Although the economy is primarily responsible for the current revenue and volume decrease, electronic diversion presents an on-going, long-term challenge.
First-Class and Standard Mail comprise 94% of total mail volume. First-Class Mail volume is expected to decline slightly, while Standard Mail is expected to regain only slowly its former volume. Total mail volume is expected to show steady growth beginning in 2011 as the economy continues to recover, but may never return to the peak 2006 levels.
For 2010, we project revenue to decrease between 4% and 6% on a volume decrease of 6% to 9%. It is possible that revenues and volumes could decrease more than projected. Revenue is expected to outperform volume due primarily to recently announced Shipping Services price increases and the residual effect of the 2009 price increases. Mailing Services prices will not increase in 2010.
First-Class Mail volume is expected to decline during 2010. When employment, consumer spending and capital investment recover, growing use of the Internet and other electronic means of communication will continue to suppress mail volume growth rates. First-Class single-piece letters have been in decline for more than a decade and are expected to continue to decline in both the short- and long-term. Presorted First-Class letters are expected to grow as economic growth returns.
We estimate that Standard Mail will have fallen by 25% by the time the effects of the recession have receded. The ten-year outlook post-recession is more positive; however, it may be a full decade before Standard Mail volume again attains 2007 levels (if at all), with the strongest growth rates forecast to occur in 2012 and 2013. For 2010, Standard Mail revenue and volume are expected to decline. The decline in both revenue and volume is expected to continue through the first half of 2010, with marginal growth in the second half of the year.
Periodicals revenue and volume are both projected to decrease modestly in 2010. While the declines in Periodicals are not as dramatic as some other mail categories, they are part of a long-term trend.
Both volume and revenue are expected to be relatively flat in 2010 for Package Services.
Shipping Services revenues and volumes are expected to increase slightly in 2010. An average price increase of 3.3% was announced on November 3, 2009. This entire group is influenced by competitors’ prices, which may include fuel surcharges. P.L. 109-435 has provided an opportunity for greater competition by the Postal Service in this market.
