Baltimore PCC Super Session March 19, 2009

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

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

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

  20. Average +3.97% Periodicals • Free address correction service with full-service IMb New Postal Prices - Baltimore PCC Super Session March 19, 2009

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

  22. Average +3.80% Package Services New Postal Prices - Baltimore PCC Super Session March 19, 2009

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

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

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

  26. Long-term benefits Actionable information Operations, marketing, and finance Paperless documentation For IMb updates and tools, go to: http://ribbs.usps.gov Full-Service Intelligent Mail New Postal Prices - Baltimore PCC Super Session March 19, 2009

  27. Resources • USPS.com/prices • New Price List • Downloadable price files • Federal Register notices • Postal Explorer(pe.usps.com) • DMM Advisory(dmmadvisory@usps.com) • PCC Insider (pccinsider@usps.com) • MailPro(usps.com/mailpro) New Postal Prices - Baltimore PCC Super Session March 19, 2009

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

  29. 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

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

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