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To Greater Success
Rhonda Schorr
USPS Sales Specialist
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►The Economy
►Market Trends
►Opportunities To Save
►Strategies Moving Forward
Agenda
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Economic Outlook
Many Retailers Are Filing For Bankruptcy Or Having To Severely Cut Back
Unemployment Rates Continue To Go Up
Banks Freezing Credit And Inflation At High Levels Consumers Are Only Buying Necessities
Online eCommerce — Down For The First Time In Its History
2010 Economy Recovery At Best
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State of Our Business: Headwinds
Strong Competitors
Package Market Declining
Economic UncertaintyConsumer Confidence Down
We Need To Keep Working Customer Care- Bring Value To Customers
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State of Our Business: Tailwinds
Great Business Partners
New Pricing Freedoms
Last Mile Strengths
Market Growth Is Lightweight And Residential
Economic Uncertainty: Customers Looking For Lowest Cost Provider:
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2008 Volume Share
Market Share by Service – All Products
Volume 2008
Overnight Service
2-3 Day Service
Ground Parcel Service
Total
Pieces
%Piece
s% Pieces % Pieces %
UPS 419 37% 334 16% 4,325 59% 5,180 48%
USPS 48 4% 1,355 65% 1,512 21% 3,016 28%
FedEx 505 44% 331 16% 1,205 16% 2,044 19%
DHL 154 13.5% 53 3% 95 1% 366 3%
Other 19 1.5% 3 <1% 180 3% 205 2%
Sub-Total
1,14511%
100% 2,075 20%
100% 7,318 69%
100% 10,538
100%
100%
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USPS33.8%
UPS31.2%
FedEx25.7%
DHL8.0%
Other1.3%
UPS72.9%
FedEx19.4%
Other3.5%
USPS1.5%DHL
2.6%
UPS75.6%
FedEx13.0%
Other1.6% USPS
7.2%DHL2.6%
39% 16% 45%5 Pounds Or Less 11 To 70 Pounds6 To 10 Pounds
3.4 Billion Pieces 3.8 Billion Pieces1.4 Billion Pieces
Breakdown Of Package Market By WeightWho Controls The Market Share
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Weight 2002 2008 Growth
0-5lbs 3.1B 3.4B 13%
6-10lbs 1.3B 1.4B 8%
11-70lbs 3.6B 3.8B 6%
Total 7.9B 8.6B 9%
Package Market Growth Trends By Weight
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B2C Shipments On The Rise
20% 22% 27% 30% 34% 36%
66% 64%
80%73%78%
70%
0%10%20%30%40%50%60%70%80%90%
100%
2002-04 2005 2006 2007 2008 2009 Proj.
Business To Consumer Business To Business
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B2B Is Stagnant
B2C Is Growing
Packages Are Getting “Lighter”
Lightweight Shipments Going B2C Are Costly To Deliver For Our Competitors
Shipments Weighing Less Then 5 Lb - Our Sweet Spot
Market Trends
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►Competitors impose a net minimum price
►Even with their discounts you’ll never pay less than the net minimum — currently $4.57.
►So what does this mean for you?
USPS Has Under-1lb Pricing.And No Net Minimums.
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CFA = Competitive Financial Analysis
Let me show you how I partner with your shipping department to provide you with a realistic comparison when searching for
the best shipping solutions
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CFA – USPS Priority Mail Commercial Plus vs FedEx 2 Day
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Competitor’s Rate Increases 2004 - 2009
PublishedActual
CommercialActual
Residential
YEAR Increase 1 - 5 lbs. 1 - 5 lbs.
2004 1.90% 1.91% 6.06%
2005 2.90% 4.71% 5.80%
2006 3.90% 4.57% 7.57%
2007 4.90% 5.50% 5.56%
2008 4.90% 5.48% 5.46%
2009 5.90% 7.99% 8.23%
TOTAL 24.40% 30.16% 37.70%
AVERAGE 4.07% 5.03% 6.28%
What Are You Really Paying?
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Surcharge 2008 Fee1 Additional Handling +$0.50 To $6.502 Address Correction (Ground) +$1.00 To $6.003 Adult Signature Required +$0.25 To $3.50
4 Declared Value+$0.05 To $0.60 Per $100.00
+$0.30 To $1.80 Minimum Charge5 Delivery Area Surcharge (Commercial) +$0.10 To $1.506 Delivery Area Surcharge (Residential) +$0.10 To $2.307 Delivery Confirmation +$0.25 To $1.50
8 Large Package Surcharge +$5.00 To $45.0090 Lbs. Minimum
9 Residential Surcharge (Air) +$0.10 To $2.3010 Residential Surcharge (Ground) +$0.10 To $1.9511 Signature Required +$0.25 To $2.50
Competitors use surcharges to mask the true cost of shipping:
Our Competitor’s Surcharges Continue To Go Up Each year
Example….$10.00
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1 UPS pieces to/from all 50 states. Volume estimates are from market segmentation models maintained by The Colography Group.2 UPS pieces shipped within the lower 48 states only. Volume based on preliminary estimates
2007 2008Overnight Air 66,382 $2.20 $2.30 $0.10 $6,638 $152,6792/3 Day Air 70,666 $2.20 $2.30 $0.10 $7,067 $162,532Ground 847,928 $1.85 $1.95 $0.10 $84,793 $1,653,460Total 984,976 - - $98,498 $1,806,138
$303,636 $5,546,514Total UPS Revenue Gain
UPS' Revenue Gain From Surcharge
Increases(In Thousands)
UPS CY-2006 Pieces Subject To
Surcharge/Change (In Thousands)Type Of Service
UPS Surcharge Fee
Amount Of Increase
Frequently Applied Surcharges
Delivery Area
(Residential)2
Delivery Area
(Commercial)2Domestic Air & Ground
Domestic Air & Ground
UPS' Total Surcharge Revenues
(In Thousands)
Residential
Surcharge 1
851,276
215,127 $2.20 $2.30
$1.50$1.40
$0.10
$0.10
$21,513 $494,792
$85,128 $1,276,914
Surcharges Are Big BusinessLook How Much is Generated With Just 3 Of These Increases
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Since 2004 our competitors have Steadily Increased Existing
Surcharges and have Added New Surcharges.
Today’s # ?????????
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45
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Delivery Area Surcharge (DAS)
DAS Is In Addition To The Residential Surcharge
“Regular” DAS Is $2.40 In Continental US
New Extended DAS $2.65 In Continental US
DAS Charge Is Also Subject To Fuel Surcharge
Over 80% Of DAS ZIPs Have Extended DAS
Over 57% Of Zips Receive DAS Or Extended DAS
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Above in red: Five-digit ZIP Codes subject to competitor 2009 delivery area surcharges (DAS) for commercial and residential delivery
What Do Our Competitors Consider Rural?
Does Does National Airport in National Airport in D.C. or Malibu, CA,D.C. or Malibu, CA, seem seem
rural to you? It does to our rural to you? It does to our competitioncompetition.
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“Almost 40% Of Total Shipment Costs Are Now Made Up Of Add-on Charges.”
Parcel Magazine
Our Clear, Up-front Pricing Makes It Easy.
“What You See Is What You Get” Rates
No Fuel, Residential, Or Delivery Area Surcharges
No Surprises
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Express Mail
Priced to compete
New incentives►Volume discounts. ►Commercial base discount is increased
and expanded.►New “Commercial Plus” pricing tier to
reward high-volume shippers.►To qualify, customers must ship:
►More than 6,000 pieces per year for Express Mail
►Average discount: ►14.5 percent
Because Our Headquarters Executives Heard You
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Priority Mail
2009 Average price change: 4.7 percent
New incentives:►Commercial base pricing extended to IBI►New “Commercial Plus” pricing tier to reward high-volume shippers
►To qualify, customers must ship:►More than 100,000 pieces for Priority Mail
►Average discount:►7.0 percent
►New small flat-rate box
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Flat Rate Envelopes And BoxesCommercial
Commercial PlusPriority Mail
Envelope $4.80 $4.75
Small Box $4.80 $4.75
Regular Box $9.85 $9.67
Large Box $13.50 $13.27
Large Box (APO/FPO) $11.50 $11.30
Express Mail
Envelope $16.63 $14.96
2009 Flat Rate Prices
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International Products
Global Express Guaranteed®(GXG) Reliable, date-certain shipping to over 190 countries.
Express Mail International®(EMI) Reliable, expedited service to over 190 countries. Now available with day-certain delivery to select destinations.
Priority Mail® International (PMI) Reliable, priority handling to over190 countries worldwide.
First-Class Mail® International Reliable and economical means of sending
correspondence, documents and lightweight merchandise weight up to 4 pounds.
1-3 Business Days
3-5 Business Days
6-10 Business Days
Varies by Destination
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Postal Qualified Wholesalers
Access Worldwide Brokers Worldwide Cloutier Direct, Inc. CMS, Complete
Management, Inc. Dahlgren's Mailing Service, Inc. Distribution Postal Co., Inc. Express Messenger International Express Postal
Options International (XPO) Global Postal Solutions, Inc. IBC, Inc. International Delivery
Solutions (IDS) Mail on the Move LLC International Mail Service, Inc. (IMS) Pitney
Bowes International Mail Services Priority Post Co., Inc. RR Donnelley World Marketing Zip
Mail Services, Inc.
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Free Packaging Opportunities
►Available for all priority & express mail shipments
►Same domestic packaging can be used for int’l shipments
►Customized/co-branding available to those who qualify
►Brand with the most trusted government agency
►Free packaging is cradle to cradle certified
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New Growth Opportunities
►Customers can’t try on touch, see or feel the products before purchasing
►An emerging driver of growth in the market place is the need for reverse logistics solutions
►There is an increasing need for items that are sold to be returned, repaired, recycled, recovered or recalled
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Strategies Moving Forward
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Improve Customer Service
► Improve “ease of use” Developing technology to enhance our USPS.COM website
each and every day Shorten start-up time for new customers
► Improve customer care Reduce response time for customer inquiries
► Enhance employee training Ongoing training to promote knowledge base for customer
care employees
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Visibility & Tracking
► Create more visibility with tracking More passive scans
Added 114% in FY08 547 million additional “enroute” scans
Scan for “arrival at unit” for all packages Increase delivery scan execution NEW Release more tracking data to customers NEW Release “out for delivery” event NEW Add additional scan events MORE TO COME
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Optimize Reasonable Pricing
► Enhance profitability with new product offerings that meet customer’s needs
► Continue to reward volume growth with volume discounts for Priority and Express Mail
► Leverage contract pricing to grow volume and revenue (NDA)
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Recap► If You Aren’t Shipping Any Packages With Us, You
Are Over Spending
►Lowest Prices on 1-5lb Shipments
►No Add-On Charges, Or Net Minimums
►Leveraging New Pricing Freedoms
►Preparing For Future Growth By Expanding Our Reach, Developing New Products And Simplifying Ease Of Use
►Creating A Company That Puts It’s Customers First
► NOW THAT WE HEAR YOU ….Let Us Try To Meet Your Challenges!
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InquiryQuestions
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Query
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