1. National Catholic Development Conference Postal Update
September 29, 2017
Stephen Colella
Vice President Postal Affairs
The Calmark Group

2. Discussion Topics Postal Leaders and Board of Governor Update
USPS Financial Review
Update on Postal Reform Legislation
PRC Review of PAEA
Postage Increase-January 21, 2018
2018 Promotions
Move Update/Change of Address Assessments
USPS New Product-Informed Delivery
Questions

3. Postal Leadership
Postmaster General and Chief Executive Officer — Megan Brennan
Deputy PMG and Chief Government Relations Officer — Ronald Stroman
Chief Customer and Marketing Officer and Executive V.P. — Jim Cochrane
Sales and Customer Relations Senior V.P — Cliff Rucker
Product Innovation V.P. — Gary Reblin
Marketing V.P. — Steven Monteith
Chief Operating Officer and Executive V.P. — David Williams
Chief Financial Officer and Executive V.P. — Joseph Corbett
Chief Information Officer and Executive V.P. — Kristin Seaver
General Counsel and Executive V.P. — Thomas Marshall

4. USPS Board of Governors
Postmaster General and Deputy Postmaster General
9 political appointees
Nominated by the president
Confirmed by the Senate-Any Senator can put hold on nominee
All political appointee positions unfilled
Last governor’s term expired December 8, 2016
Major decisions can’t be made except by governors
“Temporary Emergency Committee” approving rate increases
No nominations yet in the new Congress

5. USPS Finances through Quarter 3 2017

6. Total Volume: FY2017 June YTD vs. SPLY
June YTD has one less delivery and retail day compared to SPLY. * Other primarily consists of USPS & Free Mail at ~287M pieces for FY2017 YTD.
FY2016
116.9B
FY2017
114.0B
FCM
Single-Piece
Presort Letters
& Other
Marketing
Mail
Total Shipping
& Package
International
Other *
(incl. Periodicals)
2.9B

7. “Our financial problems are due to the restrictive laws than prevent us from fully responding to the changes in consumer behavior.” Postmaster General Patrick R. Donahoe testifying before a House Committee Wednesday April 17, 2013

8. The Postal Accountability and Enhancement Act (PAEA)
Signed into Law December 20, 2006 by George Bush
Replaced the 1970 law which had made USPS self supporting, independent agency of the executive branch
Key Changes in the Law include:
Defining UPSP to mean: “the delivery of letters, printed matter, or mailable packages, including acceptance, collection, sorting, transportation, or other functions ancillary thereto.”
Requires prepayment of Future Retirement and Health Care Costs (escrowing $5-$5.5B/year-USPS has not made payment since 2009 when Congress deferred all but $1.4Billion of that year’s $5.4 billion to end of payments
Split Products into two categories-Competitive and Non Competitive
Rate increases capped based on 12 month rolling CPI average
Expedited rate case-requires only 2 months instead of 10 months
Increase financial and operational transparency including reports on progress in meeting delivery service standards
Allows USPS to file for exigent rate increase in addition to annual increases-4.3% Case expired April 10, 2016
PRC is required to review the market dominant regulatory system to determine whether it is achieving the statutory objectives mandated by Congress. The PRC is empowered to modify the system or create a new system as necessary to achieve the objects. The obligation to conduct the review arises 10 years after the enactment of the PAEA .

9. Postal Legislation 2017 Key Points in new legislation
Requires USPS retirees to use Medicare for primary medical coverage
Open new product areas such as the delivery of alcohol
Revised how pension liabilities calculated-using postal demographics
Permanent 2.15% price increase (half of the 4.3 exigent price increase)
Status
Congressman Chaffee (R-UT) and Congressman Cummings (D-MD) introduced basically the same 2016 bill
Oversight and Government Reform Committee (OGC) approves bill by voice vote with bi-partisan support
Congressman Chaffee resigns as Chari of OGC
Congressman Trey Gowdy becomes new chair however reform not a priority at this time
CBO estimates provides positive score stating enacting H.R. 756 would reduce direct spending by about $6 billion over the period
House and Ways Committee still needs to be convince bill will not add to the deficit

10. PRC Ten-Year Review of Rate Making Process
Review began December 2016
Comments due to PRC by March 20
PRC expected to release first findings in September 2017
If PRC findings show the present rate making process does not provide “adequate revenues” the PRC would most likely ask for new comments before mandately any changes
Most likely this process will not complete in 2017
Any postage increases due to the review would likely not go into effect until mid 2018 at earliest

11. 2018 Postal Price Increase Rates to increased on January 21, 2018
Most products will increase will be around current CPI 2% (+/-1)
Nonprofit increases will be ABOVE average
Narrow letter drop ship as required by PRC
Commitment to reduce pass through by at least 10%
In 2017 Destination entry discounts when down:
NDC Entry discounts from $35/M to $26M
SCF Entry discounts from $44/M to $39/M
So the Postage Tiers your mail falls in will drastically impact the actual rate of increase you see

12. CPI
Slide Place Holder
Add latest CPI as published by PRC

13. 2018 Rates (to be approved by PRC)
Slide Place Holder
Add rates

14. PROMOTIONS 2018
No Promotions will be announce unless there is at least one Board of Governor available to approve the promotions
USPS was going to offer much of the same promotions that have been offered in the past

15. Move Update/COA
USPS requires all addresses in a mailing meet one of the move update options within 95 days of the mailing
NCOA is one the most common pr ing compliance methods
Presently compliance is checked by MERLIN equipment prior to mailing
Beginning January 21, 2018 USPS will use census method checking each piece as it moves through USPS processing equipment
Beginning January 21 the USPS will set the compliance threshold at .5%
Beginning January 21 the USPS will access an 8 cent per mail piece penalty for the total quantity over the threshold
Mail Owners can view COA errors on their scorecard or can work with their MSP to get their scores
Mail Owner can request IMb that are not in compliance from Postal One Help Desk
Using IMb unique number mailer can identify address not in compliance

16. Sample of Mailers Scorecard

17. INFORMED DELIVERY™ GET A DIGITAL SNAPSHOT OF INCOMING MAIL
Informed Deliver Testing started in Northern VA about 4 years ago
Test was expanded to New York City and Bordering Areas in CT in late 2015
USPS completed nationwide rollout in April 2017
Sign up at

18. What is Informed Delivery™?
Informed Delivery™ is a consumer-facing feature that enhances hardcopy mail delivery by providing consumers daily mail images via and online dashboard
Informed Delivery™ is a consumer-facing feature that enhances hardcopy mail delivery by providing consumers daily mail images via and online dashboard

19. Sample Uploaded Images

23. Informed Delivery Industry Concerns
Impact on physical response rates
Privacy concerns
Mail owners cannot Opt out-image of their mail piece will be included in s regardless
Mailings testing now underway
Use different URL on physical mail piece than one on image uploaded-understand which piece individual is responding
Share data with USPS

24. Informed Delivery Registered Households: 4.74MM
Registered Users: MM
enabled Users: M
Participating Mailers:
Campaigns:
Average Open Rate: %
Campaign Portal-soft launch on September 9
Official Launch October 2017

25. Testing-Pre Campaign Report
Place holder for updated reports

26. Testing-Post Campaign Report
Place holder for updated reports

27. Informed Delivery Sign up at https://informeddelivery.usps.com
Need to set up usps.com account
Can have multiple users at one address but each user must have a usps.com account
Consumer Opts in no cost
Informed Delivery approved for Mobile Shopping Promotion

28. 2017 MOBILE SHOPPING PROMOTION
Registration Period: June 15 through December 31, 2017
Program Period: August1 – December 31, 2017 Discount Amount: 2% of eligible postage on outbound mailing
Eligible Mail: Standard Mail letters and flats
Nonprofit Standard Mail letters and flats
Mailpiece Contents: All qualifying mail must contain a barcode or other technology that allows the user to engage in an electronic shopping experience.
Mobile Optimized Website: Required
Directional Copy on Mailpiece: Required

29. Sale of Services and Charitable Donations
In some instances the sale of services and charitable donations may qualify for the promotion discount provided a financial transaction occurs at some point during the scanning of the mailpiece.
One of these options must be done to qualify for the promotional discount. These mailings must meet all other promotion requirements ( and:
an item such as a hard copy certificate, thank you note or voucher is mailed to the recipient upon purchase via the US Postal service (does not include invoices, billing statements or receipts),
or the mailpieces contain a Business Reply Mail (BRM) or Courtesy Reply Mail (CRM)
or Share Mail™ ( Alternate Postage) enclosures.
Using Informed Delivery is qualifying method for mobile shopping promotion.
Requires pre approval by both the Informed Delivery and the Mobile Shopping Program Managers

30. Questions Thank You