Change in Rates and Classes of General Applicability for Competitive. ACTION: Notice of a change in rates of general applicability for competitive

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1 This document is scheduled to be published in the Federal Register on 11/01/2016 and available online at and on FDsys.gov POSTAL SERVICE Change in Rates and Classes of General Applicability for Competitive Products AGENCY: Postal Service. ACTION: Notice of a change in rates of general applicability for competitive products. SUMMARY: This notice sets forth changes in rates of general applicability for competitive products. DATES: Effective date: January 22, FOR FURTHER INFORMATION CONTACT: Daniel J. Foucheaux, Jr., SUPPLEMENTARY INFORMATION: On October 11, 2016, 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 section 3632(b)(2). Stanley F. Mires, Attorney, Federal Compliance. 1

2 DECISION OF THE GOVERNORS OF THE UNITED STATES POSTAL SERVICE ON CHANGES IN RATES OF GENERAL APPLICABILITY FOR COMPETITIVE PRODUCTS (GOVERNORS DECISION NO. 16-7) October 11, 2016 STATEMENT OF EXPLANATION AND JUSTIFICATION Pursuant to authority under section 3632 of title 39, as amended by the Postal Accountability and Enhancement Act of 2006 ( PAEA ), I establish new prices of general applicability for the Postal Service s shipping services (competitive products), and such changes in classifications as are necessary to define the new prices. The changes are described generally below, with a detailed description of the changes in the attachment. The attachment includes the draft Mail Classification Schedule sections with classification changes in legislative format, and new prices displayed in the price charts. As shown in the nonpublic annex being filed under seal herewith, the changes I establish should enable each competitive product to cover its attributable costs (39 U.S.C. 3633(a)(2)) and should result in competitive products as a whole complying with 39 U.S.C. 3633(a)(3), which, as implemented by 39 CFR (c), requires competitive products collectively to contribute a minimum of 5.5 percent to the Postal Service s institutional costs. Accordingly, no issue of subsidization of competitive products by market dominant products should arise (39 U.S.C. 3633(a)(1)). I therefore find that the new prices are in accordance with 39 U.S.C and 39 CFR I. 2

3 Governors Decision No Page 2 Domestic Products A. Priority Mail Express Overall, the Priority Mail Express price change represents a 3.4 percent increase. The existing structure of zoned Retail, Commercial Base, and Commercial Plus price categories is maintained, with Commercial Base and Commercial Plus prices continuing to be set equal to each other. Retail prices will increase an average of 3.7 percent. The price for the Retail Flat Rate Envelope, a significant portion of all Priority Mail Express volume, is increasing to $ The prices for the Retail Flat Rate Envelope, Padded Flat Rate Envelope, and Legal Flat Rate Envelope will have differentiated prices for The Commercial Base price category offers lower prices to customers who use online and other authorized postage payment methods. The Commercial Base prices will increase 2.4 percent on average. Commercial Base prices will be set at a flat 11.2 percent discount off of Retail prices. The Commercial Plus price category has traditionally offered even lower prices to largevolume customers. However, recognizing that the Postal Service is at a competitive disadvantage in the marketplace by publishing these highly discounted prices that are viewable by all customers, Commercial Plus prices were matched to the Commercial Base prices in 2016 and will continue to be in For January, Commercial Plus prices as a whole will receive a 2.3 percent increase on average. B. Priority Mail On average, the Priority Mail prices will be increased by 3.9 percent. The existing structure of Priority Mail Retail, Commercial Base, and Commercial Plus price categories is maintained. Retail prices will increase an average of 3.3 percent. Retail Flat Rate Box prices will be: Small, $7.15; Medium, $13.60; Large, $18.85 and Large APO/FPO/DPO, $ Thus, the Large APO/FPO/DPO Flat Rate Box will be $1.50 less than the Large Flat Rate Box. The regular Flat Rate Envelope will be priced at $6.65, with the Legal Size and Padded Flat Rate Envelopes priced at $6.95 and $7.20, respectively. 3

4 Governors Decision No Page 3 The Commercial Base price category offers lower prices to customers using authorized postage payment methods. The Commercial Base prices will increase 4.1 percent on average. Commercial Base prices will, on average, reflect a 13.6 percent discount off of Retail prices. The Commercial Plus price category has traditionally offered even lower prices to largevolume customers. For January, Commercial Plus prices as a whole will receive a 4.5 percent increase and will average 16.8 percent off Retail prices. C. Parcel Select On average, prices for destination-entered non-lightweight Parcel Select, the Postal Service s bulk ground shipping product, will increase 4.9 percent. For destination delivery unit (DDU) entered parcels, the average price increase is 4.9 percent. For destination sectional center facility (DSCF) destination entered parcels, the average price increase is 4.8 percent. For destination network distribution center (DNDC) parcels, the average price increase is 5.0 percent. Prices for Parcel Select Lightweight will increase by 8.0 percent. Parcel Select Ground will see a 2.7 percent price increase. D. Parcel Return Service Parcel Return Service prices will have an overall price increase of 5.5 percent. Prices for parcels retrieved at a return Sectional Center Facility (RSCF) will increase by 5.8 percent, and prices for parcels picked up at a return delivery unit (RDU) will increase 5.2 percent. E. First-Class Package Service First-Class Package Service continues to be positioned as a lightweight (less than one pound) offering used by businesses for fulfillment purposes. Overall, First-Class Package Service prices will increase 4.1 percent. F. Retail Ground Retail Ground prices will increase 3.8 percent. Customers shipping in s 1-4 will continue to receive Priority Mail service and will only default to Retail Ground if the item contains hazardous material or is otherwise not permitted to travel by air transportation. 4

5 Governors Decision No Page 4 G. Domestic Extra Services Premium Forwarding Service (PFS) prices will increase 3.8 percent in The retail counter enrollment fee will increase to $ The online enrollment option, introduced in 2014, will now be available for $ The weekly reshipment fee will increase to $ New for 2017, for PFS Commercial, Priority Mail Express or Priority Mail shipments can be dispatched in bulk at a flat rate for full and half trays. Prices for Adult Signature service will increase to $5.90 for the basic service and $6.15 for the personspecific service. Address Enhancement Service prices will be increasing between 1.9 and 7.9 percent depending on the particular rate element, to ensure adequate cost coverage. Additionally, the TIGER/ZIP+4 price category will be retired because of low usage. Competitive Post Office Box prices will be increasing 6.5 percent on average, which is within the existing price ranges. Package Intercept Service will increase 3.2 percent, to $ The Pickup On Demand fee, which has not increased since 2013, will increase to $22.00 for II. International Products A. Expedited Services International expedited services include Global Express Guaranteed (GXG) and Priority Mail Express International (PMEI). Overall, GXG prices will rise by 4.9 percent, and there will be no changes in prices for PMEI. Commercial Plus prices will be equivalent to Commercial Base; however, deeper discounting may still be made available to customers through negotiated service agreements. Customers would also benefit from a new classification change. -rated items tendered at retail counters may be offered at prices equivalent to Priority Mail International (PMI) for certain destinations and weight steps, if all PMEI eligibility requirements are met and the Postal Service determines that service can be improved and/or the PMEI destination country delivery costs are lower than PMI destination country delivery costs. B. 5

6 Governors Decision No Page 5 Priority Mail International There will be no changes in prices for Priority Mail International (PMI). Commercial Plus prices will be equivalent to Commercial Base; however, deeper discounting may still be made available to customers through negotiated service agreements. This year, service features may change as PMI shipments bearing a designated barcode and dispatched to select destination countries will receive a scan upon delivery in lieu of a signature. C. International Priority Airmail and International Surface Air Lift Published prices for International Priority Airmail (IPA) and International Surface Air Lift (ISAL) will increase by 3.8 percent, and 3.9 percent for their associated M-Bags. D. Airmail M-Bags The published prices for Airmail M-Bags will increase by 4.9 percent. E. First-Class Package International Service There will be no change in prices for First-Class Package International Service (FCPIS). Commercial Plus prices will be equivalent to Commercial Base; however, deeper discounting will still be made available to customers through negotiated service agreements. F. International Ancillary Services and Special Services Prices for several international ancillary services will be increased, with an overall increase of 10.6 percent. However, some services will be increased above average to ensure cost coverage, including International Postal Money Orders, which will increase by 73.7 percent, and Outbound International Registered Mail, which will increase by 7.2 percent. 6

7 Governors Decision No Page 6 ORDER The changes in prices and classes set forth herein shall be effective at 12:01 A.M. on January 22, I direct the Secretary to have this decision published in the Federal Register in accordance with 39 U.S.C. 3632(b)(2), and direct management to file with the Postal Regulatory Commission appropriate notice of these changes. By The Governors: /s/ James H. Bilbray Chairman, Temporary Emergency Committee of the Board of Governors 7

8 Attachment to Governors Decision 16-7 PART B COMPETITIVE PRODUCTS 8

9 Attachment to Governors Decision COMPETITIVE PRODUCT LIST * * * DOMESTIC PRODUCTS* Priority Mail Express Priority Mail Parcel Select Parcel Return Service First-Class Package Service USPS Retail Ground 2100 Domestic Products Included Services Priority Mail Express (2105) Priority Mail (2110) Parcel Select (2115) Parcel Return Service (2120) First-Class Package Service (2125) USPS Retail Ground (2135) 9

10 Priority Mail Express 2105 Priority Mail Express * * * Optional Features The following additional postal services may be available in conjunction with the product specified in this section: Pickup On Demand Service Sunday/Holiday Delivery 10:30 am Delivery Ancillary Services (1505) o Address Correction Service (1505.1) o Collect On Delivery COD Hold for Pickup (1505.7) o Priority Mail Express Insurance (1505.9) o Return Receipt ( ) o Special Handling ( ) Competitive Ancillary Services (2545) o Adult Signature (2545.1) o Package Intercept Service (2545.2) 10

11 Priority Mail Express Prices Retail Priority Mail Express / Local, s 1 &

12 Priority Mail Express Retail Priority Mail Express / (Continued) Local, s 1 &

13 Priority Mail Express Retail Priority Mail Express / (Continued) s 1 & Retail Flat Rate Envelope Retail Regular Flat Rate Envelope, per piece Retail Legal Flat Rate Envelope, per piece Retail Padded Flat Rate Envelope, per piece

14 Priority Mail Express Commercial Base / Local, s 1 &

15 Priority Mail Express Commercial Base / (Continued) Local, s 1 &

16 Priority Mail Express Commercial Base / (Continued) Local, s 1 & Commercial Base Flat Rate Envelope Commercial Base Regular Flat Rate Envelope, per piece Commercial Base Legal Flat Rate Envelope, per piece Commercial Base Padded Flat Rate Envelope, per piece

17 Priority Mail Express Commercial Plus / Local, s 1 &

18 Priority Mail Express Commercial Plus / (Continued) Local, s 1 &

19 Priority Mail Express Commercial Plus / (Continued) Local, s 1 & Commercial Plus Flat Rate Envelope Commercial Plus Regular Flat Rate Envelope, per piece Commercial Plus Legal Flat Rate Envelope, per piece Commercial Plus Padded Flat Rate Envelope, per piece Pickup On Demand Service Add $22.00 for each Pickup On Demand stop. 19

20 Priority Mail Express Sunday/Holiday Delivery Add $12.50 for requesting Sunday or holiday delivery. 10:30 am Delivery Add $5.00 for requesting delivery by 10:30 am. IMpb Noncompliance Fee Add $0.20 for each IMpb-noncompliant parcel paying commercial prices. 20

21 Priority Mail 2110 Priority Mail * * * Optional Features The following additional postal services may be available in conjunction with the product specified in this section: Pickup On Demand Service Ancillary Services (1505) o Address Correction Service (1505.1) o Business Reply Mail (1505.3) o Certified Mail (1505.5) o Certificate of Mailing (1505.6) o Collect On Delivery COD Hold for Pickup (1505.7) o USPS Tracking (1505.8) o Insurance (1505.9) o Merchandise Return ( ) o Registered Mail ( ) o Return Receipt ( ) o Return Receipt for Merchandise ( ) o Signature Confirmation ( ) o Special Handling ( ) Competitive Ancillary Services (2545) o Adult Signature (2545.1) o Package Intercept Service (2545.2) 21

22 Priority Mail Prices Retail Priority Mail / Local, s 1 &

23 Priority Mail Retail Priority Mail / (Continued) Local, s 1 &

24 Priority Mail Retail Priority Mail / (Continued) Local, s 1 &

25 Priority Mail Retail Flat Rate Envelopes 1 Retail Regular Flat Rate Envelope, per piece 6.65 Retail Legal Flat Rate Envelope, per piece 6.95 Retail Padded Flat Rate Envelope, per piece 7.20 Notes 1. The price for Regular, Legal, or Padded Flat Rate Envelopes also applies to sales of Regular, Legal, or Padded Flat Rate Envelopes, respectively, marked with Forever postage, at the time the envelopes are purchased. Retail Flat Rate Boxes 1 Size Small Flat Rate Box Medium Flat Rate Boxes Large Flat Rate Boxes Delivery to Domestic Address Delivery to APO/FPO/DPO Address Notes 1. The price for Small, Medium, or Large Flat Rate Boxes also applies to sales of Small, Medium, or Large Flat Rate Boxes, respectively, marked with Forever postage, at the time the boxes are purchased. Size Regional Rate Boxes Local, s 1 & A B

26 Priority Mail Retail Balloon Price In s 1-4 (including local), parcels weighing less than 20 pounds but measuring more than 84 inches in combined length and girth (but not more than 108 inches) are charged the applicable price for a 20-pound parcel. Retail Dimensional In s 5-8, parcels exceeding one cubic foot are priced at the actual weight or the dimensional weight, whichever is greater. For box-shaped parcels, the dimensional weight is calculated by multiplying the length (inches) times the width (inches) times the height (inches) of the parcel, and dividing by 194. For irregular-shaped parcels (parcels not appearing box-shaped), the dimensional weight is calculated by multiplying the length (inches) times the width (inches) times the height (inches) at the associated maximum cross-sections of the parcel, dividing by 194, and multiplying by an adjustment factor of

27 Priority Mail Commercial Base Priority Mail / Local, s 1 &

28 Priority Mail Commercial Base Priority Mail / (Continued) Local, s 1 &

29 Priority Mail Commercial Base Priority Mail / (Continued) Local, s 1 & Commercial Base Flat Rate Envelope Commercial Base Regular Flat Rate Envelope, per piece 5.95 Commercial Base Legal Flat Rate Envelope, per piece 6.25 Commercial Base Padded Flat Rate Envelope, per piece

30 Priority Mail Commercial Base Flat Rate Box Size Small Flat Rate Box Medium Flat Rate Boxes Large Flat Rate Boxes Delivery to Domestic Address Delivery to APO/FPO/DPO Address Size Commercial Base Regional Rate Boxes Local, s 1 & A B Commercial Base Balloon Price In s 1-4 (including local), parcels weighing less than 20 pounds but measuring more than 84 inches in combined length and girth (but not more than 108 inches) are charged the applicable price for a 20-pound parcel. Commercial Base Dimensional In s 5-8, parcels exceeding one cubic foot are priced at the actual weight or the dimensional weight, whichever is greater. For box-shaped parcels, the dimensional weight is calculated by multiplying the length (inches) times the width (inches) times the height (inches) of the parcel, and dividing by 194. For irregular-shaped parcels (parcels not appearing box-shaped), the dimensional weight is calculated by multiplying the length (inches) times the width (inches) times the height (inches) at the associated maximum cross-sections of the parcel, dividing by 194, and multiplying by an adjustment factor of

31 Priority Mail Commercial Plus Priority Mail / Local, s 1 & $)

32 Priority Mail Commercial Plus Priority Mail / (Continued) Local, s 1 &

33 Priority Mail Commercial Plus Priority Mail / (Continued) Local, s 1 & Commercial Plus Flat Rate Envelope Commercial Plus Regular Flat Rate Envelope, per piece 5.75 Commercial Plus Legal Flat Rate Envelope, per piece 6.05 Commercial Plus Padded Flat Rate Envelope, per piece

34 Priority Mail Commercial Plus Flat Rate Box Size Small Flat Rate Box Medium Flat Rate Boxes Large Flat Rate Boxes Delivery to Domestic Address Delivery to APO/FPO/DPO Address Cubic Feet Commercial Plus Regional Rate Boxes Local, s 1 & A B Commercial Plus Balloon Price In s 1-4 (including local), parcels weighing less than 20 pounds but measuring more than 84 inches in combined length and girth (but not more than 108 inches) are charged the applicable price for a 20-pound parcel. Commercial Plus Dimensional In s 5-8, parcels exceeding one cubic foot are priced at the actual weight or the dimensional weight, whichever is greater. For box-shaped parcels, the dimensional weight is calculated by multiplying the length (inches) times the width (inches) times the height (inches) of the parcel, and dividing by 194. For irregular-shaped parcels (parcels not appearing box-shaped), the dimensional weight is calculated by multiplying the length (inches) times the width (inches) times the height (inches) at the associated maximum cross-sections of the parcel, dividing by 194, and multiplying by an adjustment factor of

35 Priority Mail Commercial Plus Cubic Cubic Feet Local, s 1 & Open and Distribute (PMOD) a. DDU Container Local, s 1 & Half Tray Full Tray EMM Tray Flat Tub b. Processing Facilities Container Local, s 1 & Half Tray Full Tray EMM Tray Flat Tub

36 Priority Mail Pickup On Demand Service Add $22.00 for each Pickup On Demand stop. IMpb-Noncompliance Fee Add $0.20 for each IMpb-noncompliant parcel paying commercial prices. 36

37 Parcel Select 2115 Parcel Select Description a. Any mailable matter may be mailed as Parcel Select mail, except matter required to be mailed by First-Class Mail or Priority Mail services; and publications required to be entered as Periodicals mail. b. Parcel Select mail is not sealed against postal inspection. Mailing of matter as such constitutes consent by the mailer to postal inspection of the contents, regardless of the physical closure. c. Undeliverable-as-addressed Parcel Select pieces will be forwarded on request of the addressee or forwarded or returned on request of the mailer, subject to the applicable Parcel Select Ground price, plus an applicable fee, when forwarded or returned. Pieces which combine Parcel Select matter with First-Class Mail or Standard MailUSPS Marketing Mail matter will be forwarded or returned if undeliverableas-addressed, as specified in the Domestic Mail Manual. d. An annual mailing permit fee is required for destination entered parcels to be paid at each office of mailing or office of verification by or for mailers of Parcel Select (1505.2). Payment of the fee allows the mailer to mail at any Parcel Select price. Attachments and enclosures a. First-Class Mail or Standard MailUSPS Marketing Mail pieces may be attached to or enclosed in Parcel Select mail. Postage at the applicable First-Class Mail or Standard MailUSPS Marketing Mail price may be required. * * * 37

38 Parcel Select Optional Features The following additional postal services may be available in conjunction with the product specified in this section: Pickup On Demand Service Ancillary Services (1505) o Address Correction Service (1505.1) o Certificate of Mailing (1505.6) o Collect On Delivery COD Hold for Pickup (1505.7) o USPS Tracking (1505.8) o Insurance (1505.9) o Return Receipt ( ) o Return Receipt for Merchandise ( ) o Signature Confirmation ( ) o Special Handling ( ) Competitive Ancillary Services (2545) o Adult Signature (2545.1) o Package Intercept Service (2545.2) 38

39 Parcel Select Prices Destination Entered DDU a. DDU DDU

40 Parcel Select a. DDU (Continued) DDU

41 Parcel Select a. DDU (Continued) DDU Oversized b. Balloon Price Pieces exceeding 84 inches in length and girth combined (but not more than 108 inches) and weighing less than 20 pounds are subject to a price equal to that for a 20-pound parcel for the zone to which the parcel is addressed. 41

42 Parcel Select c. Oversized Pieces Regardless of weight, any piece that measures more than 108 inches (but not more than 130 inches) in length plus girth must pay the oversized price. d. Forwarding and Returns Parcel Select pieces that are forwarded on request of the addressee or forwarded or returned on request of the mailer will be subject to the applicable Parcel Select Ground price, plus $3.00, when forwarded or returned. For customers using Address Correction Service with Shipper Paid Forwarding/Return, and also using an IMpb, the additional fee will be $

43 Parcel Select Destination Entered DSCF a. DSCF 5-Digit Machinable DSCF 5-Digit

44 Parcel Select a. DSCF 5-Digit Machinable (Continued) DSCF 5-Digit

45 Parcel Select b. DSCF 3-Digit, 5-Digit Non-Machinable DSCF 3-Digit DSCF 5-Digit

46 Parcel Select b. DSCF 3-Digit, 5-Digit Non-Machinable (Continued) DSCF 3-Digit DSCF 5-Digit

47 Parcel Select b. DSCF 3-Digit, 5-Digit Non-Machinable (Continued) DSCF 3-Digit DSCF 5-Digit Oversized c. Balloon Price Pieces exceeding 84 inches in length and girth combined (but not more than 108 inches) and weighing less than 20 pounds are subject to a price equal to that for a 20-pound parcel for the zone to which the parcel is addressed. 47

48 Parcel Select d. Oversized Pieces Regardless of weight, any piece that measures more than 108 inches (but not more than 130 inches) in length plus girth must pay the oversized price. e. Forwarding and Returns Parcel Select pieces that are forwarded on request of the addressee or forwarded or returned on request of the mailer will be subject to the applicable Parcel Select Ground price, plus $3.00, when forwarded or returned. For customers using Address Correction Service with Shipper Paid Forwarding/Return, and also using an IMpb, the additional fee will be $

49 Parcel Select Destination Entered DNDC a. DNDC Machinable DNDC s 1 & 2 DNDC 3 DNDC 4 DNDC s