US Postal Service 2008 Annual Report Download - page 31

2008 Annual Report United States Postal Service | 31
MAILING SERVICES
While Standard Mail volume exceeds First-Class Mail vol-
ume, First-Class Mail remains, by far, the largest revenue
generator, as illustrated by the two previous charts.
The First-Class Mail category now includes First-Class Mail
International. First-Class Mail revenue decreased $226 mil-
lion, or 0.6%, while volume decreased by 4.6 billion pieces,
or 4.8%, in 2008. The revenue decrease occurred in spite
of two price increases. Only non-automation presort and
First-Class International letters experienced increases in
volume. The most significant decline was in single-piece
First-Class letters, with a decrease of over 3 billion pieces
of mail. The long-term continued decline in single-piece vol-
ume reflects the impact of electronic diversion as business-
es, nonprofit organizations, governments, and households
continue to move their correspondence and transactions to
electronic alternatives, such as Internet bill payment, auto-
matic deduction, and direct deposit. The rate of decline ac-
celerated significantly in 2008 as the economy weakened.
Presorted First-Class Mail also decreased. This is a reflec-
tion of the general curtailment of advertising spending. This
curtailment of advertising has significantly impacted both
First-Class Mail and Standard Mail.
Mail Volume By Type 2008 2007 2006
(Pieces in millions)
First-Class Mail 91,697 96,297 98,016
Standard Mail 99,084 103,516 102,460
Periodicals 8,605 8,796 9,023
Package Services 846 914 919
Other Mailing Services* 896 1,081 1,084
Total Mailing Services 201,128 210,604 211,502
Total Shipping Services 1,575 1,630 1,636
Total Mail Volume by Type 202,703 212,234 213,138
* Free mail for the blind included in the "Other" category.
In 2007, First-Class Mail revenue increased $800 million, or
2.1%, as volume decreased by 1.7 billion pieces, or 1.8%.
First-Class Mail represented 51% of total operating reve-
nues and 45% of total volume in 2007.
First-Class Mail Changes from Prior Year
2008 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
(Dollars & Pieces in millions)
Revenue Change $ 193 $ 264 $ (180) $ (503) $ (226)
Percentage 1.9% 2.8% –1.9% –5.4% –0.6%
Volume Change (993) (760) (1,282) (1,565) (4,600)
Percentage –3.9% –3.1% –5.4% –6.9% –4.8%
Standard Mail Changes from Prior Year
2008 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
(Dollars & Pieces in millions)
Revenue Change $ 201 $ 101 $ (161) $ (334) $ (193)
Percentage 3.6% 2.0% –3.2% –6.3% –0.9%
Volume Change (776) (760) (1,368) (1,528) (4,432)
Percentage –2.7% –3.0% –5.6% –6.1% –4.3%
Standard Mail revenue decreased almost $200 million, or
0.9%, in 2008, while volume decreased 4.4 billion pieces or
4.3%. Standard Mail items are primarily advertising materi-
als and is particularly sensitive to economic contractions.
The drop in Standard Mail volume is a direct reflection of the
poor state of the economy, as we experienced accelerated
declines in volume as the year progressed. The decline of
1.5 billion pieces in Quarter IV was only topped in severity
by the 2.2 billion piece decline in Standard Mail in Quarter
I of 2002 following the anthrax attacks and the terrorism
of September 11, 2001. The decline is primarily due to the
curtailment of advertising, which is expected to continue
through 2009, before rebounding beginning in 2010.
In 2007, Standard Mail revenue increased $903 million, or
4.5%, compared with 2006 on 1.0% volume growth. The
first quarter was favorably impacted by the carryover effect
of the January 2006 price increase. A portion of the third
quarter and all of the fourth quarter benefited from the May
2007 price increase. Standard Mail represented 28% of to-
tal operating revenues and 49% of total volume in 2007.