The document discusses the changing mail and shipping landscape and forecasts for the US Postal Service (USPS). It notes that while USPS has been operating at a loss due to pre-funding retiree health benefits, it has actually been profitable when excluding this mandate. The summary also notes that rural delivery points are growing quickly, with over 800,000 new delivery points added annually on average. Finally, it concludes that USPS will need to take action such as monetizing mailbox access, adjusting delivery frequency, allowing workers to join Medicare, and offering new services to adapt to changes in mail volume and revenue.

1. The Changing Mail Moment
Eastern Conference May 2016
Jody Berenblatt
Jessica Dauer Lowrance
The views represented in this paper are solely those of the authors.
1

2. Bio Page
Jessica Dauer Lowrance
MTAC PostCom Executive
President Elect, PostCom
16 years in Mailing Industry
Formerly USPS Economist
Jody Berenblatt
Senior Advisor, GrayHair Advisors
30 years in Mailing Industry
Formerly: Bank of America,
TimeWarner, Columbia House
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3. Agenda
• Contentious Postal Finances
• Measuring Change
– Revenue
– Delivery Points…
• Forecasts
• hmmm
3

4. Contentious Annual Financial Reports
The contentiousness exists because, by law, the Postal Service is required to make
annual payments to prefund its anticipated retiree health benefits.
Table 1: USPS Financial Results (in billions)
Fiscal Year Total Revenue
Total Operating
Expenses
Net Income
(Loss)
2015 $68,928.00 $73,826.00 $(5,060.00)
2014 $67,830.00 $73,178.00 $(5,580.00)
2013 $67,318.00 $72,128.00 $(4,977.00)
2012 $65,223.00 $80,964.00 $(15,906.00)
2011 $65,711.00 $70,634.00 $(5,067.00)
2010 $67,052.00 $75,426.00 $(8,505.00)
[1] 2010-2012: 2012 USPS Annual Report to Congress; 2013-2015: 2015 USPS Annual Report of Congress 4
The Postal Service has not made a payment to the U.S. Treasury since 2009, but it
continues to show the pre-funding expense in its financial reports as a large financial loss.
Stakeholders
point out
shortfalls of
reporting
Income &
Expense in
this format

5. FY 2015 Operating Profit: $1.2b
5Source: NALC

6. Excluding Pre-Funding Mandate, the
Postal Service made money
[1] 2010-2012: 2012 USPS Annual Report to Congress; 2013-2015: 2015 USPS Annual Report of Congress
Table 2: Net versus Controllable Income (in billions)
Fiscal Year
Net Income
(Loss)
Controllable Income
(Loss)
2015 $(5,060.00) $1,188.00
2014 $(5,580.00) $1,357.00
2013 $(4,977.00) $(983.00)
2012 $(15,906.00) $(2,450.00)
2011 $(5,067.00) $(2,685.00)
2010 $(8,505.00) $(584.00)
[1] Sources 2010-2012: 2012 USPS Annual Report to Congress; 2013-2015: 2015 USPS Annual Report of Congress; 2010-2012
Controllable Income: 2012 10K
FY 2014 & 2015
USPS made $2.545
billion in two years
help with needed
investments in
technology & vehicle
fleet update.
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7. First Quarter is the Best Quarter
Total Rev Total Op Expenses Income
Q1-16 [6] $19,359.00 $19,002.00 $307.00
Q1-15 [5] $18,761.00 $19,475.00 $(754.00)
Q1-14 [5] $17,994.00 $18,306.00 $(354.00)
Q1-13 [4] $17,660.00 $18,880.00 $(1,264.00)
Q1-12 [4] $16,677.00 $20,923.00 $(3,287.00)
Q1-11 [3] $17,877.00 $18,167.00 $(329.00)
Q1-10 [3] $18,355.00 $18,618.00 $(297.00)
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The usual bills, statements marked by an increase in
advertisements & catalogs for Holiday shopping.

8. 1st Quarter Revenue & Volume
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The challenge: retaining mail-related revenue AND
increasing revenue from competitive products & services

9. Percentage of Mailing & Shipping
Revenue to Total Revenues
9
Mailing Revenue is still the primary revenue source.
Shipping Revenue growth is sizable, nearly a quarter of total.

10. Volume & Revenue
for Mailing & Shipping
Fiscal Year
Mailing
Revenue
Mailing
Volume
Shipping
Revenue
Shipping
Volume
2015 $53,705 154,157 $15,085 4,530
2014 $54,221 155,539 $13,543 3,969
2013 $54,598 158,222 $12,597 3,715
2012 $53,627 156,357 $11,596 3,502
2011 $55,041 165,039 $10,670 3,258
2010 $56,896 167,802 $10,156 3,057
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FY15 Mailing revenue is 77.9% of total revenue;
while volume is 97% of total delivered.

11. Rural Delivery Points Growing Quickly
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Note: In 2004, the Postal Service refined its reporting of addresses on rural and highway contract routes by no longer counting
vacant addresses (unoccupied for more than 90 days) and addresses of customers who received mail solely via Post Office box.
Sources: HISTORIAN UNITED STATES POSTAL SERVICE FEBRUARY 2016
Year City Rural PO Box
Highway
Contract
Route Total
2010 88 40.1 20.1 2.7 150.9
2011 88.3 40.5 20 2.7 151.5
2012 88.6 40.9 19.9 2.8 152.2
2013 88.9 41.6 19.6 2.8 152.9
2014 89.2 42.3 19.5 2.9 153.9
2015 89.7 43 19.4 2.9 155
7%

12. Delivery Point Growth
Fiscal Year
New Delivery
Points
Total Delivery
Points
Mailing
Volume/Del
Point
Shipping
Volume/Del
Point
2015 1,059,852 154,951,828 995 29
2014 971,543 153,891,976 1,011 26
2013 773,882 152,920,422 1,035 24
2012 654,560 152,146,551 1,028 23
2011 636,530 151,491,991 1,089 22
2010 739,780 150,855,461 1,112 20
On average: 806,025 New Customers annually.
How can USPS leverage Delivery Point Growth?
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13. Total Revenue per delivery point by
Mailing and Shipping services
Fiscal
Year
Mailing
Revenue
Shipping
Revenue
2015 $346.59 $97.35
2014 $352.33 $88.00
2013 $357.04 $82.38
2012 $352.47 $76.22
2011 $363.33 $70.43
2010 $377.16 $67.32
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14. Potential USPS Volume Forecasts
Fiscal
Year
Mailing
Volume
2%
Shipping
Volume
8%
Shipping
Volume
14%
2020 139,173 6,725 8,774
2019 142,049 6,214 7,687
2018 144,983 5,742 6,735
2017 147,979 5,306 5,901
2016 151,036 4,903 5,170
With 14% Year on Year growth, Shipping Services will still account for a
modest 6% of all volume by 2020. Mailing Volume remains Dominant.
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15. Potential Volume Per Delivery Point
Despite Volume Decline, Monopoly Mail is market dominant
Delivery
Points
Mailing Volume
/Delivery Point
2% decline
Shipping Volume
/Delivery Point
14% increase
2020 158,981,953 875 55
2019 158,175,928 898 49
2018 157,369,903 921 43
2017 156,563,878 945 38
2016 155,757,853 970 33
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16. Where could we go from here?
• Privatization
– Learn from European
Experience: Legacy Costs
– Define USO
• Spin Off Package
Business
– Performance &
Profitability
• Do Nothing
• Revenue from MailBox
Access
– US is ONLY post with
MailBox Monopoly
– Newspaper Box as
precedent
• Digital Preview of
Physical Mail
– Changes the
conversation
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17. Conclusion: Take Action
Access & Delivery Frequency
• Monetize Mailbox access,
clearly define & fund USO
• Mail Delivery > 5 days
– Market Dominant could hit
140 billion piece threshold in
2019/2020 to help contain
costs for market dominant
products
• 330 days of delivery / avg 3.1
pieces
• 278 days in 2020 / avg 3.1 pieces
Legislation
• Allowing USPS workers to join
Medicare
• Offering other local and
federal government services at
retail post offices
• Delaying the consolidation of
additional postal processing
facilities
• Reporting at a finer level
service performance for rural
delivery
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