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Dennis Nicoski Western Area Mailing Industry Focus Group Meeting January 25, 2016 Competitive Products Price Change 

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Presentation on theme: "Dennis Nicoski Western Area Mailing Industry Focus Group Meeting January 25, 2016 Competitive Products Price Change "— Presentation transcript:

1 Dennis Nicoski Western Area Mailing Industry Focus Group Meeting January 25, 2016 Competitive Products Price Change 

2  Since 2010 the USPS has consistently kept price increases below industry averages  No increase to Priority Mail in 2015, price reductions in 2014  The most recent Priority Mail price increase was in January of 2013 – 3 years ago  Average annual price increases of 4.4% this decade for all Competitive Products  Net Minimums have risen at a much higher percentage than overall averages for the marketplace, particularly for residential deliveries  The Postal Service continues to be the only commercial carrier offering ounce-based pricing for lightweight shipments  The Postal Service does not dimensionally weight packages below 1 cubic foot (1728 cubic inches) History

3  The Postal Service has made significant investments over the past 5 years to support the growing business-to-consumer, ecommerce marketplace – nearly $2B in the last 24 months alone  Facilities  Vehicles  IT infrastructure  Processing equipment  Network capacity  The package business is crucial to the Postal Service’s future – we are committed to providing high value delivery services  The Postal Service offers the best value in the market Today

4 2010-2016 Price Change History

5 Net Minimum – Zone 2, 1 lb package Up $2.10 43.4% Up $3.31 47.0% Up $0.95 20.0%

6 Fuel Surcharge History

7 2016 Price Change Summary

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10  Commercial Plus pricing eliminated (14 to 15.99 oz.)  Commercial Base pricing now includes ounce-based pricing up to 15.99 ounces  12.8% overall average increase  Eliminate ounce-based pricing below 8 oz – flat rate up to 8 oz.  Presort options eliminated (ADC, 3D, 5D)  Limited usage, customer demand  Still available via Negotiated Service Agreement First-Class Package Service

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12  Retain current overall pricing structure  9.8% average increase overall  Retail = 8.6%; Commercial Base = 9.4%; Commercial Plus = 13.3%  Eliminate Regional Rate Box C  Eliminate Critical Mail  Effective January 17, 2016 customers will be charged the Priority Mail Flat Rate Envelope price based on weight and zone if they continue to present Critical Mail envelopes. Priority Mail

13 Priority Mail Regional Rate Box C is being eliminated as a shipping option Low customer usage. Customers will be charged single-piece Priority Mail Commercial Base or Retail prices by weight and zone after January 17, 2016. Will be removed from similar systems as PME Flat Rate Boxes. Priority Mail Regional Rate Boxes A and B will still be available.

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15 Priority Mail Current Volume Profile

16  Commercial Plus prices and Commercial Base prices will be the same  15.6% overall average increase  Retail = 14.4%; Commercial Base = 17.7%; Commercial Plus = 48.2%  Commercial Base prices will be 10% less than Retail prices  Eliminate Priority Mail Express Flat Rate Box  Limited usage/demand Priority Mail Express Effective January 17, 2016 customers will be charged Priority Mail Express prices based on weight and zone if they continue to use the PME Flat Rate Boxes.

17  3.1% overall average increase for 1 lb+ Parcel Select  Parcel Select Nonpresort rebranded as Parcel Select Ground  5.1% DNDC; 4.9% DSCF; 4.5% DDU; Ground 1.9%  ONDC and NDC Presort categories eliminated  23.5% overall average increase for Parcel Select Lightweight  Simplify ounce-based pricing structure  Eliminate ounce-based pricing below 8 oz – flat rate up to 8 oz.  9-12 oz. category and 13-16 oz category  Eliminate Machinable / Irregular distinction – one price table Parcel Select

18 Simplify PS Lightweight Change: Simplify Parcel Select Lightweight Irregular / Machinable. Machinable and Irregular price tables combined The new price table title is “Parcel Select Lightweight- Commercial Parcels” One price table based on current irregular table - start at 1 ounce and end at 15.999 ounces. -sortation levels: 1. 5-digit (DDU, DSCF, DNDC) 2. SCF (DSCF and DNDC) 3. NDC (DNDC and None) 4. Mixed (NDC/Single Piece (None) Mail preparation and other requirements will remain the same: - Separation of pieces - Individual postage statements - Processing Category in Shipping Services File 18

19  Standard Post will be renamed Retail Ground  10% average overall price increase  Domestic Extra Services  Premium Forwarding up 3.6% to $18.65, online $17.10  Adult Signature up 3.6% to $5.70; Restricted Delivery up 3.5% to $5.95  Package Intercept up 3.3% to $12.55  Competitive Post Office Box prices up 3.5% on average Other Domestic Changes

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21 Changes 2016 Click N Ship The Postal Service is restructuring Click-N-Ship to offer only retail prices Click-N-Ship will no longer be an authorized payment method for Priority Mail Express and Priority Mail Commercial Base pricing

22  Commercial Plus and Commercial Base prices will be the same  Global Express Guaranteed up 7.1%  Priority Mail Express International up 11.6%  Additional country groups added for Flat Rate Envelope; Flat Rate Box eliminated  Priority Mail International up 10.2%  Additional country groups added for Flat Rate; Eliminate PMI Regional Rate Box C  International Priority Airmail up 4.2%; IPA M-Bags up 3.5%  International Surface Airlift up 6.3%; ISAL M-Bags up 5.3%  Airmail M-Bags up 9.2%  First-Class Package International Service up 21.6%  Intl Postal Money Orders up 5.6%; Inquiry Fee up 3.5%; Transfer Service up 3.3-3.7% International

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25 Shipping Industry Landscape  2016 GRI – Fedex, UPS, USPS; fuel surcharge tables  FedEx and UPS DIM Changes  Sunday, Same Day, Holiday, Next Day  Omnichannel (Ship-from-store, Endless Aisle, Flexible delivery)  Residential growing, commercial flat  Mode shifts – Air to Ground + Zone optimization  Business need assessment  Free shipping vs. transit time pressure from market leaders  Returns  DSV’s (2.5% UPS premium)  Multi-carrier  Peak

26  Predictable, consistent prices with no accessorials  No fuel, residential, delivery area surcharges  First price increase for Priority Mail since 2012  Priority Mail and First-Class Package Service provide reliable, fast 1-3 day transit time nationwide  Delivery 6 days per week, at no additional charge  Sunday available to over 70% of the US population  Only carrier in the marketplace to offer ounce-based pricing  Both First-Class Package Service and Parcel Select Lightweight remain high-value options for lightweight shipments  World-class package tracking and visibility  Multiple options for label generation and payment  Expert support to onboard new customers  Customer service support network Postal Service Value

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28 Dennis Nicoski Director, Field Strategy and Contracts Cell (616) 304-7948 dennis.r.nicoski@usps.gov Thank you.


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