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42 | 2009 Annual Report United States Postal Service
A product of these negative economic and market forces,
operating revenue in 2009 was $68,090 million, a decrease
of $6,842 million compared to 2008 operating revenue of
$74,932 million. Mail volume of 177.1 billion pieces declined
by 25.6 billion pieces, or 12.7%, from the 2008 volume of
202.7 billion pieces, itself a decline from the previous year.
In 2008, the fi nancial sector of the U.S. economy led de-
clines in the mailing arena. Operating revenue for 2008 was
$74,932 million, an increase of $154 million over 2007 op-
erating revenue of $74,778 million, while volume of 202.7
billion pieces declined by 9.5 billion pieces, or 4.5%, from
the 2007 volume of 212.2 billion. The 2008 volume decline
accelerated throughout the year, reaching a peak decline
of 3.2 billion pieces in the fourth quarter.
Revenue for the fi rst seven and a half months of 2008 was
affected by the May 2007 price increase of 5.4%. The re-
mainder of the year was affected by the May 2008 price
increase of 2.9%. Although the volume decrease in 2008
was signifi cant, the price increase held revenue fl at com-
pared to 2007.
MAILING SERVICES
In 2009, First-Class Mail and Standard Mail, which make
up 94% of volume, decreased approximately 24.3 billion
pieces, or 12.7% compared to last year, with an associat-
ed drop in revenue of $5,528 million, or 9.4%. Total Mailing
Services revenue decreased $6,592 million, or 9.9%, with
a corresponding volume decrease of 25.5 billion pieces, or
12.7%, compared to last year. Most of this decrease can
be attributed to the downturn in the economy, particularly
the fi nancial and real estate sectors, which are heavy users
of the mail.
For the year ended September 30, 2009, revenue from
First-Class Mail was $35,873 million, or 6.0%, less than
last year, as volume decreased 7.9 billion pieces, or 8.6%,
compared to 2008. Refl ecting the economy, all signifi cant
subgroups of First-Class Mail experienced revenue and
volume declines. Single-piece First-Class letter revenue
declined $1,055 million, or 7.3%, on a decrease of 3,493
million pieces, or 10.4%, for the year compared to 2008.
Single-piece First-Class Mail volume, including bills, bill
payments, statements, confi rmations, orders and rebates,
has been in decline for over a decade. While price has
some effect on First-Class Mail volume, in this environ-
ment the economy is the primary driver behind the volume
decline, with technology as a secondary driver.
First-Class Mail Volume Changes from Prior Year
-12 %
-10 %
-8 %
-6 %
-4 %
-2 %
0 %
Volume Change Percentage
Q4 09Q3 09Q2 09Q1 09Q4 08Q3 08Q2 08Q1 08
In 2008, First-Class Mail revenue decreased $226 million,
or 0.6%, while volume decreased by 4.6 billion pieces, or
4.8%. The 2008 revenue decrease occurred in spite of a
2008 rate increase and the residual effect of a prior rate
increase. The most signifi cant decline was in single-piece
First-Class letters, with a decrease of over 3 billion pieces.
The long-term continued decline in single-piece volume
refl ects the impact of electronic diversion as businesses,
nonprofi t organizations, governments and households con-
tinue to convert to electronic methods of communication.
Standard Mail revenue decreased $3,222 million, or
15.7%, in 2009, as volume decreased 16.4 billion pieces,
or 16.5%, compared to last year. Standard Mail volume
has been signifi cantly impacted by the decline in advertis-
ing spending as a result of the recession, which spread
rapidly throughout the economy. All subgroups of Stan-
dard Mail lost both revenue and volume in 2009 compared
to last year. Standard Mail letter volume fell 18.4%, or 10.5
billion pieces, while revenue dropped $1,782 million, or
16.9%, in 2009 compared to 2008. The volume for Stan-
dard Mail fl ats fell 22.2%, or 2,218 million pieces, while
revenue dropped $798 million, or 21.8%, in 2009 com-
pared to last year. In addition to the impact of the troubled
economy on Standard Mail revenues, advertisers continue
to become more sophisticated in the targeting of their
mailings, further reducing mail volume. We expect adver-
tising mail to begin to increase as the economy improves,
although many experts do not expect the economic re-
covery to be rapid or robust.