Let’s do the numbers
Volume and revenue numbers for the fiscal year that ended September 30 were released at the last BOG meeting, but you can get a better picture of the changes facing the USPS by taking a look at the RPW numbers that were posted last week. RPW stands for Revenue, Pieces and Weights, and the RPW reports contain the basic numbers used to calculate postal budgets, and to set postal rates.
Here are some of the more interesting items in this year’s data:
- First class single piece volume fell by 3%, or 1.3 billion pieces. Total first class volume was only down by 0.5%, but that’s because volume actually increased in the discounted Automation Presort category. Consider this- the average revenue from each first class single piece item was 47 cents. Average revenue from each Automation Presort piece was less than 32 cents.
- Standard mail was up by 1.5%, or 1.5 billion pieces, and once again there was more standard mail than first class overall. Average revenue for each piece of standard mail was 19.4 cents.
- Priority mail volume was up by 4.1%. Priority is one of the highest profit margin services the USPS offers, but is still represents a relatively small piece of the pie, at about seven percent of total mail revenue.
What it all boils down to is this- like it or not, the high revenue, monopoly-status volume is continuing to decline. The lower revenue, less stable advertising volume will continue to increase. (Less stable? Yes- bank statements have to be mailed every month- catalogs can be cancelled if the economy suddenly turns sour) Right now the conventional wisdom seems to be that hard copy, mailed ads and catalogs can drive both mail order and online sales. That’s an equation that’s subject to change, however, as the web mindset matures- given the cost difference between electronic and postal ad delivery, it might not take much to arrive at a tipping point where electronic delivery of advertising sweeps hard copy delivery away.
Meanwhile, package and expedited delivery services continue to show healthy growth, but not enough to entirely make up for the loss of first class revenue.
And in the background, the likelihood of arbitrated labor agreements and the dimly seen shape of postal reform add to the suspense…
Overall a 4% gain in revenue, in a year with increased productivity, and a decrease of 37,000 in the workforce.
I don’t think there are too many companies in the world who did that well in 2006 outside of the construction industry.
Two problems with your comment:
- The 4% increase in revenue was accompanied by a 5% increase in expenses.
- All of the increased revenue was due to the postage increase required to fund the escrow account- none of it is available to the USPS for expenses.
I believe the USPS must be conservative in assessing volume figures based on RPW. RPW sampling can change depending upon the time of year or even the time period during a given month. POS figures more accurately sum up the distribution of added services and other accountables tracked by RPW.