1. Mario Roman Shipping Solutions Specialist 631-582-7431 Mario Roman Shipping Solutions Specialist 631-582-7431 Long Island PCC – April 18, 2012 What’s New in The Postal Corner! 1

2. Shipping Services Innovations  New! Express Mail Flat Rate Box  New! Priority Mail Regional Rate Box size C*  New! First-Class Package Services  New! Parcel Select Lightweight  New! Priority Mail Board Game Board Large Flat Rate Box  New! Package Intercept  New! Mobile Access & Scanning upgrades  New! Return Options (SBP)-Scan Base Payment  The True Cost to Fed Ex & UPS 2012 Increase What’s New In 2012? 2

3. 3 Express Mail ─ Commercial Base Prices Prices decrease on average by 3.9% Flat Rate Envelope price ─ $17.75 New! Flat Rate Box ─ $39.95 Approved payment method required

4. 4 Priority Mail ─ Commercial Base Prices Regional Rate Box –Approved payment methods required –Price based on box and zone  Regional Rate Box A  15-pound maximum, starts at $5.04  Regional Rate Box B  20-pound maximum, starts at $5.90  New! Regional Rate Box C  25-pound maximum, starts at $14.44 –New! $0.75 additional when deposited at Retail –Commercial plus mailers also qualify

5. Products that will include free Delivery Confirmation Service What’s New? Delivery Confirmation ProductsCategoryPayment Type First Class PackagesCompetitiveElectronic Parcel Select – OtherCompetitiveElectronic Parcel Select – Lightweight CompetitiveElectronic 5

6. 6 New! Parcel Select Lightweight –Formerly Standard Mail Commercial Parcels  Weighs less than one pound  Used for fulfillment  Excludes Nonprofit parcels –Prices are ounce-based and vary by presort and destination entry  Machinable and irregular pricing options –Increases 8.9% Parcel Select

7. Priority Mail Board Game Large Flat Rate Boxes Inside Dimensions: 23 11/16" x 11 3/4" x 3" Outside Dimensions: 24 1/16" x 11 7/8" x 3 1/8" Can be used for Domestic Priority Mail ($15.45) and International Priority Mail ($39.95 to Canada and Mexico; $60.95 to all other countries; 20 lb weight limit applies for international). Only $13.45 when used to send to APO/FPO addresses. 7

8. What’s New? Package Intercept Available through online customer interface or electronic file manifest Interception of: Letters, Flats and Parcels Requests made: –PC Postage vendor –Business Customer Gateway –usps.com interface New scan event Shipment can either be: –Returned to Sender –Held for pick up at Post Office –Redirected to alternate address (domestic only) 8

9. USPS.com Mobile: iPhone 3.0 Release New icon-directed home screen New services: Pickup – Schedule next-day pickup Get Supplies – Order free shipping supplies Scan –Tracking barcodes or QR Codes Mobile Access–iphone 9

10. Merchant Returns New Product Offerings 4 Reasons for Returns Returned Merchandise- The product did not meet the consumer’s expectations (i.e. wrong size or color, not satisfied with quality, wrong product shipped, etc.) or they may have simply changed their minds about the purchase. These reasons are based on consumer desires. Repairs- The product was broken or damaged Recalls- The Merchant demands for the consumer to return the product due to a manufacturing defect Recovery- The product is usually an old electronic that is either returned to either recover/recycle its useful parts 10

11. After the best consumer Returns experience is achieved the Merchant should consider its own needs as well. Some needs include… Visibility –-Reduces call center costs if the consumer can check on the delivery status of a package online –-Improves inventory logistics if the merchant knows – when a package will be returned Automated Payment Method –-Eliminates manual labor costs –-Allows for more accurate billing Detailed Reporting –-Receiving accurate billing information helps the merchant manage the budget Speedy Delivery –-Improves turn-over time of inventory –-Reduces consumer call volume Trust and Security –-Protection of assets is essential to any business Merchant’s Needs 11

12. Consumers desire that the Returns process is… Convenient-Easy to send package away Simple- Easy to understand the steps necessary to return the product Transparent- Can view the delivery status of package to ensure the merchant receives it Free or Cheap- No or little charge Fast- Package reaches the merchant in a timely manner Consumer’s Needs 12

13. USPS has responded to consumer and merchant needs with the new Merchant Returns Solution. Some of its benefits include… Lowest cost provider for small packages Unmatched consumer access Free and Easy to Use Package Tracking Easy to get Labels in the Hands of Consumers Free Package Pickup at Residence Pricing Flexibility The USPS Solution 13

14. A New Set of Returns Products USPS has introduced a rebranded set of Returns products that fit the new Returns solution First-Class™ Package Return Service Fast and affordable service for envelopes and packages weighing up to 13 oz Priority Mail® Return Service A great choice for shipping packages up to 70 pounds, offering the fastest delivery time of any return Ground Return Service Reliable and economical choice for less-than-urgent deliveries and oversized packages 14

15. The new Returns offerings are made possible by a new USPS program called Scan Based Payment All mail pieces are scanned before delivery Pricing is determined by sampling mail pieces to determine average piece weight and distance traveled Rates are adjusted monthly based on piece sampling Merchants charged automatically, on a daily basis, based on package activity – no manifesting Scan Based Payment (SBP) 15

16. Scan Based Payment (SBP) changes how USPS processes mail pieces How Does SBP Work? 1. Consumer Receives/Creates Labels 2. Consumer Drops Off Return with USPS 3. Packages Shipped; Scanned & Sampled 4. Merchant Receives Return 5. Merchant Charged upon Delivery 16

17. How Does SBP 1.Consumers Receive/Create Labels Consumers have four ways of getting a label … 17 How Does SBP Work?

18. i. Consumer already has a pre-printed label SBP- Consumer Receives / Creates a Label The merchant is certified to create their own labels. The merchant puts a return label in their outgoing shipments in case the consumer chooses to return the shipment. 18

19. ii. Consumer creates a label through the new USPS Returns website SBP- Consumer Receives / Creates Label Consumer initiates the Returns process on Merchant Website … 1 … is then redirected to the USPS Returns Application … 2 … application builds your label that you are now ready to ship with. 3 Email / Print Label Locate PO or Schedule Package Pickup Integration with the USPS Locator service to easily find your nearest location to drop-off a package Integration with USPS Schedule a Pickup service if you choose to have the return picked up by your mail carrier 19

20. SBP- Consumer Receives / Creates Label iii. The merchant has the option to use their own website to ‘call’ the USPS Returns Web Service (API) in order for the consumer to create labels Merchants can keep the same ‘look and feel’ on their website while still allowing the consumer to create labels using the returns tool The merchant can tailor the returns website to fit their needs and promote their products Return Labels could be created here while using Merchant’s User Interface Returns Web Service 20

21. iv. Consumer calls Merchant Call Center Consumer contacts a Call Center Agent, who uses the USPS Returns website to generate a label and send it to the consumer. 21 SBP- Consumer Receives / Creates Label

22. How Does SBP Work? 2. Consumer Drops Off Return with USPS Consumer has two options … 22

23. SBP – Consumer Drops Off, Schedules a Pick up i. Request for Pickup at Home Daily presence at 150 million addresses Free Carrier Pickup, Monday through Saturday ii. Drop-off at any Post Office Over 33,000 retail outlets Over 180,000 drop boxes 23 With either option USPS has made it easy with its convenient access and presence across the nation After the returns label is placed onto the package the consumer has the following two options:

24. How Does SBP Work? 3. Packages Shipped, Scanned & Sampled Scan Based Payment processes at work… 24

25. SBP – Packages Shipped, Scanned & Sampled Shipping The shipping process begins as soon as the consumer drops off the package or the mail carrier picks it up and ends when the merchant receives the package Scanning Packages are typically scanned 4-7 times during the shipping process Scans tabulate total shipping volume for SBP billing Allows piece visibility - allows Merchants and Consumers to see exactly how many packages have been delivered as well as the ones that are ‘enroute’ for delivery Consumer Visibility Consumers can use the USPS.com Track & Confirm page to obtain the status of the package Merchant Visibility PostalOne!: Application allows merchants to track Scan Based Payment activity. Merchants can view reports on sampling, pricing, delivery, and more. Product Tracking System (PTS): Database of all scan events. PTS extract files can be sent to merchant and include all shipping events. 25

26. SBP – Packages Shipped, Scanned, & Sampled Sampling Portions of the merchant’s returns are sampled (weighed and rated) to determine an accurate price (per piece) USPS uses a statistically valid number of samples to represent the merchant’s shipping profile USPS uses multiple sampling methods to randomly sample from the returns shipment’s total population Sampling can occur at multiple points in the shipping process All mail is tracked, but only a portion of the mail is weighed and rated as part of the sampling process 26

27. AcceptanceIn TransitDelivered Local PO/DDUUSPS Processing FacilitiesMerchant’s Address Consumer delivers package with label to retail clerk at a local PO or a mail carrier picks up package Merchant waits as the package is processed through the shipping process Mail Carrier may deliver package to merchant’s address if it is not picked up Scan Event: scanned as ‘Accept’ Scan Event: scanned as ‘Enroute’ (multiple scan events occur during the ‘enroute’ stage) Scan Event: scanned as ‘Delivered’ Sampling: Package may be weighed and rated How are Packages Scanned? Packages are scanned at multiple stages in the shipping process with hand-held and mail processing scanners How are Packages Sampled? Weight and rate (origin to destination shipping distance) are sampled during the shipping process 27 SBP – Packages Shipped, Scanned, & Sampled

28. Screenshot of the SBP module in PostalOne! (https://gateway.usps.com/bcg/login.htm)https://gateway.usps.com/bcg/login.htm where the merchant can view a pieces paid report. 28 The status is complete because the merchant automatically paid upon delivery (see slide on pricing for more details on how rate is calculated) The three mail classes for Returns are only: Priority Mail Return Service First-Class Package Return Service Ground Return Service A ‘complete’ status means that the package was delivered and the merchant was charged the amount on the left 09/18/2011 SBP – Packages Shipped, Scanned, & Sampled

29. How Does SBP Work? 4. Merchant Receives Return 29

30. The mail carrier delivers the returned packages to the merchant Package(s) delivered to the merchant’s address- A mail carrier delivers the returns to the merchant from the local USPS Processing and Distribution Center (P&DC) or the Destination Delivery Unit (DDU) 30 SBP – Merchant Receives Return

31. How Does SBP Work? 5. Merchant Charged upon Delivery 31

32. SBP – Merchant Charged Upon Delivery How and when is the merchant charged for the Return once it is delivered? The merchant will sign up for an automatic payment process (CAPS) that is linked to the merchant’s bank account. Whenever a package is scanned as ‘delivered’ the merchant will be charged for the package on the next business day. Can the merchant view a consolidated list of all charges? Yes, the merchant will have access to many reports, including a pricing summary that lists charges Automatic Debit 32

33. Pricing Will the merchant receive a Flat Rate Price? Merchants are offered a uniform price that is adjusted monthly Zn.LbsRt.Avg. Qt.Total 42$6.20 $5.65x10=$56.50 11$5.10 Example: Priority Mail 33 How are merchant rates (prices) determined? The merchant is eligible for one of the two pricing discounts below:  Commercial Base Pricing (all merchants qualify)  Commercial Plus Pricing (some merchants qualify) For the first month pricing is assigned based on one of the following (listed in priority):  Established pricing data according to historical returns characteristics  Outbound mailing activity prices  Another agreed upon method After the first month of activity pricing is determined by sampling  An average rate is calculated by using the sampled data (weight and rate) for mail class  Average price is multiplied by scanned mail volume to determine charges SBP – Merchant Charged Upon Delivery

34. Reporting Merchant Can View a Pieces Pending Report This screenshot is the merchant view of the SBP module in PostalOne! (https://gateway.usps.com/bcg/login.htm)https://gateway.usps.com/bcg/login.htm where the merchant can view a summary of pieces that have not yet been delivered. 34 A ‘pending’ status means that the package is en route for delivery $2.74

35. Reporting Merchant Can View Sampled Data This screenshot is the merchant view of the SBP module in PostalOne! (https://gateway.usps.com/bcg/login.htm)https://gateway.usps.com/bcg/login.htm where the merchant can view a summary of the monthly sampling. 35 Total Pieces Sampled is the sum of all sampled packages for all three mail classes 56 $2.71 $5.2459 22 $7.28 137

36. How Do I Sign Up For SBP? 2. Obtain a National MR Permit & Set up CAPS Account 1.Set up a Cust. Reg Account 3.Set up Prog Reg and SBP Services 4.Set up Account on Returns Tool Why do I need a permit? A permit provides permission for the merchant to conduct Returns transactions at specific locations. A national permit will allow transactions across the entire U.S. Why do I need a CAPS Account? A CAPS account sets up the merchant for automatic payment (debit) from the merchant’s bank account whenever a Returns package is delivered. Why do I need to sign up for Consumer Reg.? The merchant must set up an account by entering basic address information. It is also important because a Consumer Registration ID (CRID) is created. Why do I need to sign up for Program Reg. and SBP? This process sets up a SBP account in PostalOne! and allows the merchant to sign up for other services outside of SBP. This step is essential for the merchant to receive returns and view SBP Reports. Why do I need to sign up for the Returns Tool? This step is necessary before the consumer/merchant call center can create labels. 36

37. Flexible Label Printing New website / API for consumers to generate labels on-demand Merchant call center interface to allow agents to print labels on behalf of consumers Consumers may pre-print labels for insertion into an outbound package Increased Visibility Tracking included in the price of the product – no charge Eliminates delays in time-in-transit caused by manual rating Low Cost USPS offers a uniform low price that is adjusted monthly for every mail class 37 Just some of the benefits of the New Returns Platform include… Summary

38. Understanding 2012 Price Increase 5.9% increase on Ground with a 1% reduction in the FSC 1-5 lb. ground rates increase nearly 8% Some surcharge increases hit 10% Several international rates approach 15% The True Cost of the 2012 UPS/FedEx Increase 38

39. Fuel Surcharge Comparison Comparison of Cost with 1% FSC Reduction (A) 8.0% FSC (B) 7.0% FSC 1lb Zone 2 Rate5.49 Residential Surcharge 2.55 Residential Ext. DAS 3.25 Fuel Surcharge0.900.79 Total12.1912.08 IMPORTANT: The FSC is calculated AFTER the Residential DAS or Ext DAS are added. Column (A) is the FSC @ the current 8 %: $.90 Column (B) is the FSC @ 7 % using the 1% reduction: $.79 A difference of 11 cents. The 1% Fuel reduction nets $.11 savings BUT: Base Rate:+ $.32 Residential:+ $.10 Ext. DAS: + $.25 $.67 1% FSC- $.11 Net increase $.56 Fuel Surcharge Comparison 39

40. Delivery Area Surcharge - DAS 40

41. Delivery Area Surcharge - DAS  According to industry consultants, more than 18 % of all domestic packages are assessed a DAS charge  25% of the US population lives in a “DAS” area. Your customer ships 200,000 packages a year and 18% of their shipments are assessed a DAS Surcharge: 200,000 x 18 % = 36,000 DAS Fee: x $2.75 $99,000 Delivery Area Surcharge - DAS 41

42. What Is The Total Price Paid? UPS GroundPriority Rate (1lb Zone 2)$5.49$4.90 Tracking 0.00 Discount (35 %)($1.92) 0.00 Total$3.57$4.90 Actual Cost With Minimum Net Minimum Net Rate5.49NA Residential Surcharge2.550 Total8.04 4.90 Fuel Surcharge0.570 Total$8.61$4.90 Add if applicable Residential DAS2.750 Residential Ext. DAS3.250 Total with DAS + FSC $11.55$4.90 Total with Ext DAS + FSC $12.09$4.90 What Is The Total Price Paid? 42

43. FedEx Ground Priority Rate ONLY $1,336,528$1,389,422 Raw Average $/Pkg $7.02$7.30 Avg $/Pkg with Discount (35%) $4.56 $7.30 Fuel Surcharge $155,786 $0 Residential Surcharge (100% @ $2.55)$485,591$0 Delivery Area Surcharge - Res (18% @ $2.75) $94,262$0 Delivery Area Surcharge –Ext Res (5% @ $3.25)$55,158$0 Address Corrections (1%) $30,945 $0 Total Surcharges $821,742$0 TOTAL CHARGES $1,656,274$1,389,422 Total Average $/Pkg $8.70 $7.30 Cost Savings $1.40 Potential savings 16% $266,832 Shipping Cost Summary Priority vs. Fed Ex Ground 1-5lbs 190,428 pkgs Shipping Comparison 43

44. Scan # 11: Delivered Day 2 Expected Delivery Date Scan # 10: Out For Delivery Day 2 USPS Acceptance Scan Proof of Possession: Day 1 What Is The Total Price Paid? Day 2 Delivery: 11 Tracking Events with Expected Delivery Date 44

45. Resources Postal Explorer ─ pe.usps.com –Prices / downloadable price files / Federal Register notices / link to the Postal Bulletin –Domestic Mail Manual (DMM) / International Mail Manual (IMM) P&C Weekly (for employees) –Subscribe via e-mail: pandcweekly@usps.com DMM Advisory (for customers) –Subscribe via e-mail: dmmadvisory@usps.com MailPro –View online and subscribe at usps.com/mailpro 45

46. Questions? Mario.Roman@usps.gov 46