US Postal Service 2013 Annual Report Download - page 27

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2013 Report on Form 10-K United States Postal Service 25
Price increases for all services in the First-Class Mail category are generally capped at the rate of inflation because these
services are classified, by law, as Market-Dominant.
STANDARD MAIL
Standard Mail generates the greatest volume but represented only 26% of total revenues before the change in accounting
estimate in 2013. After consideration of the change in accounting estimate in 2013, Standard Mail represents 25% of total
revenue. The modest improvement in the economy helped increase Standard Mail revenue by 3.0% in 2013 compared to
2012, on a volume increase of 1.8%. In addition, $263 million of political mail revenue from October and November
mailings are included in our results for the year ended September 30, 2013. Technology continues to help advertisers
selectively target their mailings, restraining the growth in total pieces sent.
Standard Mail revenue and volume decreased in 2012 compared to 2011. Standard Mail volume was negatively impacted
in 2012 due to the ongoing impacts of the Great Recession and correspondingly slow economic recovery, as well as
advertisers that became more selective in the targeting of their mailings.
Price increases for all services in the Standard Mail category are generally capped at the rate of inflation because they are
classified, by law, as Market-Dominant.
SHIPPING AND PACKAGES
Shipping and Packages revenue continues to show strong year-over-year growth. Shipping and Packages are
predominantly competitive services which can be priced to reflect current market conditions although some Market-
Dominant services subject to price caps such as First-Class Parcels and certain package services are also included in this
category. Responding to the opportunity created by the growth in packages shipped for purchases made online, we have
been able to capture a portion of the newly created volume. Ground shipping services have proven to be very popular in
e-commerce fulfillment, as companies push to keep their costs low. In addition, new services and successful marketing
campaigns have helped fuel this growth. Our new marketing campaign, Priority: You, showcases our unique
understanding of the needs of Americans today and highlights the new improvements we have made to our Priority Mail
service. It centered around one simple promise: that we would prove our reliability every step of the way. We backed this
campaign with an updated media plan that spans multiple touch points, including TV, cinema, direct mail, digital and
reintroduced magazines and newspapers into the mix. Revenue from First-Class Packages grew 16.5% in 2013,
compared to 2012. Parcel Return and Parcel Select Services revenue increased by 20.9%, compared to 2012, as we
continue to capitalize on the competitive advantage we have in providing the “last mile” service.
The following table presents detailed revenues and volumes for Shipping and Packages for the years ended 2013, 2012,
and 2011, by each service line.
(Dollars and pieces in millions) Revenue Volume Revenue Volume Revenue Volume 2013/2012 2012/2011 2013/2012
2012/2011
Priority Mail1$ 7,033 926 $ 5,937 824 $ 5,636 790 18.5 % 5.3 % 12.4 % 4.3 %
Parcel Select, Parcel
Return, & Standard Parcels 2,105 1,411 1,741 1,288 1,369 1,115 20.9 % 27.2 % 9.5 % 15.5 %
Package Services 808 541 1,589 645 1,581 675 (49.2)% 0.5 % (16.1)% (4.4)%
First-Class Packages21,775 794 1,523 704 1,284 638 16.5 % 18.6 % 12.8 % 10.3 %
Priority Mail Express 794 39 802 40 800 40 (1.0)% 0.3 % (2.5)% 0.0 %
Total Revenue and Volume $ 12,515 3,711 $ 11,592 3,501 $ 10,670 3,258 8.0 % 8.6 % 6.0 % 7.5 %
Revenue Volume
% Change
Shipping & Packages Revenue and Volume *
*Note: The totals for certain mail categories for the prior year have been reclassified to better reflect classifications used in the current year.
2 Includes First-Class Mail Parcels and First-Class Package Services.
1 Includes Standard Post.
% Change
2013
2012
2011
In 2013, Shipping and Packages, which includes premium services, such as Priority Mail and Priority Mail Express, and
business-oriented services, such as Parcel Select and Parcel Return Services, represented 2.3% of volume but generated
approximately 19% of revenue. Shipping and Packages revenue of $12,515 million increased $923 million, or 8.0%, in
2013 on a volume increase of 210 million pieces, or 6.0%.
Similarly, in 2012, Shipping and Packages represented 2.2% of volume but generated approximately 17.8% of revenue.
Revenue and volume for Shipping and Packages also increased in 2012 over 2011.