Price Change Overview. Baltimore PCC Webinar January 26, 2017

Transcription

1 Price Change Overview Baltimore PCC Webinar January 26, 2017

2 Price Change Overview CPI month CPI Average Nov 2007 Sep Rate of change Dec 2007 Sep 2016

3 Price Change Overview Changes for market dominant classes filed October 12 Based on August CPI Overall increase +/ 1% (including banked authority) Class Cap % Banked % Total % available % used in filing Banked % remaining (adjusted) First Class Standard Mail Periodicals Package Svcs Special Svcs Source: USPS filing Implementation date: January 22, 2017

4 Price Change Overview Issues Data completeness, accuracy Adjustments to filed Standard Mail rates October 28, November 8 errata notices 64 rate cells modified Increased class average increase to 0.900% Rate relationships Regular/nonprofit Discounts Hockey stick at break point Worksharing Size of discounts Relationships Passthroughs

5 Price Change Overview Structural changes Third ounce free (commercial First Class Mail) One price for Auto/Mach FCM letters up to 3.5 ounces 3 Digit and AADC combined into AADC (FCM and Standard Mail) Elimination of FSS pricing (but not presort) Standard Mail renamed to USPS Marketing Mail Break point for STD letters raised from 3.3 to 3.5 ounces Break point for STD flats and non auto/non mach letters from raised 3.3 to 4.0 ounces Fees combined or eliminated for some types of mail COD redesign X

6 Price Change Overview PRC decision on market dominant classes issued November 15 Rate authority adjusted due to BLS revision of May August CPI figures First Class Mail, Periodicals, Package Services approved as filed Standard Mail approved as filed and amended by errata Special Services changes approved in December 15 order Delay and complexity in USPS submissions Proposed changes to COD not approved Competitive product prices approved November 18 October 19 filing Overall average increase: 3.9% PRC reviewed for statutory compliance Implementation date: January 22, 2017

7 Price Change Overview Changes by class and category Category Requested Change Approved Change Single piece letters/postcards 2.028% 2.024% Presort letters/postcards 0.250% 0.243% Flats 1.886% 1.886% Parcels 0.624% 0.624% Outbound single pc FCM Int l 0.000% 0.000% Inbound letter post 4.644% 5.019% Total First Class Mail 0.780% 0.778% Source: PRC order Category Requested Change Approved Change Letters 2.037% 2.037% Flats 2.493% 2.522% Parcels 1.583% 1.583% High Density/Saturation letters 2.295% 2.211% HD/Saturation flats and parcels 2.025% 2.226% Carrier route 3.090% 3.302% Every Door Direct Mail (retail) 0.568% 0.568% Total Standard Mail 0.895% 0.900% Source: PRC order Category Requested Change Approved Change Outside County 0.826% 0.826% Within County 0.965% 0.965% Total Periodicals 0.832% 0.832% Source: PRC order Category Requested Change Approved Change Alaska Bypass Service 1.100% 1.100% Bound Printed Matter flats 0.832% 0.703% Bound Printed Matter parcels 1.005% 1.005% Media Mail and Library Mail 1.135% 1.135% Total Package Services 1.007% 0.973% Source: PRC order Category % Price Change Ancillary Services: Permit Fees Account Maintenance Fees Business Reply Mail Certificate of Mailing Collect on Delivery Merchandise Return Service Parcel Airlift Return Receipt Signature Confirmation Special Handling International Ancillary Services Address Management Services Caller Service Credit Card Authentication 0 International Business Reply Mail Service 0 Money Orders 0 Post Office Box Service Customized Postage 0 Stamp Fulfillment 0

8 First Class Mail prices This information is the sole property of the presenter and is not approved or endorsed by USPS (1/26/2017) Mailers Hub LLC.

9 Standard Mail prices (piece rates) This information is the sole property of the presenter and is not approved or endorsed by USPS (1/26/2017) Mailers Hub LLC.

10 Standard Mail prices (piece/pound rates) This information is the sole property of the presenter and is not approved or endorsed by USPS (1/26/2017) Mailers Hub LLC.

11 Periodicals prices This information is the sole property of the presenter and is not approved or endorsed by USPS (1/26/2017) Mailers Hub LLC.

12 Package Services prices This information is the sole property of the presenter and is not approved or endorsed by USPS (1/26/2017) Mailers Hub LLC.

13 Special Services prices This information is the sole property of the presenter and is not approved or endorsed by USPS (1/26/2017) Mailers Hub LLC.

14 Competitive Products prices This information is the sole property of the presenter and is not approved or endorsed by USPS (1/26/2017) Mailers Hub LLC.

15 Price Change Overview Looking ahead Annual price changes planned Further simplifications being considered Rate structure Shape and weight standards Significant trends to watch Promotions Changes to postcard size Standardization of maximum letter weight and weight breaks Revisions to weight limits for flats

16 Price Change Overview the Surcharge September 2013: USPS filed for 4.3% exigent increase December 2013: approved as a surcharge Surcharge amount allowed: $3.238 billion ($2.766 billion contribution ) January 2014: USPS appeals count once rule July 2015: PRC issues new decision on remand Additional surcharge amount allowed: $1.396 billion ($1.191 billion contribution ) Total surcharge to be collected: $4.634 billion ($3.957 billion contribution ) August 2015: USPS appeals new normal rule April 9, 2016: surcharge expired November 15, 2016: Court of Appeals rules PRC decision is unappealable, dismisses appeal for lack of jurisdiction

17 The Other 2013 Rate Case November 2013: PRC approves 1.6% rate increase, but only if proposed Full Service IMB requirement is dropped December 2013: USPS appealed decision in federal court May 2015: Court remands case to PRC Original decision was capricious and arbitrary PRC needs to define when preparation standards have a rate impact July 2015: PRC initiates process January 2016: PRC completes review, issues order Rate impact to be based on redefinition or elimination of a rate cell PRC finds Full Service requirement eliminated Basic IMB rate PRC denies USPS request for reconsideration, appeals court defers Rate impact rule applied to end of Return Receipt for Merchandise

18 Ten-Year Review of Ratesetting Process PAEA (2006 postal reform law) requires the PRC to examine the ratesetting process in 2016 Ten years after the date of enactment of the Postal Accountability and Enhancement Act and as appropriate thereafter, the Commission shall review the system for regulating rates and classes for market dominant products established under this section to determine if the system is achieving the objectives in subsection (b), taking into account the factors in subsection (c). If the Commission determines, after notice and opportunity for public comment, that the system is not achieving the objectives in subsection (b), taking into account the factors in subsection (c), the Commission may, by regulation, make such modification or adopt such alternative system for regulating rates and classes for marketdominant products as necessary to achieve the objectives. Review began in December 2016, final report in 2017 Objectives include adequate revenues, including retained earnings, to maintain financial stability Same law included imposition of $55.8 billion prefunding requirement Outcome uncertain Keep, eliminate, or modify CPI cap Re establish a cost of service process

19 Full Service and Seamless Acceptance USPS acknowledges costs to mail producers, data problems, but... Use of Full Service and Seamless Acceptance being linked to optional programs and incentives IMB rich mailstream provides visibility for USPS, allows better measurement USPS reports provided to mail producers are valuable tools to indicate operational errors, assess mail quality, but... Data inaccuracies, undocumented mail remain issues Mailers mostly failing to access, use available reports Error reporting began in October, assessments on November 14

20 Move Update USPS published two notices: July 1: Clarification of the Move Update Standard Explained conventional and alternative methods of compliance Offered answers to typical questions July 6: Quality Census Measurement and Assessment Process Amended existing proposed rule, sought comments Defined terms Offered answers to prior comments Proposed to move from sampling to census evaluation Proposed to assess penalties for NCOA errors above 0.5% threshold Indicated USPS is considering offering free ACS to mailers who present 95% Full Service mail in a calendar month Proposed rule to be issued in 2017, assessments begin six months after final rule is published in the Federal Register

21 What You Can Do Stay informed Price changes Network changes Revisions to mailing standards PRC activities Legislation in Congress Pay attention!

22 Questions