US Postal Service 2005 Annual Report Download - page 32

22 | 2005 Annual Report United States Postal Service
by virtue of its two dominant characteristics: it can be
targeted to specific audiences, and its effectiveness can
be measured.
First-Class Mail volume, which was our largest mail class
until 2004, increased slightly in 2005 after declining for
three consecutive years. The increase in workshare First-
Class Mail pieces (up 1.8 billion pieces or 3.7%) offset the
continuing decline in single-piece volume (down 1.8 billion
pieces or 4.0%). The long-term continued decline in single
piece volume reflects the impact of electronic diversion
as businesses, nonprofit organizations, governments, and
households increasingly automate all transactions and
divert correspondence to the Internet. The consolidation in
the pre-bar-coded mailer market and anecdotal evidence
suggests that some of the single piece First-Class Mail
may be migrating to workshare First-Class Mail. Following
several years of essentially no change in workshare First-
Class Mail volume, volume grew in 2005, driven by the
advertising and financial markets.
After declining for four consecutive years, Priority Mail
volumes increased. Four factors underlie this performance.
First, Priority Mail rates have stayed steady for three years
while competitors’ published rates have increased annually.
Second, the proliferation of competitors’ surcharges for
fuel, residential delivery, and delivery in rural areas make
Priority Mail increasingly attractive, especially for small-
volume users, who generally cannot negotiate discounts or
other pricing concessions with private sector competitors.
Third, Priority Mail is easier to use than ever. Customers
can purchase postage and print mailing labels with free
delivery confirmation on-line through Click-N-Ship or on
websites such as eBay. The Carrier Pickup online notifica-
tion program saves customers a trip to the Post Office.
Letter carriers averaged 4,000 daily pickups in 2005. Also
contributing to growth in Priority Mail is the Priority Flat
Rate Box. Launched in November 2004, revenues from
this service are growing strongly. Through this service,
customers can send packages via Priority Mail at a flat
rate of $7.70. Two differently shaped boxes are available to
customers, both with the same cubic capacity. Finally, we
have worked to consistently improve Priority Mail service
performance. Express Mail and Package Services have
experienced similar turnarounds for many of the same rea-
sons. Periodical Mail volume and revenue are declining, as
businesses and consumers in-
creasingly rely on the Internet
as a substitute for hardcopy
publication of news, informa-
tion, and entertainment.
Financial review
Part II
(Dollars in millions) % Change
Revenue 2005 2004 2003 2005-2004 2004-2003
First-Class Mail $ 36,062 $ 36,377 $ 37,048 -0.9% -1.8%
Priority Mail 4,634 4,421 4,494 4.8% -1.6%
Express Mail 872 853 888 2.3% -3.9%
Periodicals 2,161 2,192 2,235 -1.4% -1.9%
Standard Mail 18,953 18,123 17,231 4.6% 5.2%
Package Services 2,201 2,207 2,216 -0.3% -0.4%
International 1,765 1,696 1,587 4.1% 6.9%
Other* 3,345 3,160 3,065 5.9% 3.1%
Total $ 69,993 $ 69,029 $ 68,764 1.4% 0.4%
Note: Percentages are calculated based on unrounded numbers.
*Mailgrams are included in the “Other” category as are special service revenues, other income and investment income.
103.5
98.1
90.1
100.9
12.7
14.3
0
50
100
150
200
250
FY 2000 FY 2005
Other
Standard
First-Class
Down 11.0%
Up 12.1%
Down 5.3%
208 Billion 212 Billion
MAIL MIX COMPARISON
(Pieces in billions)