In 2009, First-Class Mail and Standard Mail, which make up 94% of volume, decreased approximately 24.3 billion pieces, or 12.7% compared to last year, with an associated drop in revenue of $5,528 million, or 9.4%. Total Mailing Services revenue decreased $6,592 million, or 9.9%, with a corresponding volume decrease of 25.5 billion pieces, or 12.7%, compared to last year. Most of this decrease can be attributed to the downturn in the economy, particularly the financial and real estate sectors, which are heavy users of the mail.
For the year ended September 30, 2009, revenue from First-Class Mail was $35,873 million, or 6.0%, less than last year, as volume decreased 7.9 billion pieces, or 8.6%, compared to 2008. Reflecting the economy, all significant subgroups of First-Class Mail experienced revenue and volume declines. Single-piece First-Class letter revenue declined $1,055 million, or 7.3%, on a decrease of 3,493 million pieces, or 10.4%, for the year compared to 2008. Single-piece First-Class Mail volume, including bills, bill payments, statements, confirmations, orders and rebates, has been in decline for over a decade. While price has some effect on First-Class Mail volume, in this environment the economy is the primary driver behind the volume decline, with technology as a secondary driver.
First-Class Mail Volume Changes from Prior Year
In 2008, First-Class Mail revenue decreased $226 million, or 0.6%, while volume decreased by 4.6 billion pieces, or 4.8%. The 2008 revenue decrease occurred in spite of a 2008 rate increase and the residual effect of a prior rate increase. The most significant decline was in single-piece First-Class letters, with a decrease of over 3 billion pieces. The long-term continued decline in single-piece volume reflects the impact of electronic diversion as businesses, nonprofit organizations, governments and households continue to convert to electronic methods of communication.
Standard Mail revenue decreased $3,222 million, or 15.7%, in 2009, as volume decreased 16.4 billion pieces, or 16.5%, compared to last year. Standard Mail volume has been significantly impacted by the decline in advertising spending as a result of the recession, which spread rapidly throughout the economy. All subgroups of Standard Mail lost both revenue and volume in 2009 compared to last year. Standard Mail letter volume fell 18.4%, or 10.5 billion pieces, while revenue dropped $1,782 million, or 16.9%, in 2009 compared to 2008. The volume for Standard Mail flats fell 22.2%, or 2,218 million pieces, while revenue dropped $798 million, or 21.8%, in 2009 compared to last year. In addition to the impact of the troubled economy on Standard Mail revenues, advertisers continue to become more sophisticated in the targeting of their mailings, further reducing mail volume. We expect advertising mail to begin to increase as the economy improves, although many experts do not expect the economic recovery to be rapid or robust.
Standard Mail Volume Changes from Prior Year
In 2008, Standard Mail revenue decreased almost $200 million, or 0.9%, compared with 2007, on 4.3% volume decline. The progressively larger quarterly volume declines were a harbinger of 2009. Standard Mail represented 27% of total operating revenues and 49% of total volume in 2008.
Revenue from Periodicals decreased $257 million, or 11.2%, in 2009 compared to last year. Trends in reading behavior have been depressing this segment for years, and, in conjunction with the recession, have pushed revenue and volume declines into double digits. The average weight per piece of Periodicals decreased by 10.8% in 2009, reflecting the decline in the number of advertising pages. Periodicals volume decreased 651 million pieces, or 7.6%, in 2009 compared to last year.
Periodicals volume decreased 191 million pieces, or 2.2%, in 2008 compared to 2007. Price increases resulted in a revenue increase of $107 million, or 4.9%, in 2008. The long-term trend in reading preferences was the significant driver of 2008 volume and revenue declines.
Package Services revenue of $1,683 million decreased $162 million, or 8.8%, in 2009, compared to 2008. Volume decreased 116 million pieces, or 13.7%, in the same period. Volumes fell throughout the package industry in 2009, reflecting the overall state of the economy.
Price increases resulted in a Package Services revenue increase of $33 million, or 1.8%, in 2008 compared to 2007. Volume decreased 68 million pieces, or 7.4%, in 2008. During 2008 each sub-classification of Package Services experienced volume declines and revenue increases, with the exception of Bound Printed Flats, which experienced both volume and revenue declines.
