mailing services prices mailers’ technical advisory committee february 19, 2009 maura robinson vp...
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Mailing Services Prices
Mailers’ Technical Advisory CommitteeFebruary 19, 2009
Maura RobinsonVP Pricing
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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 Mailing Services Prices – May 11, 2009
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-1.3%
-3.0%
-5.5%
-9.3%
2.2%
-1.5%
-6.4%
-3.3%-2.1%
-0.6%
2.3%2.3%
-0.1%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Challenges – Total Mail Volume
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8 Quarter Moving Average Growth Rates% SPLY
FY 06 FY 07 FY 08 FY 09
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Focus on Profitable Growth
Identify opportunities in all segments Best value in shipping Better customer experience New technologies (IMb and FSS)
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Mailing Services$65.6 Billion FY 08 Revenue (89% of total)
New Mailing Services Prices – May 11, 2009
First-Class Mail$38B
Special Services $3.1B
Standard Mail$20.6B
Periodicals $2.3B
Package Services $1.85B
58%
31%
4%4%
3%
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CPI Cap (12 month moving average)
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2008 Cap
2009 Cap
2.9%
3.8%
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First-Class Mail
Average +3.78%
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Product % Change
Single-Piece Letters & Cards 4.62
Presort Letters & Cards 3.08
Flats 3.83
Parcels 2.57
International 4.07
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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
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High margin Large customers influence large volumes Economic pressure in financial industry
Lower than average increase for letters Maintain 2.2¢ incentive for 5-D auto letters No change in additional ounce price
First-Class Mail – Commercial
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Align auto and machinable letter characteristics Provide choices
Optional preparation for auto letters Auto flats
Tray-based preparation required
First-Class Mail – Commercial
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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
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All advertising mail vulnerable Focus on growth incentives
Saturation mail Catalog prices
Provide choices Optional preparation for letters
Standard Mail parcels underperforming Move Update compliance
Standard Mail
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Case study for new approach Work with customers to identify opportunities Evaluate potential ideas
Meets customer needs? Financially sound for customers and Postal
Service? Eliminate ideas that don’t work Refine high potential opportunities
Standard Mail
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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
Evaluate versus expectations
Standard Mail – Saturation Mail
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Depend on mail for core business Retail catalogs seriously hurt by economy Reducing content (pages) may discourage sales Additional catalogs attract new customers
Lowered pound rate to encourage more content Lower than average price increase Additional opportunities?
Standard Mail – Catalogs
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Periodicals
Average +3.97%
Product % Change
Outside-County 3.97
In-County 3.80
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Financial challenges for customers and Postal Service
83 percent cost coverage Limit relative price changes Steps towards increasing efficiency
Periodicals
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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
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Periodicals – Outside-County Percentage Increases
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Volume per Issue
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Periodicals – Outside-County
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$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
< 500 500- 1,000
1,000- 2,500
2,500- 5,000
5,000- 10 K
10 K- 25 K
25 K -50 K
50 K -100 K
100 K- 250 K
250 K- 500 K
500 K- 1 MM
> 1 MM
Volume per Issue
May 2009 Increase
May 2008 Prices
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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
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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
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Full Service Intelligent Mail
Long term benefits End-to-end visibility Actionable information
– Operations, marketing, and finance Paperless documentation
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Full Service Intelligent Mail
Phase in over time Immediate benefits in May
Free Address Correction Service Start-the-clock information
Full-service prices (November 29)
0.3¢ for First-Class Mail 0.1¢ for Standard Mail and Periodicals
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Resources
USPS.com/prices New Price List Downloadable price files Federal Register notices
Postal Explorer (pe.usps.com)
DMM Advisory ([email protected])
PCC Insider ([email protected])
MailPro (usps.com/mailpro)
New Mailing Services Prices – Mail 11, 2009