Postal Service Proposes New Approach to Shape a More Efficient Future

Reshaping Mail Allows Businesses to Reduce Costs



May 03, 2006, 01:00 ET from U.S. Postal Service

    WASHINGTON, May 3 /PRNewswire/ -- The U.S. Postal Service has unveiled
 proposed new pricing incentives that would effectively reshape the future
 of mail and provide benefits to both business customers and the Postal
 Service. The current pricing structure for postal products relies primarily
 on a weight based system. The new plan -- sent to the Postal Rate
 Commission (PRC) as part of a 2007 price adjustment proposal package --
 combines weight with shape to allow the Postal Service to better align
 prices with processing costs to ensure every type of mail covers its costs.
 Price changes would not occur before May, 2007.
     Current Postal Service prices do not distinguish between some letters,
 flats, and parcels. For example, in First-Class Mail, the current
 single-piece price is 63 cents to mail a 2-ounce letter, a 2-ounce flat,
 and a 2-ounce parcel. The new plan recognizes that each of these shapes has
 substantially different processing costs and should have different prices.
     The new pricing plan, in effect, creates an adjustable rate system by
 giving mailers the opportunity to obtain lower rates as they find ways to
 configure their mail into shapes that reduce processing costs for the
 Postal Service. For example, if the contents of a First-Class flat can be
 folded and placed in a letter-sized envelope, the mailer can reduce the
 postage by as much as 20 cents per piece. If a First-Class parcel can be
 configured as a flat, the mailer will save 36 cents.
     As the Postal Service emphasizes shape in its pricing, it also proposes
 to reduce the additional ounce rate. As mail pieces become heavier, the
 proposed price increase declines. For letters over one ounce, the new
 prices are actually lower than today's prices.
     "Our pricing proposal recognizes changes in underlying costs and market
 conditions, and includes pricing initiatives to improve efficiency, which
 helps keep rates affordable for everyone," said Postmaster General John E.
 Potter. "We will work closely with our business mailers in the coming
 months to show them how they can take advantage of the new pricing to keep
 their mailing costs as low as possible," added Potter.
     The following chart illustrates the many opportunities to mitigate
 price increases as business mailers help the Postal Service to shape a more
 efficient future:
                   Product      Current  Proposed  Potential       Proposed
     Class/Product description  price    price     modification    price with
                                                                   modification
 
     First Class   Parcel - 6                      Reconfigure
     Mail          ounces;       $1.59     $2.00   the piece as a         $1.62
                   Single                          flat
                   Piece
 
                   Large                           Reconfigure
                   envelope (a   $0.63     $0.82   the piece as a         $0.62
                   flat) - 2                       letter
                   ounces
 
     Standard Mail Parcel - 8                      Enter at the
                   ounces,                         destination
                   Basic        $0.794    $1.301   BMC                   $1.101
                   presort, no
                   dropship
 
                   Parcel - 12                     Enter at
                   ounces,                         destination
                   3/5-digit    $0.823    $0.939   DU, 5-digit
                   presort,                        presort               $0.801
                   DSCF
 
                   4-ounce                         Use flexible
                   rigid        $0.275    $0.491   packaging for         $0.291
                   automation                      automation
                   flat, DSCF
                   entry
 
                   Saturation                      Put the
                   flat, 3                         address on the
                   ounces, DAL  $0.136    $0.155   flat (no DAL)         $0.140
                   used, DDU
                   entry
 
     Address       Electronic                      Use Automated
     Correction    notification  $0.21     $0.06   (OneCode) ACS          $0.00
     Service       - First
                   Class Mail
 
                   Electronic                      Use Automated
                   notification                    (OneCode) ACS
                   - Standard    $0.21     $0.25                          $0.02
                   Mail
 
     Periodicals   8-ounce, 5-                     Co-palletize
                   digit auto,                     with another          $0.361
                   mailed in    $0.334    $0.381   magazine (1639
                   sacks (40                       per pallet)
                   per sack)
                                                   As above, but         $0.312
                                                   enter at DADC
 
     Priority Mail 10 POUND,                       Reduce package
                   1.6 CUBIC                       size by 25%
                   FOOT         $20.25    $28.75                         $24.85
                   PARCEL
                   - Zone 8
     Since 1775, the United States Postal Service and its predecessor, the
 Post Office Department, have connected friends, families, neighbors and
 businesses by mail. An independent federal agency that visits more than 144
 million homes and businesses every day, the Postal Service is the only
 service provider delivering to every address in the nation. It receives no
 taxpayer dollars for routine operations, but derives its operating revenues
 solely from the sale of postage, products and services. With annual
 revenues of $70 billion, it is the world's leading provider of mailing and
 delivery services, offering some of the most affordable postage rates in
 the world. The U.S. Postal Service delivers more than 46 percent of the
 world's mail volume -- some 212 billion letters, advertisements,
 periodicals and packages a year -- and serves seven million customers each
 day at its 37,000 retail locations nationwide.
 
 

SOURCE U.S. Postal Service
    WASHINGTON, May 3 /PRNewswire/ -- The U.S. Postal Service has unveiled
 proposed new pricing incentives that would effectively reshape the future
 of mail and provide benefits to both business customers and the Postal
 Service. The current pricing structure for postal products relies primarily
 on a weight based system. The new plan -- sent to the Postal Rate
 Commission (PRC) as part of a 2007 price adjustment proposal package --
 combines weight with shape to allow the Postal Service to better align
 prices with processing costs to ensure every type of mail covers its costs.
 Price changes would not occur before May, 2007.
     Current Postal Service prices do not distinguish between some letters,
 flats, and parcels. For example, in First-Class Mail, the current
 single-piece price is 63 cents to mail a 2-ounce letter, a 2-ounce flat,
 and a 2-ounce parcel. The new plan recognizes that each of these shapes has
 substantially different processing costs and should have different prices.
     The new pricing plan, in effect, creates an adjustable rate system by
 giving mailers the opportunity to obtain lower rates as they find ways to
 configure their mail into shapes that reduce processing costs for the
 Postal Service. For example, if the contents of a First-Class flat can be
 folded and placed in a letter-sized envelope, the mailer can reduce the
 postage by as much as 20 cents per piece. If a First-Class parcel can be
 configured as a flat, the mailer will save 36 cents.
     As the Postal Service emphasizes shape in its pricing, it also proposes
 to reduce the additional ounce rate. As mail pieces become heavier, the
 proposed price increase declines. For letters over one ounce, the new
 prices are actually lower than today's prices.
     "Our pricing proposal recognizes changes in underlying costs and market
 conditions, and includes pricing initiatives to improve efficiency, which
 helps keep rates affordable for everyone," said Postmaster General John E.
 Potter. "We will work closely with our business mailers in the coming
 months to show them how they can take advantage of the new pricing to keep
 their mailing costs as low as possible," added Potter.
     The following chart illustrates the many opportunities to mitigate
 price increases as business mailers help the Postal Service to shape a more
 efficient future:
                   Product      Current  Proposed  Potential       Proposed
     Class/Product description  price    price     modification    price with
                                                                   modification
 
     First Class   Parcel - 6                      Reconfigure
     Mail          ounces;       $1.59     $2.00   the piece as a         $1.62
                   Single                          flat
                   Piece
 
                   Large                           Reconfigure
                   envelope (a   $0.63     $0.82   the piece as a         $0.62
                   flat) - 2                       letter
                   ounces
 
     Standard Mail Parcel - 8                      Enter at the
                   ounces,                         destination
                   Basic        $0.794    $1.301   BMC                   $1.101
                   presort, no
                   dropship
 
                   Parcel - 12                     Enter at
                   ounces,                         destination
                   3/5-digit    $0.823    $0.939   DU, 5-digit
                   presort,                        presort               $0.801
                   DSCF
 
                   4-ounce                         Use flexible
                   rigid        $0.275    $0.491   packaging for         $0.291
                   automation                      automation
                   flat, DSCF
                   entry
 
                   Saturation                      Put the
                   flat, 3                         address on the
                   ounces, DAL  $0.136    $0.155   flat (no DAL)         $0.140
                   used, DDU
                   entry
 
     Address       Electronic                      Use Automated
     Correction    notification  $0.21     $0.06   (OneCode) ACS          $0.00
     Service       - First
                   Class Mail
 
                   Electronic                      Use Automated
                   notification                    (OneCode) ACS
                   - Standard    $0.21     $0.25                          $0.02
                   Mail
 
     Periodicals   8-ounce, 5-                     Co-palletize
                   digit auto,                     with another          $0.361
                   mailed in    $0.334    $0.381   magazine (1639
                   sacks (40                       per pallet)
                   per sack)
                                                   As above, but         $0.312
                                                   enter at DADC
 
     Priority Mail 10 POUND,                       Reduce package
                   1.6 CUBIC                       size by 25%
                   FOOT         $20.25    $28.75                         $24.85
                   PARCEL
                   - Zone 8
     Since 1775, the United States Postal Service and its predecessor, the
 Post Office Department, have connected friends, families, neighbors and
 businesses by mail. An independent federal agency that visits more than 144
 million homes and businesses every day, the Postal Service is the only
 service provider delivering to every address in the nation. It receives no
 taxpayer dollars for routine operations, but derives its operating revenues
 solely from the sale of postage, products and services. With annual
 revenues of $70 billion, it is the world's leading provider of mailing and
 delivery services, offering some of the most affordable postage rates in
 the world. The U.S. Postal Service delivers more than 46 percent of the
 world's mail volume -- some 212 billion letters, advertisements,
 periodicals and packages a year -- and serves seven million customers each
 day at its 37,000 retail locations nationwide.
 
 SOURCE U.S. Postal Service