US Postal Service 2006 Annual Report Download - page 22

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20 | 2006 Annual Report United States Postal Service
In our operations, we established broad new internal processes for quality
control and timely cross-functional hand-offs. We began live tests with our
Flats Sequencing System, the next step in postal mail processing automa-
tion. A filing was submitted to the PRC for an advisory opinion on our
delivery network redesign. This will support the need for an evolutionary
network design. We also started multiple efforts to improve the accuracy
and quality of mailing addresses.
The full text of our Strategic Transformation Plan 2006–2010 is available
at www.USPS.com.
Services (Products)
The Postal Service is the centerpiece of the U.S. mailing industry. We
provide a wide variety of services and products to meet almost any mailing
need. Some of our major services and products are:
FIRST-CLASS MAIL
Includes postcards, letters, or any other advertisement or merchandise up
to 13 ounces. This service (or Express Mail or Priority Mail) is required for
personal correspondence, handwritten or typewritten letters and bills or
statements of account.
PRIORITY MAIL
This 1–3-day non-guaranteed delivery service is typically used to send
documents, gifts and merchandise.
EXPRESS MAIL
This overnight money-back guaranteed service includes tracking, proof of
delivery and insurance up to $100. Delivery is offered to most destinations
and is available 365 days a year with no extra charge for weekend and
holiday delivery.
PERIODICALS
Offered for newspaper, magazine and newsletter distribution and requires
prior authorization by the Postal Service.
STANDARD MAIL
Is offered for any item, including advertisements and merchandise
weighing less than 16 ounces that are not required to be sent using
First-Class Mail. Standard Mail is typically used for bulk advertising to
multiple delivery addresses. Content restrictions apply for authorized
nonprofit mailers.
PACKAGE SERVICES
Are offered for any merchandise or printed matter weighing up to 70
pounds. These services include Parcel Post, Bound Printed Matter, Library
Mail and Media Mail.
SPECIAL SERVICES
Offer a variety of enhancements that add value to mail by providing
added security, proof of delivery or loss recovery. These services
include: Certified Mail, Registered Mail, Delivery Confirmation, Signature
Confirmation and insurance up to $1,000.
MONEY ORDERS
Are offered as a safe, convenient and economical alternative to sending
cash through the mail. They can be purchased at any Post Office as well
as from any rural route carrier. Postal money orders are available for
any amount up to $1,000 and are restricted to a daily purchase limit of
$10,000 per customer. Money orders can be cashed at any Post Office or
can be deposited or negotiated at financial institutions. Money orders are
replaced if damaged, lost or stolen.
Rate and Classification Activity
The PRC is an independent establishment of the executive branch of the
United States government. The PRC reviews our proposals to establish
and change domestic mail rates, fees and mail classifications. The PRC
holds public hearings and issues recommended decisions to the Board
of Governors of the Postal Service, who approve, reject, or, in some
cases modify the PRC’s recommendations. The PRC is also authorized
to issue advisory opinions concerning proposed changes in the nature
of postal services that affect service on a nationwide or substantially
nationwide basis, to recommend decisions regarding rate complaints by
interested parties and to report regarding complaints that parties are not
receiving postal services in accordance with the policies of the Postal
Reorganization Act. The PRC is also responsible for promulgating rules
and regulations and establishing procedures deemed necessary and
proper to carry out their functions and obligations.
On January 8, 2006, the Postal Service implemented an average 5.4%
postage rate increase across all rate classifications in order to generate
revenues to partially fund the escrow requirements set forth in the Postal
Civil Service Retirement System Funding Reform Act of 2003, Public Law
108-18 (P.L.108-18).
On May 3, 2006, the Postal Service filed a request with the PRC to
increase prices by an average of 8.5%. This request is not across-
the-board, but it better aligns our prices with our costs. The filing also
includes numerous innovative classification proposals. The most sweeping
of these classification proposals is more extensive shape-based pricing.
The last rate case of this nature was in 2001. The filing also contains a
proposal for a “forever” stamp. This stamp would be sold at the prevailing
First-Class Mail single-piece letter rate. Consumers would be able to use
this stamp for the prevailing First-Class single-piece rate forever. Other
proposals are designed to reduce “undeliverable as addressed” First-Class
Mail, improve the handling of Periodicals and enhance our insurance offer-
ings. The PRC has 10 months from the filing date to submit its findings to
the Board of Governors for its review.
Financial Section Part I