US Postal Service 2009 Annual Report Download - page 43

2009 Annual Report United States Postal Service | 41
of 50 million workhours. Operating expenses of $77,738
million were $2,367 million less than the $80,105 million
incurred in 2007. Expenses in 2007 also included a one-
time charge for the transfer of $2,958 million from escrow
into the PSRHBF.
REVENUE AND VOLUME
The annual price increase for most Mailing Services in
May 2009 averaged 3.8%. In May 2008, the annual price
increase for most Mailing Services averaged 2.9%. Ship-
ping Services prices increased in January 2009 by an av-
erage of 5%.
The economic recession adversely affected all classes of
mail in 2009, leading to the largest year-over-year revenue
and volume decline since the Postal Reorganization Act
of 1971. As the recession continued, signifi cant volume
declines occurred in each quarter of the year.
Operating Revenue
(dollars in millions)
2009 2008 2007
First-Class Mail $ 35,873 $ 38,179 $ 38,405
Standard Mail 17,364 20,586 20,779
Periodicals 2,038 2,295 2,188
Package Services 1,683 1,845 1,812
Other Mailing Services* 3,000 3,645 3,720
Total Mailing Services 59,958 66,550 66,904
Total Shipping Services 8,132 8,382 7,874
Total Operating Revenue $ 68,090 $ 74,932 $ 74,778
*Special services and other income included in “Other” category.
Led by the troubled fi nancial services industry, we fi rst
experienced declines in advertising mail, particularly with
regard to credit card, mortgage and home equity loan
solicitations. With the recession’s spread to all econom-
ic sectors, declining volumes followed among catalogue
retailers, printing and publishing businesses and the ser-
vices sector.
2009 Mail Revenue
Other Mailing
Services
Standard Mail
Shipping Services
First-Class Mail
53%
9%
12%
26%
Mail Volume by Type
(pieces in millions)
2009 2008 2007
First-Class Mail 83,770 91,697 96,297
Standard Mail 82,706 99,084 103,516
Periodicals 7,954 8,605 8,796
Package Services 730 846 914
Other Mailing Services* 517 896 1,081
Total Mailing Services 175,677 201,128 210,604
Total Shipping Services 1,381 1,575 1,630
Total Mail Volume by Type 177,058 202,703 212,234
*Free mail for the blind included in “Other” category.
The decline of both revenue and volume for each class of
mail for the year can largely be attributed to the economic
environment. Competition, electronic diversion and other
external factors continue to negatively impact revenue
and volume performance, but those factors have become
secondary to the overall performance of the economy. No
class of mail has been immune to the recent fi nancial tur-
moil and all categories of mail experienced drops in vol-
ume and revenue. Total mail volume fell by 12.7% in 2009,
with an accompanying revenue decline of 9.1%.
2009 Mail Volume
Other Mailing
Services
Standard Mail
Shipping Services
First-Class Mail
47%
5%
1%
47%
Although its relative infl uence lessened in comparison to
economic factors, electronic diversion continued to de-
press mail volumes in 2009. For example, in Quarter II,
the largest decline in First-Class Mail volume came from
mailings to and from the U.S. Treasury, primarily the Inter-
nal Revenue Service. Americans are increasingly fi ling tax
returns electronically, including a 16.7% increase in e-fi led
tax returns by self-preparers this year compared to last
year. Many of these fi lers also elect to receive refunds elec-
tronically. Periodicals mail volumes also displayed the ef-
fects of electronic diversion as some publishers converted
to electronic publications.