Federal Register, Volume 73 Issue 60 (Thursday, March 27, 2008)

[Federal Register Volume 73, Number 60 (Thursday, March 27, 2008)]
[Notices]
[Pages 16327-16392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-5925]


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POSTAL SERVICE


Change in Rates of General Applicability for Competitive 
Products: Decision of the Governors of the Postal Service

AGENCY: Postal Service.

ACTION: Notice.

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SUMMARY: This notice sets forth changes in rates of general 
applicability for competitive products.

DATES: Effective Date: May 12, 2008.

FOR FURTHER INFORMATION CONTACT: Daniel J. Foucheaux, Jr., 202-268-
2989.

SUPPLEMENTARY INFORMATION: On March 3, 2008, pursuant to their 
authority under 39 U.S.C. 3632, the Governors of the Postal Service 
established prices and classification changes for competitive products. 
The Governors' Decision and the record of proceedings in connection 
with such decision are reprinted below in accordance with Sec.  
3632(b)(2). Implementing regulations will be published separately in 
the Federal Register.

Stanley F. Mires,
Chief Counsel, Legislative.

Decision of the Governors of the United States Postal Service on 
Changes in Rates and Classes of General Applicability for Competitive 
Products (Governors' Decision No. 08-3)

March 4, 2008.

Statement of Explanation and Justification

    Pursuant to our authority under section 3632 of title 39, as 
amended by the Postal Accountability and Enhancement Act of 2006 
(``PAEA''), we establish new prices of general applicability for the 
Postal Service's competitive products, and such changes in 
classifications as are necessary to define the new prices. The prices 
and classification changes are shown in Attachment A and are described 
in detail in the analysis provided by management in Attachment B. We 
have reviewed that analysis and have evaluated the new prices and 
classification changes in accordance with 39 U.S.C. 3632-3633 and 39 
CFR 3015.2. We approve the changes set forth in Attachment A, finding 
that they

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are appropriate, and are consistent with the regulatory criteria. In 
particular, we note that the price changes are expected to result in an 
increase of contribution for each competitive product.
    For Express Mail service, the overall increase is approximately 3.1 
percent. A number of substantive changes are made to the Express Mail 
price categories. First, the current unzoned retail price structure is 
replaced with prices that are zoned to reflect the practice in the 
marketplace and to align prices better with costs. Second, lower prices 
are available for customers who use alternate postage payment systems 
that capture more detailed customer information, such as the online 
service, Click-N-Ship, or corporate accounts. Even lower prices will be 
available to customers who use corporate accounts and whose average 
daily volumes exceed a minimum threshold. These changes will improve 
Express Mail's competitive position, especially with regard to small 
and medium-sized businesses.
    For Priority Mail service, the overall price increase is 4 percent. 
The average Priority Mail retail price increases by about 6 percent. 
Customers who use electronic postage and meet other requirements are 
provided reduced prices. On average, these prices are 3.5 percent lower 
than retail prices; however, the size of the reduction varies for each 
specific price point, based on competitive considerations. This should 
increase volume and revenue from small-volume commercial shippers.
    For Parcel Select service, the overall average price increase is 
5.7 percent. Prices increase more for Destination BMC entry than for 
Destination Delivery Unit entry in order to further encourage customers 
to bring packages to the DDU. Incentives are provided, in the form of 
declining block prices, for shippers with greater than $5 million 
annual Parcel Select revenue who increase their volume from the 
previous twelve month period. To further encourage growth, qualifying 
shippers whose annual Parcel Select volume grows more than 10 percent 
will receive rebates ranging from 2 to 14 percent of DDU postage based 
on their annual postage revenues.
    For Parcel Return Service, prices have an overall increase of 2 
percent to encourage growth. Prices are realigned between the return 
delivery unit (RDU) and return BMC categories, such that RBMC has an 
approximately 9 percent increase and RDU prices are decreased 21 
percent.
    For Global Express Guaranteed service, the overall price increase 
is 5.2 percent. Price increases vary by country group and weight 
increment. An online price remains available. The relatively modest 
price increases and continued availability of the lower online price 
should allow this service to remain competitive.
    For Express Mail International service, prices will increase on 
average by 6 percent. Price increases vary by country group and weight 
increment. Customers using Click-N-Ship or other online applications 
continue to receive a lower price. In addition, two new incentives are 
provided for commercial mailers. First, customers receive a reduced 
price if they pay postage by PERMIT imprint and use authorized software 
to prepare their mail. This software allows mailers to create online 
Customs forms, print labels, and track packages. Second, customers also 
receive a lower price if they use this authorized software to prepare 
their mail and pay their postage through an Express Mail Corporate 
Account; this incentive is tiered, depending on volume or postage 
minimums. The new incentives are expected to result in little or no 
shift of retail mail volume to the lower prices; rather, they are 
expected to be used by new customers, or customers who previously had a 
customized agreement with the Postal Service.
    For Priority Mail International service, price increases, on the 
whole, are 6.1 percent. Different increases apply depending on the 
weight and country group. Prices are set to fit logically between 
Express Mail International and First-Class Mail International. The 
incentive to pay postage online is maintained and a new incentive is 
added for commercial customers who pay postage by PERMIT imprint and 
use authorized software to prepare their mail. As with Express Mail 
International, retail mail volume is not expected to shift to the new 
lower prices.
    For International Direct Sacks--M-Bags (Airmail M-Bags), prices 
rise around 5.9 percent. The country group structure for this product 
is expanded to nine country groups to match the Express Mail 
International, Priority Mail International and planned First-Class Mail 
International country group structures, providing convenience and ease 
of use for customers.
    For International Priority Airmail (IPA), published prices 
generally increase by 12.5 percent. For International Surface Airlift 
(ISAL), prices for ISC Drop Shipment will increase 21.3 percent. In 
addition, published prices for ISAL Direct Shipment are eliminated and, 
in the future, will only be available through customized agreements.
    Finally, prices for the following International Ancillary Services 
used with competitive international mail services will increase: 
International Certificate of Mailing, International Registered Mail, 
International Return Receipt, International Restricted Delivery and 
certain International Insurance prices (Priority Mail International 
Insurance and Global Express Guaranteed Insurance).
    As shown in Attachment B, these changes satisfy the statutory 
requirements. They should not result in the subsidization of 
competitive products by market dominant products (39 U.S.C. 
3633(a)(1)). Each competitive product should cover its attributable 
costs (39 U.S.C. 3633(a)(2)). They should allow competitive products as 
a whole to comply with 39 U.S.C. 3633(a)(3), which, as implemented by 
39 CFR 3015.7(c), requires competitive products to contribute a minimum 
of 5.5 percent to the Postal Service's total institutional costs.

Order

    The changes in prices and classes set forth herein shall be 
effective at 12:01 A.M. on May 12, 2008. We direct the Secretary to 
have this decision published in the Federal Register in accordance with 
39 U.S.C. 3632(b)(2). We also direct management to file with the Postal 
Regulatory Commission appropriate notice of these changes.
    By The Governors:
    Alan C. Kessler,
    Chairman.
BILLING CODE 7710-12-P

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[FR Doc. E8-5925 Filed 3-26-08; 8:45 am]
BILLING CODE 7710-12-C