USPS Predicts 7.2% Growth in Standard-A Mail Volume

The U.S. Postal Service last week said it expects to see growth in 1998 for both Standard A and First-Class mail with First-Class showing more moderate results. It forecasts an increase in mailings for 1999 with First-Class continuing its more moderate growth of 1 percent to 2 percent.

Although final audited figures should be announced in mid-December, the USPS' preliminary Fiscal Year 1998 Revenue, Piece and Weight Report reveals a gross of $59.8 billion for FY98, a 3.1 percent increase over last year's gross of 1.7 billion. Total Standard A mail volume, including regular nonautomation and automation presort, enhanced carrier route and nonprofit mail, increased 7.2 percent to 82.4 billion pieces sent in the United States, compared to 76.8 billion pieces in 1997. Standard A mail revenue increased 6.8 percent to $13.7 billion from last year's $12.8 billion. First-Class mail volume reported a more moderate increase of 1.3 percent in FY98, and a 1.6 percent increase in revenue.

The reason First-Class is growing more slowly than Standard A, according to Malcolm Harris, USPS manager of economics and forecasting, is the growth of e-payment and e-billing programs that are cutting into First-Class mail volume, while Standard A is benefiting from the current economic growth.

“Standard A is very sensitive to the economy because it is a marketing investment for companies, and, as a result, when the economy is doing well, Standard A usually grows,” he said.

Standard A mail is predicted to have more piece growth than First-Class in 1999, said Harris. “We should have three to four billion more pieces of Standard A mail in 1999, whereas we may have two billion more in First-Class.” The USPS predicts it will continue to grow — as it has the last two years — between 1 percent and 2 percent in FY99.

“A lot of it has to do with what the economy does,” Harris said. “If we continue to have the kind of strong economy we've had over the last four years, and given how small our price increase is, we could have another great year in Standard A. But, there are still some worries on the horizon, most notably the series of crises in the emerging economies; and if these eventually pull down the American consumer, then we could have trouble in '99.”

Harris said USPS' chief financial officer Richard Porras and USPS' comptroller John Ward are watching these developments as well as monitoring the bills, remittances and statements categories, which represent about $13 billion to $15 billion of First-Class revenue for the USPS.

“If we were to lose a significant portion of that, it would hurt us financially,” he said.

Harris said the USPS is stressing that businesses, such as banks, can use the mail as a very cost-effective way to build relationships with their customers, including using their statements as direct mail vehicles.

“Banks have been competing with the mutual funds industry for the last thirty years, and they've lost enormous market share,” said Harris. “The banking industry should be looking at the mail more closely.”

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