US Postal Service 2007 Annual Report Download - page 23

2007 Annual Report United States Postal Service | 23
Financial Section Part II
First-Class Mail revenue increased $977 million in 2006 as volume
decreased slightly. An increase of approximately 1 billion pieces, or 2.1%,
in workshare First-Class letters partially offset the continuing decline in
single-piece volume, which was down 1.5 billion pieces, or 3.3%.
40
45
50
55
60
2007200520042003200220012000 2006
Single-Piece Workshare
(Pieces in billions)
First-Class Mail Volume
In 2007, Standard Mail revenue increased by $902 million, or 4.5%, while
volume increased 1.1 billion pieces or 1.0%. Standard Mail volume has
grown each of the last five years. For the third consecutive year, Standard
Mail volume has exceeded First-Class Mail volume. While Standard Mail
has increased in volume each year since 2002, growth was tempered this
year by a decline in Enhanced Carrier Route volume of more than 800
million pieces. Standard Mail revenue and volume is expected to show
year-over-year increases into the foreseeable future.
In 2006, Standard Mail revenue increased $924 million compared with
2005 on 1.5% volume growth.
Spurred by the May 2007 rate increase, Priority Mail revenue increased
$191 million, or 3.8%. Volume, however, decreased by 27 million pieces,
or 2.9%. Priority Mail volume decreased during the last three quarters of
2007 after an extended period of growth. Priority Mail is a price-sensitive
service and we anticipate several quarters of slight revenue growth on
stagnant volumes, before this service rebounds.
Priority Mail revenue increased $408 million, or 8.8%, in 2006. Volume
also increased, growing 4.1% in 2006, in spite of the January 2006 rate
increase.
Package Services revenue increased $47 million, or 2.1%, in 2007, while
its volume decreased 12 million pieces, or 1.0%, compared to 2006. This
volume decrease in Package Services ended four straight years of growth.
Package Services revenue increased $58 million on a volume increase of
9 million pieces, or 0.8%, in 2006. The Parcel Select component of Parcel
Post was adversely affected by three major parcel consolidators, which
ceased operations in 2006.
Periodicals volume decreased 227 million pieces, or 2.5%, in 2007. This
resulted in a revenue decrease of $27 million, or 1.2%, in spite of the rate
increase.
Although Periodicals volume declined 0.5% in 2006 revenue increased
$54 million due to the 2006 rate increase. The volume decline continued a
long-term trend.
In 2007, Express Mail revenue increased $33 million, or 3.6%, while
volume decreased one million pieces, or 1.8%, compared to 2006. Express
Mail is our most price-sensitive service and price increases in January
2006 and May 2007 will likely result in lower volume for this service in the
foreseeable future.
Express Mail revenue increased $46 million while volume increased
475,000 pieces in 2006. This was the second consecutive year of volume
increases for Express Mail after four years of declines.
Our international products portfolio was simplified in conjunction with the
May 2007 price implementation. Eight products were reduced to four,
eliminating redundancy and reducing customer confusion. International
product names are now linked to their domestic counterparts. New packag-
ing further reduced complexity, while cutting waste and better positioning
our brand. The international products portfolio now comprises Global
Express Guaranteed, Express Mail International, Priority Mail International,
and First-Class Mail International services. The product simplification has
had a significant effect on international volume and revenue. International
revenue grew by $242 million, or 13.5%, while volume grew 40 million
pieces, or 5.0%, in 2007. In addition, Foreign Postal Transactions and
International Mail fees grew by $38 million, or 16.3%.
In 2006, International Mail revenue increased $29 million, or 1.6%. The
2006 rate increase offset a volume decline of 59 million pieces, or 6.9%,
compared to 2005.
0
50
100
150
200
250
Standard Mail Other
First-Class Mail
FY 2001 FY 2007
(Pieces in billions)
212.2
12.8
103.5
95.9
13.9
89.9
103.7
207.5
Down 7.9%
Up 15.1%
Down 7.5%
Mail Mix Comparison