US Postal Service 2012 Annual Report Download - page 7

2012 Report on Form 10-K United States Postal Service- 6 -
allowing them to easily and economically retrieve packages returned by their customers. Parcel Select and Parcel
Return Services allow us to partner with privately owned delivery services to serve our respective customers’ needs.
International — Offered for mail service and the shipping market with individual customer contracts, agreements with
other postal administrations, and streamlined product offerings tailored to the needs of businesses and consumers.
Express Mail International (EMI) provides reliable delivery within 3 to 5 business days on average and Priority Mail
International (PMI) offers delivery within 6 to 10 business days on average to over 190 countries. Global Express
Guaranteed (GXG) is the premium international shipping option that offers reliable date-certain delivery in 1 to 3 business
days to over 190 countries, with a money-back guarantee.
Periodicals — Offered for newspaper, magazine, and newsletter distribution. This service requires prior authorization by
the Postal Service.
Other includes the following services:
Post Office Boxes — Provides customers an additional method for mail delivery that is private and convenient.
Money Orders — A special service offering a safe, convenient, and economical alternative to sending cash through
the mail or for the payment of bills. They can be purchased at most Post Offices or from any rural route carrier and
can be sent within the U.S. and to some foreign countries. Postal money orders are available for any amount up to
$1,000. Money orders can be cashed at most Post Offices or can be deposited or negotiated at financial institutions.
The Postal Service will replace postal money orders that have been damaged, lost, or stolen.
Extra Services — Offered for a variety of enhancements that add value, provide added security, proof of delivery, or
loss recovery. Examples of these services include: Certified Mail, Registered Mail, Delivery Confirmation, Signature
Confirmation, Adult Signature, and Insurance up to $5,000 available online, at Post Offices or at Automated Postal
Centers.
Details on the Postal Service’s revenue and volume are found in Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations and in the Operating Statistics table immediately following the Notes to the
Financial Statements.
PRICING AND CLASSIFICATION ACTIVITY
P.L. 109-435 classifies postal services into two broad categories: Market-Dominant and Competitive. Market-Dominant
services include, but are not limited to, First-Class Mail, Standard Mail, Periodicals, and certain parcel services. Price
increases for these services are subject to a price cap by class of mail based on the Consumer Price Index–All Urban
Consumers (CPI-U). Competitive services, such as Priority Mail, Express Mail, Parcel Select and Parcel Return Service,
Bulk Standard Post, and some types of International Mail have greater pricing flexibility and are commonly referred to as
“Shipping and Package Services”. New pricing for Market-Dominant and Competitive services will go into effect January
27, 2013, at an average overall price increase of 4%, pending the compliance review of the PRC.
Postal Service prices for Market-Dominant services are set by the Board of Governors and reviewed by the PRC for legal
compliance. We have provided, and anticipate continuing to provide, at least 90 days advance notice of new prices for
Market-Dominant services. There was a 1.7% price increase for Market-Dominant services in April 2011; and a January
2012 price increase averaging 2.1%. The price of a one-ounce First-Class Mail stamp is currently $0.45 after increasing
from $0.44 in January 2012. New pricing for all Market-Dominant services will go into effect on January 27, 2013 at an
average increase of 2.6%, pending the compliance review of the PRC. The price of a one-ounce First-Class Mail stamp
will increase to $0.46 at that time. A First-Class Mail Global Forever Stamp will be available for the first time in early 2013.
Prices for Competitive services, by law, must cover costs attributable to each product, as well as an appropriate share of
the institutional costs of the Postal Service. The required share of institutional costs to be covered by Competitive market
services as determined by the PRC is 5.5% of total institutional costs. By law, changes in prices for our Competitive
market services must be announced at least 30 days prior to the implementation date. Prices for these Competitive
market services – including Express Mail, Global Express Guaranteed, Express Mail International, Priority Mail, Priority
Mail International, Parcel Select, and Parcel Return Service – increased an average of 3.6% in January 2011, and again
in January 2012 at an average rate of 4.6%. New pricing for Competitive market services will go into effect on January
27, 2013 at an average increase of 9%.