POSTAL REGULATORY COMMISSION

Annual Compliance 

Determination Report

Fiscal Year 2023

March 28, 2024

Postal Regulatory Commission

Submitted 03/28/2024 04:10 PM

Filing ID: 128338

Accepted 3/28/2024
- i -

TABLE OF CONTENTS

 Page

EXECUTIVE SUMMARY.......................................................................................................................................1

CHAPTER I. INTRODUCTION............................................................................................................................3

A. Statutory Context......................................................................................................................3

B. Timeline and Review of Report...........................................................................................4

C. Focus of the ACR .......................................................................................................................4

D. Organization of the FY 2023 ACD.......................................................................................5

E. Procedural History...................................................................................................................6

F. Confidentiality ...........................................................................................................................6

G. Requests for Additional Information................................................................................7

CHAPTER II. MARKET DOMINANT PRODUCTS: PRICING REQUIREMENTS.................................8

A. Introduction................................................................................................................................8

B. The Class-Level Price Cap......................................................................................................8

C. Workshare Discounts........................................................................................................... 12

1. Introduction .............................................................................................................. 12

2. Workshare Discount Regulations ..................................................................... 12

3. Comments on Workshare Discounts ............................................................... 14

4. Commission Analysis............................................................................................. 16

CHAPTER III. MARKET DOMINANT PRODUCTS: OTHER RATE AND FEE COMPLIANCE 

ISSUES...................................................................................................................................................... 19

A. Introduction............................................................................................................................. 19

B. Non-Compensatory Classes............................................................................................... 21

1. Periodicals.................................................................................................................. 21

C. Non-Compensatory Products in Compensatory Classes........................................ 28

1. Package Services...................................................................................................... 28

2. USPS Marketing Mail.............................................................................................. 33

D. Fully Compensatory Classes.............................................................................................. 49

1. First-Class Mail......................................................................................................... 49

2. Special Services........................................................................................................ 52
- ii -

CHAPTER IV. COMPETITIVE PRODUCTS.................................................................................................. 54

A. Introduction............................................................................................................................. 54

B. Cross-Subsidy Provision: 39 U.S.C. § 3633(a)(1)...................................................... 55

C. Product Cost Coverage Provision: 39 U.S.C. § 3633(a)(2)..................................... 56

1. Competitive Domestic Products with Rates of General Applicability. 57

2. Competitive Domestic Products Consisting of NSAs ................................. 60

3. Competitive International Products with Rates of General 

Applicability .............................................................................................................. 63

4. Competitive International Products Consisting of NSAs ......................... 73

5. Other Issues Related to International Products.......................................... 80

D. Appropriate Contribution Provision: 39 U.S.C. § 3633(a)(3)............................... 82

1. Comments on Appropriate Contribution Provision .................................. 82

2. Commission Analysis............................................................................................. 83

E. Pilot Program – Gift Cards.................................................................................................. 84

F. Interagency Agreements..................................................................................................... 85

CHAPTER V. SERVICE PERFORMANCE ..................................................................................................... 88

A. Service Performance Results ............................................................................................ 88

1. Introduction .............................................................................................................. 88

2. Issues Affecting Service Performance for All Market Dominant 

Products in FY 2023............................................................................................... 95

3. FY 2023 Service Performance Measurement Systems ...........................114

4. FY 2023 Service Performance Results by Class.........................................124

5. Nonpostal Services ...............................................................................................178

B. Customer Access ..................................................................................................................179

1. Introduction ............................................................................................................179

2. Retail Facilities.......................................................................................................182

3. Post Office Suspensions ......................................................................................184

4. Delivery Points.......................................................................................................200

5. Collection Boxes.....................................................................................................201

6. Wait Time in Line..................................................................................................204

7. Alternative Access.................................................................................................208

C. Customer Satisfaction with Market Dominant Products .....................................211
- iii -

1. Introduction ............................................................................................................211

2. Commission Analysis...........................................................................................215

Appendix A—Key Commission Findings and Directives Requiring Postal Service Action for 

Future Annual Compliance Reports

Appendix B—Initial and Reply Comments FY 2023 Annual Compliance Determination

Appendix C—Information Requests and Responses to Information Requests FY 2023 Annual 

Compliance Determination

Appendix D—Acronyms and Abbreviations
Docket No. ACR2023 - 1 -

EXECUTIVE SUMMARY

This Report reviews the Postal Service’s Annual Compliance Report (ACR) in Fiscal Year 

(FY) 2023,1 fulfilling the Commission’s responsibility to produce an annual assessment of 

Postal Service rates and service mandated by 39 U.S.C. §§ 3653 and 3705. It is based on 

information the Postal Service is required to provide within 90 days after the close of the 

fiscal year and on comments subsequently received from the public. Commission findings 

and directives are identified in italics in each chapter and summarized in Appendix A.

Consistent with the approach adopted in past years, the Annual Compliance Determination

(ACD) focuses on compliance issues as defined in 39 U.S.C. §§ 3653(b)(1), (b)(2), and 

3705(e). These statutory subsections require the Commission to make determinations on 

whether any rates and fees in effect during FY 2023 were not in compliance with chapter 

36 and 37 of Title 39 of the United States Code and whether any service standards in effect 

during FY 2023 were not met. A financial analysis is expanded in the report titled Financial 

Analysis of United States Postal Service Financial Results and 10-K Statement 2023 that will 

be issued later this spring. The Commission will also issue a separate report on the Postal 

Service’s FY 2023 Annual Performance Report and FY 2024 Performance Plan.

Notable Commission findings and determinations for FY 2023 are:

• Market Dominant Rate and Fee Compliance. In Chapter II, the Commission 

determines that all rates implemented in FY 2023 complied with all rate authority 

provisions. The Commission notes that all workshare discounts in effect in FY 2023 

were in compliance at the time they were introduced in rate adjustment 

proceedings based on the most recent avoided costs available at the time of each 

rate adjustment filing. The Postal Service is required to bring any current discounts 

that are out of compliance with relevant regulations based on the new FY 2023 

avoided costs into compliance in the next Market Dominant rate adjustment.

• Market Dominant Non-Compensatory Classes and Products. In Chapter III, the 

Commission finds that the Postal Service lost $1.34 billion in FY 2023 from noncompensatory classes and products. Periodicals was the only non-compensatory 

class, and both products within that class were non-compensatory. Other noncompensatory products included USPS Marketing Mail Flats, USPS Marketing Mail 

Carrier Route, and Media Mail/Library Mail. With regards to the Periodicals class, 

the Commission reiterates its longstanding finding that despite cost-reduction 

initiatives and the maximization of its pricing authority, the costs of these products 

continue to rise, and slight increases in unit revenue are not enough to mitigate the 

products’ cost increases and improve cost coverage. As it relates to USPS Marketing 

Mail Flats, and USPS Marketing Mail Carrier Route, and Media Mail/Library Mail, the 

1 United States Postal Service, FY 2023 Annual Compliance Report, December 29, 2023 (FY 2023 ACR).
Docket No. ACR2023 - 2 -

Commission finds that all three products failed to cover their attributable costs and 

directs the Postal Service to increase the price for each product by at least 2 

percentage points above the class average in each generally applicable Market 

Dominant rate proceeding.

• Competitive Products. In Chapter IV, the Commission finds that revenues for four 

Competitive products with rates of general applicability did not cover attributable 

costs and, therefore, did not comply with 39 U.S.C. § 3633(a)(2). As it relates to the 

Postal Service’s interagency agreements (IAAs), the Commission finds that the 

Postal Service’s IAAs provided a net contribution to the Postal Service in compliance 

with 39 U.S.C. § 3704.

• Service Performance. In Chapter V, the Commission finds that 15 out of 27 Market 

Dominant products/categories failed to meet their service performance targets and 

directs the Postal Service to take corrective action to improve performance. Further, 

of the 22 Market Dominant products, 11 were non-compliant. The Postal Service 

met its service performance targets for the remaining 11 Market Dominant 

products. The Commission directs the Postal Service to improve service 

performance results to achieve the applicable on-time percent target level for all 

non-compliant products in FY 2024. The Commission has specifically developed 

directives that are designed to elicit information and data from the Postal Service 

regarding service performance for non-compliant products and the steps that the 

Postal Service will take to restore service performance for those products in FY 

2024. These directives include continued Postal Service reporting of specific 

information developed from its internal metrics within 90 days of the issuance of 

this ACD and as part of the Postal Service’s FY 2024 ACR.
Docket No. ACR2023 - 3 -

CHAPTER I. INTRODUCTION

A. Statutory Context

United States Code Title 39 Section 3652 requires the Postal Service to file certain reports 

with the Commission regarding Postal Service costs, revenues, rates, and service during the 

prior fiscal year, including the Postal Service’s ACR.2 Section 3653(b) requires the 

Commission to review the Postal Service’s ACR and issue an ACD evaluating whether rates 

or fees were non-compliant with the applicable provisions of chapter 36 of Title 39 of the 

United States Code (or regulations issued thereunder) and whether any service standards 

were not met in the fiscal year under review. 39 U.S.C. § 3653(b). The Postal Service 

Reform Act of 2022 (PSRA)3 expanded the Postal Service’s annual reporting requirements 

to include costs, revenues, rates, and quality of service for nonpostal services for the fiscal 

year under review.4 The PSRA requires the Commission to review this reporting and 

determine whether the activities complied with applicable provisions of chapter 37 of Title 

39 of the United States Code.5

The provisions of chapters 36 and 37 of Title 39 of the United States Code establish the ACR 

and the ACD as integrated mechanisms for providing ongoing accountability, transparency, 

and oversight of the Postal Service. This ACD focuses on the requirements appearing in 39 

U.S.C. §§ 3653(b)(1), 3653(b)(2), and 3705(e). The Commission addresses only matters 

that have been challenged by commenters or otherwise present compliance issues.

Consistent with past practice, the Commission plans to issue its analysis of the Postal 

Service’s financial results and Form 10-K later in FY 2024.6 Similarly, the Commission will 

continue publishing a separate analysis evaluating the Postal Service’s performance plans 

and program performance report pursuant to 39 U.S.C. § 3653(d).7

2 The ACR is filed in accordance with the provisions appearing in 39 U.S.C. § 3652(a) through (f). In conjunction with filing the ACR, the Postal 

Service must also file its most recent Comprehensive Statement on Postal Operations, its FY 2023 Performance Plan, and its FY 2022 

Performance Report. 39 U.S.C. § 3652(g).

3 Pub. L. 117-108, 136 Stat. 1127 (2022).

4 See 39 U.S.C. § 3705(a).

5 See 39 U.S.C. § 3705(e); see 39 U.S.C. § 3652(a).

6 See, e.g., Docket No. ACR2022, Financial Analysis of United States Postal Service Financial Results and 10-K Statement, May 17, 2023 (FY 2022 

Financial Analysis).

7 See Docket No. ACR2022, Notice Requesting Comments on the Postal Service FY 2022 Annual Performance Report and FY 2023 Annual 

Performance Plan, January 11, 2023 (Order No. 6407). Initial and reply comment deadlines were established as March 15, 2023, and March 29, 

2023, respectively. Order No. 6407 at 3-4.
Docket No. ACR2023 - 4 -

B. Timeline and Review of Report

The Postal Service must file the ACR no later than 90 days after the end of each fiscal year 

(i.e., 90 days after September 30). Upon receipt of the ACR, the Commission provides an 

opportunity for public comment on the Postal Service’s submissions.8 For the fiscal year 

under review, the Commission must make a written determination within 90 days of the 

Postal Service’s filing, identifying any rates or fees that were not in compliance with 

applicable provisions of chapters 36 and 37 of Title 39 or related regulations and whether 

any service standards were not met. 39 U.S.C. § 3653(b); 39 U.S.C. § 3705(e). In making this 

determination, the Commission shall take such action as it deems appropriate. 39 U.S.C. 

§ 3653(c); 39 U.S.C. § 3705(e)(3). The Postal Service filed the FY 2022 ACR on December 

29, 2023; thus, the Commission must issue this ACD no later than March 28, 2024.

C. Focus of the ACR

The focus of the ACR is to “analyze costs, revenues, rates, and quality of service, using such 

methodologies as the Commission shall by regulation prescribe, and in sufficient detail to 

demonstrate that all products during such year complied with all applicable requirements 

of this title....” 39 U.S.C. § 3652(a)(1).

For Market Dominant products, the Postal Service must include product information, 

volumes, and measures of quality of service, including the speed of delivery, reliability, and 

the degree of customer satisfaction. 39 U.S.C. § 3652(a)(2); 39 C.F.R. pt. 3055. For 

workshare discounts, the Postal Service must report the per-item cost it avoided through 

the activity performed by the mailer, the percentage of the per-item cost avoided that the 

current discount represents, and the per-item contribution to institutional costs. 39 U.S.C. 

§ 3652(b).

For Competitive products, the Postal Service must demonstrate that all Competitive 

products complied with 39 U.S.C. § 3633, which prohibits the subsidization of Competitive 

products by Market Dominant products and requires that each Competitive product covers 

its attributable costs and that Competitive products collectively cover what the 

Commission determines to be an appropriate share of the Postal Service’s institutional 

costs. See 39 U.S.C. § 3633(a).

8 39 U.S.C. § 3653(a). Additionally, the Commission is required to appoint an officer of the Commission who shall represent the interests of the 

public. Id.; see 39 U.S.C. § 505.
Docket No. ACR2023 - 5 -

For nonpostal services in effect during the fiscal year under review, the Postal Service must 

demonstrate compliance with the applicable provisions of chapter 37 of Title 39 of the 

United States Code. See 39 U.S.C. § 3705(e)(2).9

By regulation, in developing periodic reports such as the ACR, the Postal Service must use 

only accepted analytical principles. See 39 C.F.R. § 3050.10. Accepted analytical principles 

refer to economic, mathematical, or statistical theories, precepts, or assumptions that were 

applied by the Commission in its most recent ACD, unless different analytical principles 

were subsequently accepted by the Commission in a final rule. 39 C.F.R. § 3050.1(a), (c).

In this proceeding, the Postal Service relies upon five approved methodology changes.10

The Postal Service discusses the effect of methodology changes to FY 2023 ACR library 

references in Library Reference USPS-FY23-9 (Roadmap Document).11

D. Organization of the FY 2023 ACD

In Chapter II, the Commission discusses compliance with the system of ratemaking for 

Market Dominant products, which includes workshare discount compliance with applicable 

requirements. Chapter III focuses on other compliance issues related to Market Dominant 

products’ rates and fees, including non-compensatory classes and products. Chapter IV 

covers compliance issues related to the rates and fees of Competitive products, as well as 

PSRA-required reporting on nonpostal services. In Chapter V, the Commission discusses 

service performance, customer access, and customer satisfaction.

There are four appendices to this ACD. Appendix A contains Commission directives in this 

ACD. Appendix B contains a list of comments filed in this proceeding and their citations, 

organized by commenter. Appendix C contains a list of Commission Information Requests 

(CIRs), Chairman’s Information Requests (CHIRs), the Postal Service’s responses to the 

information requests, and the citations to these filings, organized in numerical order. 

Appendix D contains an index of acronyms and abbreviations used in this ACD.

9 For agreements with an agency of any State government, local government, or tribal government to provide property or nonpostal services to 

the public on behalf of such agencies for non-commercial purposes entered into under 39 U.S.C. § 3703, the Postal Service must include costs, 

revenues, rates, and quality of service for each agreement or substantially similar set of agreements. 39 U.S.C. § 3705(a)(1). For the Postal 

Service’s program to provide property and nonpostal services to other Government agencies within the meaning of 39 U.S.C. § 411 the Postal 

Service must include costs, revenues, rates, and quality of service for the program as a whole established under 39 U.S.C. § 3704. 39 U.S.C. 

§ 3705(a)(1).

10 Docket No. RM2023-4, Order on Analytical Principles Used in Periodic Reporting (Proposal One), April 6, 2023 (Order No. 6474); Docket No. 

RM2023-7, Order on Analytical Principles Used in Periodic Reporting (Proposal Two), Directing the Postal Service’s Participation in Further 

Proceedings, and Providing Notice of Filing Attachment Under Seal, August 31, 2023 (Order No. 6659); Docket No. RM2023-8, Order Approving 

Analytical Principles Used in Periodic Reporting (Proposal Three), August 9, 2023 (Order No. 6608); Docket No. RM2023-9, Order Approving 

Analytical Principles Used in Periodic Reporting (Proposal Four), November 2, 2023 (Order No. 6771); Docket No. RM2023-10, Order Approving 

Analytical Principles Used in Periodic Reporting (Proposal Five), November 16, 2023 (Order No. 6798). The Postal Service relies, in part, on 

accepted analytical principles approved in Docket No. RM2023-7; however, the docket remains pending and may result in further changes to 

accepted analytical principles. See generally Order No. 6659.

11 Library Reference USPS-FY23-9, December 29, 2023, PDF file “USPS-FY23-9 Roadmap.pdf,” at 124-81 (Roadmap Document).
Docket No. ACR2023 - 6 -

E. Procedural History

Prior to the filing of its FY 2023 ACR, the Postal Service filed a motion requesting a 

temporary waiver of 39 C.F.R. § 3050.10 with respect to reporting disaggregated costs for 

the USPS Ground Advantage product.12 The Commission issued an order taking the Motion 

under advisement.13 The Commission responds to the Postal Service’s motion and 

discusses the data reported for USPS Ground Advantage in more detail in Chapter IV. See 

Chapter IV, infra.

On December 29, 2023, the Postal Service filed its FY 2023 ACR, covering October 1, 2022, 

through September 30, 2023. See FY 2023 ACR. The ACR includes extensive narrative and 

substantial detailed public and non-public information contained in library references. The 

library references include the Cost and Revenue Analysis (CRA), the International Cost and 

Revenue Analysis (ICRA), cost models supporting workshare discounts, and billing 

determinants. The library references also include the Postal Service’s Roadmap Document 

to the FY 2023 ACR, which contains a brief description of each library reference, a 

summary of material changes in methodology, and a discussion of obsolescence in 

accordance with 39 C.F.R. § 3050.12. See Roadmap Document, supra note 11. The Postal 

Service concurrently filed its FY 2023 Annual Report and FY 2023 Comprehensive Statement 

on Postal Service Operations as part of Library Reference USPS-FY23-17.14

On January 2, 2024, the Commission issued an order establishing Docket No. ACR2023 to 

consider the ACR, appointing a Public Representative to represent the interests of the 

general public, and establishing January 30, 2024, and February 13, 2024, as the deadlines 

for comments and reply comments, respectively.15

F. Confidentiality

Commission rules require the Postal Service, when it files non-public materials with the 

Commission, to file an application for non-public treatment which must clearly identify all 

non-public materials and fulfill the burden of persuasion that the materials should be 

withheld from the public. 39 C.F.R. §§ 3011.200(a), 3011.201. The FY 2023 ACR includes 

such an application with respect to certain Competitive and international products. FY 

2023 ACR, Attachment 2.

12 See Motion of the United States Postal Service for Waiver of Rule 3050.10 with Respect to Disaggregated Ground Advantage Costs, December 

8, 2023 (Motion for Waiver).

13 Order Taking Under Advisement Postal Service Motion for Waiver of Rule 39 C.F.R. § 3050.10 Regarding Disaggregated USPS Ground 

Advantage Cost Information, December 22, 2023 (Order No. 6894).

14 Library Reference USPS-FY23-17, December 29, 2023, PDF file “FY2023.Annual.Report.to.Congress.pdf” (FY 2023 Annual Report).

15 See Notice of Postal Service's Filing of Annual Compliance Report and Request for Public Comments, January 2, 2024, at 5-6 (Order No. 6909). 

On January 10, 2024, the Commission established separate comment deadlines for the Postal Service’s FY 2023 annual performance report (FY 

2023 Report) and FY 2024 annual performance plan (FY 2024 Plan). Notice Requesting Comments on the Postal Service FY 2023 Annual 

Performance Report and FY 2024 Annual Performance Plan, January 10, 2024, at 3-4 (Order No. 6932).
Docket No. ACR2023 - 7 -

G. Requests for Additional Information

Fourteen CHIRs were issued with respect to the ACR beginning on January 5, 2024. See 

generally Appendix C. The Postal Service responded to the CHIRs.16 In addition, one CIR 

was issued on February 8, 2024. See generally Appendix C.

On January 16, 2024, the National Postal Policy Council (NPPC) filed a motion for issuance 

of information requests, which the Commission issued on January 17, 2024.17

On February 2, 2024, the Postal Service filed two motions requesting reconsideration of 

two CHIR questions. Motion for Reconsideration, Question 6; Motion for Reconsideration, 

Question 18. In both instances, the Postal Service sought the reconsideration and 

withdrawal of questions. See generally id. The Commission responded to the Motion for 

Reconsideration, Question 6 by issuing CIR No. 1. See generally CIR No. 1. The Commission 

responded to the Motion for Reconsideration, Question 18 by issuing Order No. 6971, 

which denied the Postal Service’s motion in part by reducing the number of Post Office 

suspensions it sought information on and extending the time allowed for a Postal Service 

response.18

16 See generally id.

17 National Postal Policy Counsel Motion for Issuance of Information Request, January 16, 2024; see also CHIR No. 3.

18 Order Denying Motion for Reconsideration in Part and Granting an Extension of Time, February 13, 2024 (Order No. 6971).
Docket No. ACR2023 - 8 -

CHAPTER II. MARKET DOMINANT 

PRODUCTS: PRICING REQUIREMENTS

A. Introduction

The system for regulating rates and classes for Market Dominant products was modified in 

FY 2021 as new regulations went into effect on January 14, 2021, which included new rate 

authority mechanisms and new requirements for workshare discounts.19 Chapter II 

discusses the class-level price cap and workshare discounts. Key findings are as follows:

• at the time of Commission approval, all rate increases in FY 2023 complied with all 

relevant regulations;

• at the time of Commission approval, all workshare discounts in effect in FY 2023 

complied with all relevant workshare regulations; and

• the Postal Service must bring all current workshare discounts that are not equal to 

their FY 2023 avoided costs into compliance with relevant workshare regulations in 

the next rate adjustment proceeding.

B. The Class-Level Price Cap

The new regulations as set out in Order No. 5763 provide for multiple forms of rate 

authority. 39 C.F.R. § 3030.127(a). In particular, in addition to rate authority based on the 

change in consumer price index for all urban consumers (CPI-U) and any unused banked 

rate authority, which existed prior to the Commission’s issuance of Order No. 576320, the 

maximum rate adjustment authority available to the Postal Service for each Market 

Dominant class under the new regulations also includes:

• density rate authority (39 C.F.R. part 3030, subpart D), which grants additional rate 

authority to the Postal Service based on unit cost increases caused by the decline in 

mail density as the Postal Service delivers fewer mail pieces to more delivery points;

• retirement obligation rate authority (39 C.F.R. part 3030, subpart E), which grants 

additional authority based on specific retirement liabilities as a driver of the Postal 

Service’s net losses beyond the Postal Service’s control; and

19 Docket No. RM2017-3, Order Adopting Final Rules for the System of Regulating Rates and Classes for Market Dominant Products, November 

30, 2020 (Order No. 5763).

20 CPI-U based rate authority (39 C.F.R. part 3030, subpart C) grants the authority to the Postal Service to raise rates based on monthly changes 

in the CPI-U as published by the Bureau of Labor Statistics, and banked rate authority (39 C.F.R. part 3030, subpart H) includes unused rate 

adjustment authority accumulated for future use pursuant to certain rules.
Docket No. ACR2023 - 9 -

• when applicable, non-compensatory class rate authority (39 C.F.R. part 3030, 

subpart G), which grants an additional 2 percentage points of rate authority for 

classes where costs of all products exceed revenues of all products. Id.; Order No. 

5763 at 72, 100, 189-91.21

The Commission approved two omnibus rate adjustments that went into effect during FY 

2023.22 The first was approved in Docket No. R2023-1 on November 28, 2022, and went 

into effect on January 22, 2023. The second one was approved in Docket No. R2023-2 on 

May 31, 2023, and went into effect on July 9, 2023.23 In Docket No. R2023-1, all of the rate 

authority newly available to the Postal Service was due to the CPI-U authority. In Docket 

No. R2023-2, most of the rate authority available to the Postal Service was due to CPI-U 

authority.24 Figure II-1 shows the amount of rate authority by type available to the Postal 

Service in each of these dockets.

At the time of Commission approval, all rates implemented in FY 2023 complied with all 

rate authority provisions, in accordance with 39 C.F.R. §§ 3030.127 and 3030.128.25

21 Density rate authority, retirement obligation rate authority, and non-compensatory class rate authority are available to the Postal Service 

only once annually and must be included in the calculation of the maximum rate adjustment authority in the first generally applicable rate 

adjustment after the authority becomes available. See 39 C.F.R. §§ 3030.160(c), 3030.181(c), 3030.222(b). In FY 2023, those authorities became 

available April 3, 2023. See Docket No. ACR2022, Determination of Available Market Dominant Rate Authority, April 3, 2023 (Order No. 6472).

22 See Docket No. R2023-1, Order on Price Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals, Package Services, and Special 

Services Products and Related Mail Classification Changes, November 28, 2022 (Order No. 6341); Docket No. R2023-2, Order on Price 

Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals, Package Services, and Special Services Products and Related Mail 

Classification Changes, May 31, 2023 (Order No. 6526). Docket No. R2023-2 was the first rate adjustment after Order No. 6472 and, accordingly, 

used the newly available density, retirement obligation, and non-compensatory class rate authorities. Docket No. R2023-1 included only newly 

available rate authority from the CPI-U rate authority and banked authority.

23 Additionally, on August 11, 2023, the Postal Service filed an incentives-only rate case in Docket No. R2023-3 that proposed volume-based 

incentives for First-Class Mail and USPS Marketing Mail only. Docket No. R2023-3, United States Postal Service Notice of Market Dominant Price 

Change Creating Two Incentives, August 11, 2023. The Commission approved these incentives on September 27, 2023. Docket No. R2023-3, 

Order on Market Dominant Price Change Creating Two Incentives, September 27, 2023 (Order No. 6713). Because these promotional rates do 

not go into effect until January 1, 2024, they do not fall within the fiscal year under review in the current ACD. The Commission notes that since 

these incentives lowered rates for certain pieces of mail and the Postal Service at the time of filing did not seek to include the promotional 

volume in the price cap calculation to generate additional rate adjustment authority based on the incentives, the price cap was not implicated 

in Docket No. R2023-3. The Commission further notes that on October 6, 2023, the Postal Service filed a rate adjustment affecting all Market 

Dominant classes of mail. See Docket No. R2024-1, United States Postal Service Notice of Market-Dominant Price Change, October 6, 2023 

(Docket No. R2024-1, Notice). The Commission approved these rates on November 22, 2023, to go into effect January 21, 2024. Docket No. 

R2024-1, Order on Price Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals, Package Services, and Special Services Products and 

Related Mail Classification Changes, November 22, 2023 (Order No. 6814). The rates approved in Docket No. R2024-1 do not fall in the fiscal 

year under review within the FY 2023 ACD.

24 The Commission utilizes a 12-month rolling average methodology for calculating CPI-U changes. See 39 C.F.R. § 3030.128. In FY 2022 (October 

1, 2021 - September 30, 2022), CPI-U increased 7.92 percent. In FY 2023 (October 1, 2022 - September 30, 2023), CPI-U increased 5.06 percent.

25 See Order No. 6341 at 2; Order No. 6526 at 2.
Docket No. ACR2023 - 10 -

Figure II-1

Available Rate Authority by Case

Source: SeeDocket No. R2023-1, Library References PRC-LR-R2023-1-1 through PRC-LR-R2023-1-5, November 28, 2022; Docket 

No. R2023-2, Library References PRC-LR-R2023-2-1 through PRC-LR-R2023-2-5, May 31, 2023. Non-compensatory authority only 

applies to classes of mailfound to be non-compensatory as determined by the Commission. 39 C.F.R. § 3030.220. For FY 2023, the 

only non-compensatory class was Periodicals. Order No. 6341 at 75-76; Order No. 6526 at 91-92. Banked authority differs by class 

based on the difference between the total authority available to the Postal Service under each type of rate authority in prior rate 

adjustment proceedings and how much the Postal Service’s elected to use for each class in those proceedings and is not shown in 

this graph.

The Association for Postal Commerce (PostCom) and NPPC express concern with the Postal 

Service’s use of its rate authority and its potential impact on volume declines. PostCom 

Comments at 1-4; NPPC Comments at 1-2, 7.

PostCom argues that semi-annual rate increases and the Postal Service’s “exercise of full 

pricing authority” have accelerated volume declines. PostCom Comments at 2. PostCom 

asserts that the Postal Service “remains intent” on increasing rates every 6 months, and 

states that rates will likely increase this July by “approximately [7] percent – [9] percent for 

users of flats - without any empirical information about the rate increase implemented last 

week.” Id. at 1. PostCom contends that the Commission’s regulations require the Postal 

Service to demonstrate the degree to which its products “promote the public policy 

objectives set out in title 39 of the United States Code.” Id. at 2 (citing 39 C.F.R. 

§ 3050.20(a)). PostCom argues that the FY 2023 ACR provides little indication that the 

Postal Service has engaged in practices that “create predictability and stability in rates” or 

that its products “assure adequate revenues, including retained earnings, to maintain 

financial stability.” PostCom Comments at 2 (citing 39 U.S.C. § 3622(b)(2), (b)(5)). PostCom 

asserts that the Commission should determine that the Postal Service is not in compliance 

with the requirements of 39 U.S.C. chapter 36 and prevent it from exercising any rate 

authority until it can demonstrate compliance. PostCom Comments at 4.
Docket No. ACR2023 - 11 -

NPPC states that the ACR “shows a Postal Service that, despite sustained record high rates 

and near-record revenues, has profound issues with excessive costs, continues to suffer 

sharp volume declines, and is struggling to improve service.” NPPC Comments at 1. NPPC 

contends that total operating expenses rose to a record high, but at the same time “volumes 

fell to a level not seen this century.” Id. NPPC argues that this “is not a strategy for longterm stability.” Id.

The Postal Service argues that PostCom’s proposal to prevent the Postal Service from 

exercising any rate authority until it can demonstrate compliance with 39 U.S.C. chapter 36 

“would be truly extraordinary.” Postal Service Reply Comments at 2-3. The Postal Service 

states that this proceeding is to determine whether rates and fees in effect during the fiscal 

year were compliant with applicable statutes and regulations. Id. at 2. The Postal Service 

argues that the Commission has addressed the objectives in 39 U.S.C. § 3622(b) in the 

Commission’s design of a ratemaking system, and that the Postal Service is not required “to 

justify...individual prices vis-à-vis those objectives. Id. at 3.

As noted above, all rates implemented in FY 2023 complied with all Commission rate 

authority provisions. The Commission agrees with the Postal Service that the 

reconsideration of its Market Dominant rate regulations is outside the scope of this annual 

compliance review; thus, the Commission is unable to grant the relief that PostCom 

proposes.

The Commission is, however, troubled by ongoing volume declines and acknowledges 

concerns about the potential impact of rate increases on volume. Market Dominant volume 

declined from 120.4 billion pieces in FY 2022 to 109.5 billion pieces in FY 2023.26 In 

particular, USPS Marketing Mail volume declined from 67.1 billion pieces in FY 2022 to 

59.4 billion pieces in FY 2023.27 In conclusion, from FY 2022 to FY 2023, Market Dominant 

volume declined by 10.9 billion pieces, with USPS Marketing Mail contributing to 70.2 

percent of that decline, with a volume loss of 7.7 billion pieces.

The regulations set forth in Order No. 5763 that provide for multiple forms of rate 

authority have been in effect for 3 years. See Order No. 5763 at 1, 370. The Commission 

previously stated that it would perform a 5-year review (or sooner) of the regulations 

following their effective date. Order No. 5763 at 267. The consistent, year-over-year 

volume declines, however, as well as stakeholder concerns regarding a wide variety of 

issues related to Market Dominant rate changes, have prompted the Commission to commit 

to opening a proceeding to consider these issues and the potential effects of its Market 

Dominant rate regulations. Order No. 6814 at 2, 18.

26 See United States Postal Service, Fiscal Year 2023 Notice of Rate Authority Calculations, December 29, 2023, Excel file 

“FY23.Rate.Authorities.Workbooks.xlsx,” tab “Density Rate Authority.”

27 Compare Docket No. ACR2022, Library Reference USPS-FY22-1, December 29, 2022, Excel file “Public_FY22CRAReport.xlsx,” with Library 

Reference USPS-FY23-1, December 29, 2023, Excel file “Public_FY23CRAReport.xlsx.”
Docket No. ACR2023 - 12 -

C. Workshare Discounts

1. Introduction

Workshare discounts provide reduced prices for mail that is prepared or entered in a 

manner that avoids certain activities the Postal Service would otherwise have to perform 

such as presorting, barcoding, handling, or transportation and relieves the Postal Service of 

the cost of performing those activities. These workshare discounts are based on the 

avoided costs that result from the mailer performing the activity instead of the Postal 

Service.

A passthrough represents the relationship between the amount of the workshare discount 

and the avoided cost, calculated by dividing the workshare discount by its avoided cost and 

expressing the result as a percentage.28 When a workshare discount equals avoided cost, 

the passthrough is 100 percent. If a workshare discount is less than the avoided cost, then 

the passthrough is below 100 percent. Conversely, if a workshare discount is greater than 

the avoided cost, then the passthrough is above 100 percent.

2. Workshare Discount Regulations

The Commission’s regulations contain several pricing requirements for workshare 

discounts that must be complied with in each rate adjustment proceeding. See 39 C.F.R. pt.

3030, subpt. J. Workshare discounts are primarily regulated through rate adjustment 

proceedings, and only workshare discounts consistent with the regulations are approved 

by the Commission and permitted to go into effect.29

The Commission’s regulations provide that, based on the avoided costs established in the 

most recent ACD, workshare discounts set above avoided costs cannot be increased, 

workshare discounts set below avoided costs cannot be decreased, and workshare 

discounts with 100 percent passthroughs cannot be changed. 39 C.F.R. § 3030.282. 

Additionally, workshare discounts cannot be set above or below their avoided costs in a 

rate adjustment proceeding unless a specific exemption applies. Id. §§ 3030.283, 3030.284.

A workshare discount that exceeds its avoided cost is only permissible if one of the 

following exceptions applies: (1) the proposed workshare discount is associated with a 

new postal service, a change to an existing postal service, or a new workshare initiative; 

(2) the proposed workshare discount is a minimum of 20 percent less than the existing 

workshare discount; or (3) the proposed workshare discount is provided in connection 

28 For example, if the Postal Service offers a discount of $0.020 for mailers to apply a barcode to their mail, and this barcoding allows the Postal 

Service to avoid $0.022 in cost, then the worksharing passthrough is calculated as $0.02/$0.022 = 0.909 or a passthrough of 90.9 percent. Both 

the workshare discount and the avoided cost should be rounded to three decimal places (i.e., the nearest thousandth or $0.001). The 

passthrough percentage should be rounded to one decimal place.

29 See, e.g., Order No. 6526 at 6-7, 53, 70, 95, 107 (approving workshare discounts proposed by the Postal Service as consistent with applicable 

regulations).
Docket No. ACR2023 - 13 -

with a subclass of mail, consisting exclusively of mail matter of educational, cultural, 

scientific, or informational (ECSI) value. Id. § 3030.283(a)-(c), (e). In order for the ECSI 

exception to apply, the Postal Service must provide additional supporting information with 

its rate adjustment filing. Id. § 3030.285(c).

In addition, a workshare discount that exceeds avoided cost will be permitted if the 

Commission has granted a waiver of the application of 39 C.F.R. § 3030.283 pursuant to 39 

C.F.R. § 3030.286. Id. § 3030.283(d). For a workshare discount that exceeds avoided cost, 

the application for waiver will be granted only if at least one provision appearing in 39 

U.S.C. § 3622(e)(2)(A) through (e)(2)(D) or 39 U.S.C. § 3622(e)(3)(A) through (e)(3)(B) 

applies. Id. § 3030.286(f). Such provisions consider, among other things, preventing a loss 

of volume and reduction in contribution, phasing out discount gaps over time to mitigate 

rate shock, and avoiding an impediment to the efficient operation of the Postal Service. In 

Docket No. R2023-1, the USPS Marketing Mail Carrier Route Flats dropshipped at the 

destination delivery unit (DDU) workshare discount was permitted to exceed its avoided 

cost because the Postal Service received an advanced waiver from the Commission under 

the exception in 39 C.F.R. § 3030.283(d). Order No. 6341 at 60-61.30 In Docket No. R2023-2, 

no workshare discount set above avoided cost received a waiver and all discounts complied 

with applicable regulations.

A workshare discount that is less than its avoided cost is only permissible if one of the 

following exceptions applies: (1) the proposed workshare discount is associated with a 

new postal service, a change to an existing postal service, or a new workshare initiative; 

(2) the proposed workshare discount is a minimum of 20 percent more than the existing 

workshare discount; or (3) the percentage passthrough for the proposed workshare 

discount is at least 85 percent. Id. § 3030.284(a)-(c), (e). In addition, a workshare discount 

that is less than its avoided cost will be permitted if the Commission has granted a waiver 

of the application of 39 C.F.R. § 3030.284 pursuant to 39 C.F.R. § 3030.286. Id.

§ 3030.284(d). For a workshare discount that is less than its avoided cost, the application 

for waiver will be granted only if setting the workshare discount closer or equal to its 

avoided cost would impede the efficient operation of the Postal Service or if increasing or 

eliminating the workshare discount for a non-compensatory product would result in a 

further increase in the rates paid by mailers not able to take advantage of the discount. Id.

§ 3030.286(g). In Docket Nos. R2023-1 and R2023-2, no workshare discounts less than 

avoided costs received a waiver and all discounts complied with the applicable regulations.

30 In Docket No. RM2022-12, the Commission granted the Postal Service’s waiver for USPS Marketing Mail Carrier Route Flats dropshipped at 

the DDU. Docket No. RM2022-12, Order Approving Postal Service Application for Waiver Under 39 C.F.R. § 3030.286, August 30, 2022 (Order 

No. 6261). Subsequently, in Docket No. RM2023-4, the Commission approved the Postal Service’s proposed methodological changes to remedy 

the issue from Docket No. RM2022-12. See Order No. 6474. Similar methodological issues persist for USPS Marketing Mail Parcels dropshipped 

at the DDU and resulted in two passthroughs above 100 percent in Docket No. R2023-2; however, the Postal Service complied with 39 C.F.R. 

§ 3030.283(c). See Order No. 6526 at 69-70.
Docket No. ACR2023 - 14 -

Figure II-2 shows the total number of workshare discount passthroughs by compliance 

type at the time of filing for Docket Nos. R2023-1 and R2023-2.

Figure II-2

Workshare Discount Passthrough Compliance by Case

At the time of Commission approval, and as represented by Figure II-2, all workshare 

discounts in effect in FY 2023 complied with all workshare provisions, in accordance with 

39 C.F.R. §§ 3030.282, 3030.283, and 3030.284.

3. Comments on Workshare Discounts

The Public Representative provides a summary of the number of workshare discounts that 

were below 85 percent, between 85 and 100 percent, and over 100 percent in both FY 

2022 and FY 2023. PR Comments at 20-21. The Public Representative states that although 

there are several workshare discounts in FY 2023 with passthroughs less than 85 percent 

as well as greater than 100 percent, the Public Representative acknowledges the Postal 

Service’s explanation that mail processing cost avoidance models may fluctuate for a 

variety of reasons. Id. at 21. The Public Representative states that the Postal Service has 

brought workshare discounts into compliance with the Commission’s regulations in prior 

Market Dominant rate cases, and that he expects it will do so in the future. Id. The Public 

Representative also notes that, in some instances, passthrough percentages “can be quite 

volatile,” and fluctuate considerably from year to year. Id. at 23. The Public Representative 

observes that the costs for small-volume products are particularly subject to change. Id. at 

23-24.

NPPC states that many passthroughs in First-Class Mail and USPS Marketing Mail “did not 

comply with the law and Commission regulations.” NPPC Comments at 7. NPPC 

acknowledges that in most instances the passthroughs changed because the avoided costs 

increased. Id. NPPC states that the Postal Service recognizes that it will need to adjust those 

workshare discounts in its next rate adjustment proceeding. Id.
Docket No. ACR2023 - 15 -

PostCom expresses concern with the number of passthroughs that are below 100 percent, 

and in particular, the number of those that are below 85 percent. PostCom Comments at 5. 

PostCom contends that, in the aggregate, the Postal Service continues to send inefficient 

price signals. Id. PostCom states that although the 85 percent floor “may encourage 

improved pricing efficiency to some extent,” the Postal Service continues to 

“inappropriately favor passthroughs well below 100 percent of avoided costs.” Id. at 6. 

Further, PostCom criticizes a “mechanistic approach” in setting workshare discounts that 

“presumes that all customers can make the same cost versus service tradeoffs.” Id. PostCom 

contends, instead, that customers choosing destination entry might be buying greater 

service reliability than those choosing origin entry. Id. PostCom argues that “an 

unnecessarily oversimplified approach” in setting workshare discounts does not recognize 

this reality. Id.

Pitney Bowes Inc. (Pitney Bowes) argues that the FY 2023 ACR confirms that the 

Commission’s workshare discount rules are “having a positive effect,” but that “further 

refinements” are necessary to maximize incentives and achieve pricing and operational 

efficiency. Pitney Bowes Comments at 1. As an example, Pitney Bowes points to the 

discount for First-Class Mail 5-Digit Automation Letters in effect at the end of FY 2023, 

which it states was 79.6 percent of the FY 2023 avoided costs. Id. Pitney Bowes argues that 

the 95.2 percent passthrough set in Docket No. R2024-1, although an increase from 92.9 

percent passthrough, was an insufficient adjustment in view of the “significant increase 

(16.7 percent) in the cost avoidance.” Id. at 2. Pitney Bowes also encourages the 

Commission to improve the workshare discount rules by narrowing the permissible “safe 

harbor” and setting discounts based on forward-looking cost avoidance estimates. Id.

The News/Media Alliance (N/MA) asserts that 23 passthroughs in Periodicals were below 

85 percent as a result of the FY 2023 ACR updated avoided costs. N/MA Comments at 6. 

N/MA argues that this suggests that the Postal Service has not used pricing signals 

effectively to encourage worksharing in the Periodicals class. Id. N/MA argues that it 

“merits noting” that although the Postal Service set the Basic Carrier Route discount at 97.4 

percent of FY 2022 avoided costs in Docket No. R2024-1, that passthrough fell to 79.5 

percent as a result of updated avoided costs in the FY 2023 ACR. Id. N/MA acknowledges 

that the Postal Service will increase the 23 workshare discounts in the next rate case and 

encourages the Commission to urge the Postal Service to set the passthroughs as close to 

100 percent as feasible. Id. at 6-7.

The American Catalog Mailers Association, Inc. (ACMA) notes that a passthrough set at 100 

percent causes the cost coverage of an underwater product to decline. ACMA Comments at 

12. ACMA asserts that this is one of the reasons for cost coverage declines in USPS 

Marketing Mail Flats. Id.

The Postal Service argues that the Commission “has long been aware of the iterative 

nature” of workshare discount compliance, where workshare discounts are adjusted based 

on cost avoidances in the annual compliance review but are thereafter subject to change. 
Docket No. ACR2023 - 16 -

Postal Service Reply Comments at 17. The Postal Service argues that PostCom and N/MA’s 

suggestions that low passthrough percentages in the FY 2023 ACR are indicative of a 

“cynical...strategy” are “grossly overblown.” Id. The Postal Service argues that it “dutifully 

adjusted workshare discounts” in FY 2023 based upon the Commission’s regulations, and 

that it intends to do so in FY 2024. Id. The Postal Service further acknowledges that cost 

avoidances in small mail categories are subject to “high degrees of variation” and are 

sensitive to any data-collection anomalies. Id. Finally, the Postal Service contends that 

Pitney Bowes’ proposal to narrow the “safe harbor” or to base workshare discounts on 

cost-avoidance estimates is outside the scope of this annual compliance review. Id. at 18.

4. Commission Analysis

In response to commenters’ concerns about the Postal Service sending efficient price 

signals, the Commission reiterates that at the time of approval in rate adjustment 

proceedings, Docket No. R2023-1 and Docket No. R2023-2, all workshare discounts in 

effect in FY 2023 complied with all workshare provisions, in accordance with 39 C.F.R. 

§§ 3030.282, 3030.283, 3030.284. See Figure II-2, supra. The Postal Service does not have 

the opportunity to bring workshare discounts that have fallen out of compliance with

Commission regulations as a result of updated avoided costs filed in the FY 2023 ACR into 

compliance until the next rate adjustment proceeding. The Postal Service is required to do 

so at that time. The Commission encourages the Postal Service to not only bring workshare 

discounts into compliance with Commission regulations, but to also bring passthroughs 

closer to 100 percent.

The Commission agrees with the Public Representative that a few workshare discounts are 

quite volatile and can fluctuate from year to year. These include five workshare dropship 

discounts for USPS Marketing Mail Parcels, which still have a per-piece and per-pound 

avoided cost structure. The Commission has encouraged the Postal Service to consider 

changing the passthrough methodology for USPS Marketing Mail Parcels so that it is based 

solely on a per-piece avoided cost structure, matching the workshare dropship discounts 

for USPS Marketing Mail Letters and Flats.31 The remaining two volatile workshare 

dropship discounts are for USPS Marketing Mail Letters, where the discounts are so small 

that any fluctuation results in a large change to the discounts. In addition, the Commission 

is concerned with the avoided cost calculations for USPS Marketing Mail High Density 

Letters, which historically has had a very low passthrough.32

31 Order No. 6474 at 13; see Docket No. RM2024-3, Chairman’s Information Request No. 1, February 14, 2024, question 5.

32 In response to CHIR No. 2, question 32, the Postal Service acknowledges significant increases in measured cost avoidances for USPS 

Marketing Mail High Density Letters and states that they result from variability in the In-Office Cost System (IOCS) mail processing tallies for its 

benchmark product, USPS Marketing Mail Carrier Route Letters. January 19 Response to CHIR No. 2, question 32. The Postal Service states that 

it found “non-sampling errors” affecting the unit cost estimates, but also notes that this particular cost avoidance is subject to considerable 

sampling variability. Id. The Postal Service states that it has “identified remedies, including changes to data collector training and IOCS tally 

editing rules” that it expects will mitigate the recent anomalous increases for USPS Marketing Mail Carrier Route Letters costs in FY 2024. Id. 

The Postal Service also suggests that it may be appropriate to examine these issues and potential solutions in another docket. Id. The 

Commission requested additional information to further explore these issues and will consider whether a rulemaking is necessary to address 

the anomalies after FY 2024. See CHIR No. 9, question 10.
Docket No. ACR2023 - 17 -

Additionally, with respect to commenters’ concerns with the 85 percent passthrough floor, 

the Commission acknowledged in Docket No. RM2017-3 that the 85 percent passthrough 

floor prescribed in 39 C.F.R. § 3030.284(e) was less restrictive than many other workshare 

discount requirements, but explained that the exception “strikes an appropriate balance 

between improving pricing efficiency and providing sufficient pricing flexibility.” Order No. 

5763 at 212. The Commission also noted that if over time, the Postal Service was not taking 

steps to move workshare discounts toward 100 percent passthroughs, the Commission 

would reconsider the rules on workshare discounts as part of its plan to review the 

modified ratemaking system in 5 years. Id. at 212-13, 267.

As noted above, the Commission has committed to opening a proceeding to consider 

stakeholders’ concerns about a wide variety of Market Dominant rate issues. Comments on 

the workshare discount system and related regulations would be more appropriate in that 

proceeding.

In addition to the workshare compliance review in rate adjustment proceedings, the 

Commission considers compliance for workshare discounts in the ACD. For purposes of 

determining workshare discount compliance for FY 2023 in the ACD, the Commission 

identifies which workshare discounts in the previous fiscal year resulted in passthroughs 

that either exceeded 100 percent or fell below 85 percent. Order No. 5337 at 207; Order 

No. 5763 at 199. In addition, the Commission identifies those workshare discounts that

were equal to their avoided costs. Id. Section 3653(b)(1) of Title 39 requires the 

Commission to base its determination on the rates and fees “in effect” during FY 2023.33

The rates in effect at the end of FY 2023 are those approved in Docket No. R2023-2. Library 

Reference PRC-LR-ACR2023-9 demonstrates compliance of discounts in effect at the end of 

the year with the FY 2023 avoided costs.

The rates approved in Docket No. R2023-2 and in effect at the end of FY 2023, however, are 

no longer current as of the date of issuance of this Report. Between the end of FY 2023 and 

the publication of the FY 2023 ACD, the Postal Service filed a rate adjustment on October 6, 

2023 affecting all Market Dominant classes of mail in Docket No. R2024-1. See generally 

Docket No. R2024-1, Notice. The Commission approved these rates on November 22, 2023, 

to go into effect on January 21, 2024. Order No. 6814 at 66-67. The rates approved in 

Docket No. R2024-1 do not fall in the fiscal year under review within the FY 2023 ACD; 

however, the regulations regarding workshare discounts described above will be applied to 

the workshare discounts approved in Docket No. R2024-1 based upon the FY 2023 avoided 

costs in the next rate adjustment proceeding filed by the Postal Service. Accordingly, 

Library Reference PRC-LR-ACR2023-9 also assesses the compliance of workshare 

33 The Commission has consistently evaluated workshare discounts’ compliance based on the prices in effect at the end of the fiscal year 

regardless of whether other prices were also in effect at other points during the fiscal year. This is consistent with the Commission’s longstanding practice to use the most recent data available in its analyses. See, e.g., Docket No. ACR2020, Annual Compliance Determination, March 

29, 2021, at 12 (FY 2020 ACD); Docket No. ACR2019, Annual Compliance Determination, March 25, 2020, at 13 (FY 2019 ACD); Docket No. 

ACR2018, Annual Compliance Determination, April 12, 2019, at 13 (FY 2018 ACD); Docket No. ACR2017, Annual Compliance Determination, 

March 29, 2018, at 15 (FY 2017 ACD); Docket No. ACR2016, Annual Compliance Determination, March 28, 2017, at 10 (FY 2016 ACD); Docket 

No. ACR2015, Annual Compliance Determination, March 28, 2016, at 10 (FY 2015 ACD).
Docket No. ACR2023 - 18 -

discounts approved in Docket No. R2024-1, effective January 21, 2024, with the FY 2023 

avoided costs. Table II-1 shows the number of workshare discounts by mail class 

categorized by passthrough level (below 85.0 percent, between 85.0 percent and 99.9 

percent, equal to 100 percent, and above 100 percent).

Table II-1

Workshare Discounts by Mail Class Categorized by Passthrough Level

Docket No. R2024-1 Workshare Discounts and Docket No. ACR2023 Avoided Costs

Mail Class <85% 85.0%-99.9% =100% >100% Total

First-Class Mail 9 5 0 2 16

USPS Marketing Mail 19 19 5 15 58

Periodicals 23 7 0 0 30

Package Services 6 6 0 0 12

All Mail Classes 57 37 5 17 116

The Commission finds that all workshare discounts in effect in FY 2023 were in compliance 

with 39 C.F.R. part 3030, subpart J at the time they were introduced in rate adjustment 

proceedings based on the most recent avoided costs available at the time of each rate 

adjustment filing.

The Commission directs the Postal Service to bring all current workshare discounts approved 

in Docket No. R2024-1 and identified in Table II-1 that are not equal to their avoided costs 

based on the new FY 2023 avoided costs into compliance with 39 C.F.R. § 3030.283 and 39 

C.F.R. § 3030.284 in the next rate adjustment proceeding, which could include aligning 

workshare discounts with avoided costs or explaining how the workshare discounts comply 

with existing exceptions (including waivers granted in accordance with the rules set forth in 

39 C.F.R. § 3030.286). In addition, all workshare discounts proposed in rate adjustment 

proceedings must be consistent with 39 C.F.R. § 3030.282.
Docket No. ACR2023 - 19 -

CHAPTER III. MARKET DOMINANT 

PRODUCTS: OTHER RATE AND FEE 

COMPLIANCE ISSUES

A. Introduction

This chapter discusses other rate and fee compliance issues (not discussed in Chapter II), 

including Commission determinations related to non-compensatory classes and products.

In Order No. 5763, the Commission adopted new rules for non-compensatory classes and 

products. Specifically, 39 C.F.R. part 3030, subpart G permits an additional 2 percentage 

points of rate authority for any class of mail where the attributable cost for that class 

exceeds the revenue from that class. 39 C.F.R. § 3030.222(a). The use of this additional rate 

authority is optional and may be implemented at the Postal Service’s discretion whenever 

it files a rate adjustment proceeding involving the non-compensatory class. Id.

In addition, the regulations have requirements specific to products classified as noncompensatory within classes that are compensatory overall. For those products, the rates 

must increase by a minimum of 2 percentage points above the average percentage increase 

for that class. Id. § 3030.221. The regulations also provide that rates may not be reduced 

for any non-compensatory product. Id. § 3030.127(b). The Postal Service is required to 

comply with directives issued by the Commission pursuant to 39 C.F.R. § 3030.221 

whenever it files a rate adjustment proceeding affecting a non-compensatory product.

The Commission finds that one class was non-compensatory in FY 2023: Periodicals. The 

Periodicals class contains two products that are each non-compensatory in FY 2023. 

Additionally, the Commission identifies the following non-compensatory products in 

compensatory classes: (1) USPS Marketing Mail Flats, (2) USPS Marketing Mail Carrier 

Route, and (3) Media Mail/Library Mail. The Commission notes that two classes were fully

compensatory in FY 2023, with both the class and all products within the class covering 

attributable costs: First Class Mail and Special Services.34 These results are displayed in 

Table III-1. Collectively, the Postal Service lost $1.34 billion in FY 2023 from noncompensatory classes and products.

34 Market Dominant nonpostal services are not specifically discussed in this chapter because all products in the group covered their costs in 

FY 2023. FY 2023 ACR at 108-09.
Docket No. ACR2023 - 20 -

Table III-1

Market Dominant Product Compliance Results FY 2023
Docket No. ACR2023 - 21 -

In alignment with the new regulations of 39 C.F.R. part 3030, subpart G, this chapter begins 

with an analysis of the non-compensatory class, followed by an analysis of each noncompensatory product in compensatory classes, organized by class. The Commission also 

discusses the fully compensatory classes.

In addition, this chapter includes a discussion of other rate and fee compliance issues 

raised by commenters.

B. Non-Compensatory Classes

1. Periodicals

A. FY 2023 RESULTS

The Periodicals class is comprised of two products, In-County35 and Outside County. 

Revenue for both products was insufficient to cover their attributable costs in FY 2023. As 

shown in Table III-2, the cost coverage for the class decreased from 61.1 percent in FY 

2022 to 60.1 percent in FY 2023, resulting in a negative contribution of more than $613 

million.36 In this section, the Commission discusses the FY 2023 financial results for 

Periodicals in more detail.

Table III-2

Periodicals Cost Coverage, FY 2019–FY 2023

Fiscal Year Periodicals

Class In-County Outside County

FY 2019 64.0% 58.4% 64.3%

FY 2020 56.9% 51.1% 57.3%

FY 2021 53.2% 45.0% 53.9%

FY 2022 61.1% 49.1% 61.9%

FY 2023 60.1% 57.4% 60.3%

Source: Library Reference PRC-LR-ACR2023-5.

The Postal Service reports that revenue-per-piece increased 10 percent and cost-per-piece 

increased 11 percent, resulting in the decline in cost coverage described above. FY 2023 

ACR at 40. The Postal Service also notes a more pronounced decline in Periodicals volume 

in recent years due to increased substitution from the Internet, mobile devices, and ereaders.37 The Postal Service observes that, compared to the number of different 

35 The In-County product is typically used by smaller circulation weekly newspapers for distribution within the county of publication.

36 See Library Reference PRC-LR-ACR2023-5, Excel file “FY 2023 CH3 Periodicals.xlsx.”

37 See Library Reference USPS-FY23-45, December 29, 2023, folder “Rule 3050.50 Flats,” folder “Paragraph (b) -- Financial Report,” PDF file “Part 

B Narratives-FY 23 Rule 3050.50.pdf,” at 12.
Docket No. ACR2023 - 22 -

publications that were mailed in FY 2022, in FY 2023 there were 5.8 percent fewer as 

publications cease mailing altogether. Id.

B. PREVIOUS ACD DIRECTIVES

The Periodicals class has consistently failed to cover its attributable costs, and the 

Commission has repeatedly encouraged the Postal Service to improve Periodicals cost 

coverage.38 In its Flats Study, the Commission made several recommendations to the Postal 

Service as it developed its plan to address inefficiencies in the collection, sorting, 

transportation, and delivery of flat-shaped mailpieces, which includes both In-County and 

Outside County Periodicals.39 The Commission is currently reviewing the Postal Service’s 

plan.40

C. COMMENTS ON PERIODICALS

N/MA comments that controlling costs and improving productivity are essential for the 

Periodicals class. N/MA Comments at 3. It states that the Postal Service’s strategy of solely 

raising rates is not a viable cost coverage improvement plan in the absence of meaningful 

and effective cost control. Id. N/MA notes that it filed several comments in Docket No. 

SS2022-1 regarding the need for stronger metrics and enforcement measures as it pertains 

to controlling costs. Id. at 2. N/MA- avers that, in this proceeding, the Postal Service has not 

provided “clear, firm metrics against which the success of its various flats-related cost 

savings initiatives can be evaluated.” Id. at 3.

The Public Representative observes that although prices increased for both Periodicals 

products, cost coverage did not improve. PR Comments at 13. Noting that revenue- perpiece improved, the Public Representative observes that volume declined and attributable 

cost-per-piece increased by 11 percent. Id. He states that the root cause of the cost increase 

is unclear and emphasizes that the Postal Service’s main focus for the Periodicals class 

should be on cost reduction. Id.

D. COMMISSION ANALYSIS

Since FY 2019, Periodicals volume has declined by 35.4 percent, total revenue has declined 

by 22.7 percent, total attributable cost has declined by 17.6 percent, and during that time, 

the Periodicals class has provided cumulative negative contribution of $3.5 billion.41 To 

better understand the contribution shortfall of Periodicals, the Commission analyzes 

Periodicals revenue and cost.

38 See, e.g., FY 2017 ACD at 50; FY 2018 ACD at 46; FY 2019 ACD at 25; FY 2020 ACD at 20; Docket No. ACR2021, Annual Compliance 

Determination, March 29, 2022, at 27 (FY 2021 ACD); Docket No. ACR2022, Annual Compliance Determination, March 29, 2023, at 36 (FY 2022 

ACD).

39 See Docket No. SS2022-1, Flats Operations Study Report, April 6, 2023, at 2-3 (Flats Study).

40 See Docket No. SS2022-1, Submission of the United States Postal Service Flats Plan Pursuant to Section 206 of the Postal Service Reform Act 

of 2022, October 6, 2023 (Postal Service October 6, 2023 Flats Plan); see also Docket No. SS2022-1, Notice and Order on Postal Service 

Submission of Flats Plan, November 17, 2023 (Order No. 6803).

41 See Library Reference PRC-LR-ACR2023-5, Excel file “FY 2023 CH3 Periodicals.xlsx.”
Docket No. ACR2023 - 23 -

(1) Periodicals Revenue

In an effort to improve Periodicals revenue, and in line with prior encouragement from the 

Commission to improve cost coverage, the Postal Service has generally implemented price 

increases that have maximized the Postal Service’s rate authority for both Periodicals 

products since the rules governing the new ratemaking system went into effect in January 

2021.42 In Docket No. R2023-1, the Postal Service raised Periodicals prices by 3.456 

percent on average. Order No. 6341 at 67. In Docket No. R2023-2, the Postal Service raised 

Periodicals prices by 8.122 percent on average. Order No. 6526 at 87.

As such, FY 2023 Periodicals unit revenue increased over 9 percent compared to FY 2022. 

As detailed in Figure III-1, from FY 2019 to FY 2021, Periodicals unit revenue remained flat 

while FYs 2022 and 2023 both showed significant growth. Unit revenue for In-County was 

$0.118 in FY 2022 and $0.134 in FY 2023, an increase of 13.1 percent. Unit revenue for 

Outside County was $0.306 in FY 2022 and $0.339 in FY 2023, an increase of 10.9 percent.

Figure III-1

Periodicals Unit Revenue, FY 2019–FY 2023

Source: Library Reference PRC-LR-ACR2023-5.

42 See 85 Fed. Reg. 81,124 (Dec. 15, 2020).
Docket No. ACR2023 - 24 -

Changes in the characteristics of mailpieces, such as weight and advertising content, have 

dampened the impact of the rate increases. For Outside County, which makes up 84.9 

percent of Periodicals volume, pricing for the product is related to weight and percent of 

advertising content. Simply put, the Postal Service earns more revenue from mailpieces 

that are heavier and contain more advertising, but both of those elements are decreasing.

As detailed in Table III-3, average weight for Outside County decreased by 11.3 percent and 

average advertising content decreased by 5.1 percentage points over the last 5 fiscal years. 

These factors directly limited the revenue that the Postal Service earned from the Outside 

County product, which makes the unit revenue increase experienced by the product in 

FY 2023 more noteworthy.

Table III-3

Periodicals Outside County Revenue Elements, FY 2019–FY 2023

Fiscal Year Weight (Ounces) Advertising Content

FY 2019 5.59 34.2%

FY 2020 5.32 31.9%

FY 2021 5.26 30.7%

FY 2022 5.18 30.2%

FY 2023 4.96 29.1%

Source: Library Reference PRC-LR-ACR2023-5.

(2) Periodicals Attributable Cost

Because Periodicals is comprised of flat-shaped mail, the operational changes and 

initiatives designed to reduce flat-shaped mail costs described by the Postal Service 

reporting on which is required by 39 C.F.R. § 3050.50, impacts Periodicals. See Library 

Reference USPS-FY23-45. As the Commission has previously discussed, the Postal Service 

has been unable, and continues to be unable, to quantify the impact of those operational 

initiatives and changes on Periodicals products. See, e.g., FY 2022 ACD at 33.

In FY 2023, the Postal Service implemented two major operational initiatives for 

Periodicals. In Docket No. N2022-2, the Postal Service changed the critical entry times 

(CETs) for Periodicals; however, the Postal Service “cannot quantify specific cost savings 

that were achieved in FY2023 by implementing a standardized [CET] for Periodicals.” 

January 26 Response to CHIR No. 6, question 8.a. In Docket No. R2023-1, the Postal Service 

eliminated select entry options for sacks with Outside County Periodicals Flats; however, 

the Postal Service “does not have an estimate of the cost savings resulting from the 

elimination of sacks at the [origin sectional center facility (OSCF), origin area distribution 

center (OADC), origin network distribution center (ONDC), destination network 

distribution center (DNDC), and destination area distribution center (DADC)] entry points.” 

January 22 Response to CHIR No. 2, question 21.
Docket No. ACR2023 - 25 -

Figure III-2

Periodicals Unit Attributable Cost, FY 2019–FY 2023

Source: Library Reference PRC-LR-ACR2023-5.

As detailed in Figure III-2, from FY 2019 through FY 2023, Periodicals unit attributable cost

increased overall. Unit attributable cost for In-County was $0.193 in FY 2019 and $0.233 in 

FY 2023, an increase of 20.9 percent. Library Reference PRC-LR-ACR2023-5. Unit 

attributable cost for Outside County was $0.428 in FY 2019 and $0.563 in FY 2022, an 

increase of 31.6 percent. Id. From FY 2022 to FY 2023, Periodicals unit attributable cost 

increased overall; In-County decreased by 3.2 percent while Outside County increased by 

13.9 percent. Id.
Docket No. ACR2023 - 26 -

Figure III-3 illustrates that the wide gap between unit revenue and unit attributable cost 

results in low unit contribution and a total negative contribution for Periodicals.

Figure III-3

Periodicals Unit Contribution, FY 2019–FY 2023

Source: Library Reference PRC-LR-ACR2023-5.

In FY 2023, Outside County constituted 84.9 percent of all Periodicals volume and 93.1 

percent of total Periodicals attributable cost.43 Figure III-4 shows that Outside County unit 

attributable cost increased by 13.5 cents from FY 2019 through FY 2023. From FY 2022 to 

FY 2023, Outside County unit attributable cost increased by 6.9 cents Library Reference 

PRC-LR-ACR2023-5.

 

43 See Library Reference PRC-LR-ACR2023-5, Excel file “FY 2023 CH3 Periodicals.xlsx.”
Docket No. ACR2023 - 27 -

Figure III-4

Periodicals Outside County Unit Attributable Cost, FY 2019–FY 2023

Source: Library Reference PRC-LR-ACR2023-5.

In FY 2023, the unit attributable cost increased across all segments, including mail 

processing, delivery, transportation, and other costs.44 The Postal Service reports that 

“[u]nit mail processing labor costs increased by 8.8 percent from FY 2022 to FY 2023, 

substantially due to inflation-linked cost of living adjustments in the Postal Service’s labor 

agreements and outside of Postal Service management control.” January 22 Response to 

CHIR No. 2, question 21. From FY 2022 to FY 2023, Outside County total transportation 

costs decreased by 9.6 percent; however, unit transportation costs increased by 5.21 

percent.45

44 In Figure III-4, Mail Processing includes cost segment 3; Delivery includes cost segments 6, 7, and 10; Transportation includes cost segment 

14; and Other, such as retiree health benefits, management, building space, and supply related costs, includes cost segments 1, 2, 8, 11, 12, 13, 

15, 16, 17, 18, 19, and 20. The figure does not account for piggyback factors.

45 See Library Reference PRC-LR-ACR2023-5, Excel file “FY 2023 CH3 Periodicals.xlsx.”
Docket No. ACR2023 - 28 -

As Table III-4 illustrates, mailer presortation of Outside County Carrier Route has 

decreased since FY 2019. In FY 2019, mailer presortation of Outside County Carrier Route 

was at 59.9 percent and had decreased to 56.5 percent by FY 2023. In addition, mailer 

dropship of Outside County decreased from 72.4 percent in FY 2019 to 68.7 percent in 

FY 2023. Library Reference PRC-LR-ACR2023-5.

Table III-4

Periodicals Outside County Mail Mix, FY 2019–FY 2023

Fiscal Year Presortation -

Carrier Route Basic

Dropship -

All Levels

FY 2019 59.9% 72.4%

FY 2020 58.9% 71.9%

FY 2021 58.7% 72.8%

FY 2022 57.6% 70.0%

FY 2023 56.5% 68.7%

Source: Library Reference PRC-LR-ACR2023-5.

The Commission notes that when the mail mix shifts away from presortation and dropship, 

revenue can increase because rates are higher. However, because the Postal Service must 

process and transport those pieces more often, costs also increase. In future rate cases, the 

Postal Service should consider mail mix changes when pricing Periodicals in order to 

maximize revenue and minimize costs.

The Commission reiterates its longstanding findings that despite numerous cost-reduction 

initiatives designed to reduce flat-shaped mail costs, including Periodicals costs, these costs 

have risen over time. Furthermore, the Commission encourages the Postal Service to continue 

to maximize its usage of rate authority granted under 39 C.F.R. § 3030.222 and to maximize 

its cost coverage by strategically pricing Periodicals.

C. Non-Compensatory Products in 

Compensatory Classes

1. Package Services

Package Services covered its overall attributable costs in FY 2023, with a cost coverage of 

102.3 percent. Library Reference PRC-LR-ACR2023-6. The Package Services class consists 

of four products. Three of those products, Alaska Bypass Service, Bound Printed Matter 

(BPM) Parcels, and BPM Flats, covered their attributable costs in FY 2023. Id. However, for 

the second consecutive year, the Media Mail/Library Mail product was the only Package 

Services product that failed to cover its attributable cost. Id. Table III-5 contains the cost 

coverage of each Package Services product as well as the overall class cost coverage for the 

last 5 fiscal years.
Docket No. ACR2023 - 29 -

Table III-5

Package Services Cost Coverage, FY 2019–FY 2023

Fiscal 

Year

Package 

Services 

Overall

Alaska Bypass 

Service

Bound Printed Matter 

Flats

Bound Printed 

Matter Parcels

Media Mail / 

Library Mail

FY 2019 96.9% 155.9% 143.7% 106.1% 71.5%

FY 2020 92.5% 147.6% 125.8% 94.0% 79.3%

FY 2021 93.2% 129.8% 117.3% 94.6% 84.3%

FY 2022 102.2% 136.0% 124.7% 108.7% 91.3%

FY 2023 102.3% 120.1% 114.0% 118.9% 89.7%

Source: Library Reference PRC-LR-ACR2023-6.

As Table III-5 shows, the cost coverage for the Package Services class in FY 2023 is the 

highest it has been in the last 5 fiscal years.46 However, it also illustrates that cost coverage 

for all Package Services products except Bound Printed Matter Parcels decreased between 

FY 2022 and FY 2023. The majority of volume in Package Services is Bound Printed Matter 

Parcels.

A. MEDIA MAIL/LIBRARY MAIL

(1) FY 2023 Results

In FY 2023, the Media Mail/Library Mail product failed to cover its attributable cost. 

FY 2023 was the seventeenth consecutive year that Media Mail/Library Mail did not 

generate sufficient revenue to cover its attributable cost. See FY 2022 ACD at 58. In FY 

2023, Media Mail/Library Mail had a cost coverage of 89.7 percent (FY 2023 ACR at 42), a 

1.6 percentage point decrease compared to FY 2022. The Postal Service acknowledges that 

the costs for Media Mail/Library Mail in FY 2023 continue to exceed its revenues. Id. at 43.

The Postal Service states that the unit revenue for Media Mail/Library Mail increased by 9.8 

percent in FY 2023, driven by above class average price increases of 4.381 percent in 

Docket No. R2023-1 and 7.380 percent in Docket No. R2023-2.47 These increases, however, 

were offset by a 11.7 percent increase in unit cost. See FY 2023 ACR at 43.

The Postal Service states that the price increase applied in Docket No. R2023-2 is expected 

to have a more significant effect on cost coverage in FY 2024 along with the above class 

46 To see a more extensive accounting of Package Services cost coverages, please see Library Reference PRC-LR-ACR2023-6.

47 See id. The 4.381 percent price increase for Media Mail/Library Mail in Docket No. R2023-1 was more than the Package Services class average 

of 4.197 and went into effect on January 22, 2023. Order No. 6341 at 92. The 7.380 percent price increase for Media Mail/Library Mail in Docket 

No. R2023-2 was more than 2 percentage points above the Package Services class average increase of 5.379 percent and went into effect on 

July 9, 2023. Order No. 6526 at 103.
Docket No. ACR2023 - 30 -

average increase of 3.979 percent approved in Docket No. R2024-1, which went into effect 

January 21, 2024. See FY 2023 ACR at 43; see also Order No. 6814 at 54-56. The Postal 

Service intends to recommend to the Board of Governors that they continue to apply aboveclass-average price increases to Media Mail/Library Mail. See FY 2023 ACR at 43.

(2) Comments on Media Mail/Library Mail

The Public Representative notes that the Package Services class covered its attributable 

cost in FY 2022 and FY 2023, with cost coverage of approximately 102 percent for both 

years. PR Comments at 14. The Public Representative also notes that after cost coverage 

improvements between FY 2021 and FY 2022, Media Mail/Library Mail was the only noncompensatory product within Package Services in FY 2023 despite the Postal Service’s 

expectation that the product would cover its attributable cost after price increases. Id. The 

Public Representative further notes that, compared to FY 2022, in FY 2023 Media 

Mail/Library Mail volume decreased 3 percent, revenue-per-price increased 9.8 percent, 

and attributable cost-per-piece increased by 11.7percent. Id.

(3) Commission Analysis

As noted above, the Media Mail/Library Mail product did not cover its attributable cost or 

make a contribution to institutional costs in FY 2023. Table III-6 contains the volume, unit 

revenue, unit attributable cost, unit contribution, and cost coverage of Media Mail/Library 

Mail since FY 2019.

Table III-6

Media Mail/Library Mail Financial Results, FY 2019–FY 2023

Fiscal 

Year

Volume 

(Millions)

Unit 

Revenue 

(Cents)

Unit Attributable Cost 

(Cents)

Unit Contribution 

(Cents)

Cost 

Coverage

FY 2019 80.1 354.5 495.5 -141.1 71.5%

FY 2020 97.8 357.3 450.5 -93.2 79.3%

FY 2021 107.3 372.8 442.0 -69.2 84.3%

FY 2022 95.0 423.8 464.2 -40.4 91.3%

FY 2023 92.3 465.1 518.3 -53.2 89.7%

Source: Library Reference PRC-LR-ACR2023-6.
Docket No. ACR2023 - 31 -

Although Media Mail/Library Mail covered only 89.7 percent of its attributable cost in 

FY 2023, the product’s financial results have generally improved over the last 5 fiscal years, 

as Table III-6 demonstrates. Between FY 2019 and FY 2023, Media Mail/Library Mail’s unit 

revenue increased by 110.6 cents, which outpaced its unit cost increase of 22.8 cents over 

the same period, leading to an improvement of 87.9 cents in unit contribution. This 

improved contribution is also reflected in the product’s cost coverage, which improved by 

18.2 percentage points between FY 2019 and FY 2023. The Commission also notes unit 

attributable costs have experienced more volatility over the same period and are an area 

where the Postal Service should focus its efforts as it looks to further improve the cost 

coverage for this product.

The Commission issued several information requests seeking to identify the causes of unit 

cost changes, and the Postal Service responded. January 19 Response to CHIR No. 2; 

February 9 Response to CHIR No. 9. Since FY 2021, the unit cost for Media Mail/Library 

Mail has increased 76.3 cents, with increases of 22.3 cents in FY 2022 and 54.0 cents in FY 

2023. January 19 Response to CHIR No. 2, question 22.a. This represents an approximate 

17.3 percent increase in unit costs over the past 2 years. The Postal Service identified the 

primary driver of these cost increases as purchased transportation, namely the contracts 

with air carriers the Postal Service uses but also, to a lesser extent, highway transportation 

contracts. Id.

In FY 2022, the Postal Service states that the unit cost for purchased transportation 

increased 31.4 cents, which is approximately 140.8 percent of the actual unit cost increase 

of 22.3 cents for Media Mail/Library Mail in FY 2022. Id. The 54.0 cent unit cost increase for 

Media Mail/Library Mail in FY 2023 was especially steep. The Postal Service explains that 

the three primary drivers of this increase were purchased transportation (34.1 cents) 

driven primarily by air contract costs, vehicle service drivers (6.0 cents), and clerks and 

mailhandlers (9.2 cents). Id. Together, these three cost segments represent approximately 

91.3 percent of the unit cost increase.

As in FY 2022, FY 2023 purchased transportation costs were driven mainly by air contract 

costs. Id. The Postal Service explained that in FY 2022, 3 percent of Media Mail/Library Mail 

was transported via air. In FY 2023, the volume of Media Mail/Library Mail transported by 

air increased to 5.07 percent, despite the Postal Service’s initiative to move more volume 

across the network to surface transportation.48 The Postal Service indicated that its 

operational plan to achieve this goal relies on the mailer applying the appropriate “Service 

Type Code” in the mailpiece barcode, which the Postal Service is seeking to incentivize 

mailers to do. February 9 Response to CHIR No. 9, question 11.b.

48 See February 9 Response to CHIR No. 9, question 11.a.; see also generally United States Postal Service, Delivering For America: Our Vision and 

Ten-Year Plan to Achieve Financial Sustainability and Service Excellence, at 30, available at https://about.usps.com/what/strategicplans/delivering -for-america/assets/USPS_Delivering-For-America.pdf (DFA Plan). The Commission sought the percentage of Media 

Mail/Library Mail transported via air in FY 2021, but the Postal Service explained that due to data retention limits, the information is 

unavailable. February 9 Response to CHIR No. 9, question 11.a.
Docket No. ACR2023 - 32 -

The increase in vehicle service drivers costs was due to a 1.9 percent increase in the main 

cost driver for that cost segment, and the increase in clerks and mailhandlers costs were 

driven by an increase in mail processing costs. Response to CHIR No. 2, question 22.a. 

Decreasing volume was also a driving factor in the unit cost increases for Media 

Mail/Library Mail in FY 2023.

The Commission acknowledges the Postal Service’s intention to move all of Media 

Mail/Library Mail to surface transportation should contribute to reduced costs once the 

process is complete and is hopeful that the Postal Service will achieve this. However, the 

Commission notes two concerns. First, while the Postal Service aspires to move Media 

Mail/Library Mail to surface transportation, it will likely not succeed by the next ACR and 

thus the Commission is uncertain that Media Mail/Library Mail will cover its costs in the 

immediate future. Second, the Postal Service’s data retention policies that limit its ability to 

provide a full response to information requests could also make it difficult to measure and 

assess the progress and success of key strategies laid out in the Delivering for America 

(DFA) Plan, such as the shifting of volume from air transportation to surface. February 9 

Response to CHIR No. 9 (in reference to its DFA Plan); see DFA Plan at 30.

Since the enactment of the Postal Accountability and Enhancement Act (PAEA) in 2006, the 

Postal Service has consistently increased the prices for Media Mail/Library Mail above the 

class average increase for Package Services. See FY 2022 ACD at 60. According to the Postal 

Service, it intends to recommend to the Board of Governors to continue applying above 

class average price increases to Media Mail/Library Mail. FY 2023 ACR at 43. The 

Commission notes that the Postal Service is required to comply with 39 C.F.R. § 3030.221 

whenever it files a rate adjustment proceeding affecting a compensatory class with a noncompensatory product as is the case here.

The Commission finds that the FY 2023 revenue for Media Mail/Library Mail was not 

sufficient to cover its attributable cost. The Commission reminds the Postal Service that under 

39 C.F.R. § 3030.221, the Postal Service must increase the prices of Media Mail/Library Mail 

by at least 2 percentage points above the class average in each Market Dominant rate 

adjustment affecting Package Services through the issuance of the FY 2024 ACD. Further, the 

Commission directs the Postal Service to include the percentage of Media Mail/Library Mail 

volume sent by air transportation in FY 2024 in their discussion of the Package Services class 

in the FY 2024 ACR. If that number is greater than zero, the Postal Service must explain why 

that occurred.
Docket No. ACR2023 - 33 -

2. USPS Marketing Mail

As a class, USPS Marketing Mail covered its attributable costs in FY 2023 and had an overall 

cost coverage of 136.3 percent. Library Reference PRC-LR-ACR2023-4. Table III-7 provides 

the cost coverage for each USPS Marketing Mail product as well as the overall class for the 

last 5 fiscal years. As Table III-7 shows, two products within the class did not cover costs in 

FY 2023: (1) USPS Marketing Mail Flats and (2) USPS Marketing Mail Carrier Route.49

Table III-7

USPS Marketing Mail Cost Coverage, FY 2019–FY 2023

Fiscal Year

USPS 

Marketing 

Mail 

Overall

Carrier 

Route Letters Flats Parcels HD/Sat Flats EDDM HD/Sat Letters

FY 2019 139.1% 99.9% 190.0% 67.7% 56.9% 138.2% 259.5% 204.7%

FY 2020 129.5% 96.2% 171.4% 63.3% 76.5% 129.9% 257.7% 188.6%

FY 2021 130.5% 94.6% 174.7% 60.3% 73.1% 125.4% 248.3% 182.4%

FY 2022 143.5% 99.4% 191.2% 66.7% 87.5% 132.5% 263.9% 198.8%

FY 2023 136.3.% 98.7% 180.1% 64.5% 119.5% 122.7% 214.8% 184.9%

Source: Library Reference PRC-LR-ACR2023-4.50

In this chapter, the Commission discusses the FY 2023 financial results for USPS Marketing 

Mail non-compensatory products in more detail.51

49 Because the USPS Marketing Mail Parcels product covered its attributable costs in FY 2023, it is no longer subject to the individual product 

requirement of 39 C.F.R. § 3030.221. Cf. FY 2022 ACD at 56.

50 The Commission’s cost coverage calculations may differ from the Postal Service’s calculations because, unlike the Postal Service, the 

Commission includes fees in the revenue for each product. See Library Reference PRC-LR-ACR2023-1.

51 The Commission received certain comments on the USPS Marketing Mail class that were not specifically related to non-compensatory 

products. ANM comments on the Postal Service’s response to CHIR No. 2, question 17, in which the Postal Service stated that it may be 

“appropriate” to examine issues related to reduced rates provided to nonprofit USPS Marketing Mail. See generally ANM Comments; Response 

to CHIR No. 2, question 17.c. ANM argues that there is no need to open a proceeding to consider these issues because the reduced rates 

provided to nonprofit USPS Marketing Mail are established by statute. See ANM Comments at 2-3. In its reply comments, the Postal Service 

states that ANM’s views are “better addressed in another venue.” Postal Service Reply Comments at 15. The Commission appreciates ANM’s 

and the Postal Service’s comments on this issue; however, it is outside the scope of the instant proceeding. Further, NPPC notes the volume 

decline in USPS Marketing Mail letters between FY 2022 and FY 2023. See NPPC Comments at 5-6. NPPC highlights the product’s net increase in 

attributable costs and states that “[t]hat net increase simply should not have happened.” Id. at 6. The Commission appreciates NPPC’s 

concerns; however, the USPS Marketing Mail Letters product covered its attributable costs in FY 2023 and is not discussed further in this 

chapter.
Docket No. ACR2023 - 34 -

A. USPS MARKETING MAIL FLATS

(1) FY 2023 Results

In FY 2023, USPS Marketing Mail Flats had a cost coverage of 64.5 percent, 2.2 percentage 

points lower than in the prior year. Library Reference PRC-LR-ACR2023-4. As shown in 

Figure III-5, cost coverage for USPS Marketing Mail Flats declined 3.2 percentage points 

from FY 2019 to FY 2023. Id.

Figure III-5

USPS Marketing Mail Flats Cost Coverage and Contribution, FY 2019–FY 202352

Source: Library Reference PRC-LR-ACR2023-4.

52 Complete USPS Marketing Mail Flats data for FY 2008 to FY 2023 can be found in Library Reference PRC-LR-ACR2023-4.
Docket No. ACR2023 - 35 -

Unit revenue grew by 12.3 percent in FY 2023, an increase over the 11.4 percent unit 

revenue growth seen in FY 2022. Id. The Postal Service reports that it implemented rate 

increases for USPS Marketing Mail Flats that were at least 2 percentage points higher than 

the class average for USPS Marketing Mail in each of the last six rate increases to go into 

effect, including the 7.381 percent rate increase approved in Docket No. R2023-2. FY 2023 

ACR at 22-23; Order No. 6526 at 66. The Postal Service also states that the proportion of 

nonprofit Flats grew from 23.1 percent of the Flats volume in FY 2017 to 33.7 percent in FY 

2023. FY 2023 ACR at 22.

In addition, reported unit cost increased by 16.0 percent. Id. In responses to CHIRs, the 

Postal Service attributed this to increases in mail processing, delivery, and transportation 

unit costs. See January 19 Response to CHIR No. 2, question 19.a.

Due to increases in unit cost outpacing increases in unit revenue, contribution decreased 

by $13.8 million in FY 2023, as shown in Figure III-5. As a result, the cumulative 

contribution from USPS Marketing Mail Flats between FY 2008 and FY 2023 grew to a 

negative $9.6 billion, as shown in Figure III-5.

USPS Marketing Mail Flats volume continued to decline in FY 2023, decreasing by 466 

million pieces, or 17.3 percent, compared to FY 2022. See January 19 Response to CHIR No. 

2, question 16.a. (revised). This rate of decline was higher than in recent years, with the 

product’s volume having decreased 6.1 percent in FY 2022 and 10.3 percent in FY 2021. FY 

2022 ACD at 39. The mail mix of USPS Marketing Mail Flats changed in that more pieces 

were entered at the origin than destination. See January 19 Response to CHIR No. 2,

question 16.a. (revised).

(2) Previous ACD Directives

Given USPS Marketing Mail Flats’ history of not covering its costs, the Commission has 

issued specific directives related to the cost coverage of USPS Marketing Mail Flats since 

the FY 2010 ACD.53 In the FY 2022 ACD, the Commission declined to re-issue prior 

directives on the cost coverage of USPS Marketing Mail Flats because its regulations had 

largely superseded these directives, with the requirement in 39 C.F.R. § 3030.221 

mandating a minimum rate increase for non-compensatory products of 2 percent or more 

above the class average, and the improved reporting requirements for flat-shaped products 

generally in 39 C.F.R. § 3050.50. See id. at 48.

In response to the FY 2022 ACD directive and in compliance with 39 C.F.R. § 3030.221, the 

Postal Service raised rates for USPS Marketing Mail Flats by 2 percentage points higher 

than the USPS Marketing Mail class average in the Market Dominant rate increases since 

the FY 2022 ACD. Specifically, the Postal Service raised rates on USPS Marketing Mail Flats 

53 See FY 2022 ACD at 39-40 (describing the history of Commission directives related to the cost coverage of USPS Marketing Mail Flats between 

FY 2010 and FY 2021).
Docket No. ACR2023 - 36 -

by 7.381 percent in Docket No. R2023-254 and by 3.966 percent in Docket No. R2024-1. See

FY 2023 ACR at 22-23; Order No. 6814 at 34.

(3) Comments on USPS Marketing Mail Flats

The Public Representative notes that rates increased over 30 percent for USPS Marketing 

Mail Flats over four Market Dominant rate proceedings (Dockets Nos. R2021-1, R2022-1, 

R2023-1, and R2023-2); however, in the Public Representative’s view, these rate increases 

did not help cost coverage. PR Comments at 17. The Public Representative “opines that the 

Postal Service’s cost reduction initiatives, which aim to improve its operational efficiencies, 

lower its costs, and render it less volatile to losses in economies of density, are equally as 

(if not more) crucial than prices.” Id. According to the Public Representative, the Postal 

Service October 6, 2023 Flats Plan includes initiatives to improve mail processing and 

decrease the unit cost of flats products. PR Comments at 19; see Postal Service October 6, 

2023 Flats Plan. In the Public Representative’s view, “these are impressive initiatives, and 

he hopes that the Postal Service will show the effect of these initiatives in its next Annual 

Compliance Report.” Id. The Public Representative recommends that the Postal Service 

clarify why its cost reduction initiatives have not been successful in reducing the unit costs 

of the non-compensatory USPS Marketing Mail Flats product. See id. The Public 

Representative further states that the Postal Service should provide detailed reasons of 

“how redesigning or removing machinery in different facilities can help to confront the 

cost-push of volume decline.” Id.

ACMA comments that USPS Marketing Mail Flats attributable costs have increased and that 

“serious questions exist about the costs’ meaningfulness, including that the assumption of 

high variabilities for mail processing has led to the attribution of fixed costs.”55 ACMA 

further comments that “[Carrier Route] and [High Density] mailers [have elected] to stop 

sending to their low-density segments, due to the high rates of Flats.” ACMA Comments at 

18. ACMA suggests a potential solution to these issues could involve “a highly-designed, 

streamlined network for flats, combining high preparation, few touches, and the best the 

Postal Service has to offer.” Id. at 25.

In its reply comments, the Postal Service states that the cost coverage decline for USPS 

Marketing Mail Flats was significantly smaller in FY 2023 than in the years preceding FY 

2022 (except FY 2019) and that FY 2022 was anomalous because of the PSRA’s elimination 

of normal cost expenses for retiree health benefits. Postal Service Reply Comments at 12-

13, 13 n.17. According to the Postal Service, reductions in cost coverage declines show the 

effects of above-average rate increases and cost reduction initiatives. See id. at 14.

54 See FY 2023 ACR at 22 (summarizing flats rate increases compared to overall USPS Marketing Mail rate increases between FY 2021 and FY 

2024); Order No. 6526 at 66. The class average rate increase was 5.378 percent. FY 2023 ACR at 22; Order No. 6526 at 66.

55 ACMA Comments at 25; see id. at 12-14, 18-20; cf. id. at 16-17. Regarding ACMA’s questions about the meaningfulness of USPS Marketing 

Mail Flats costs, the Commission notes that annual periodic reporting is required to use only accepted analytical principles. See 39 C.F.R. 

§ 3050.10. However, any interested person may file a proposal to change accepted analytical principles to improve the quality, accuracy, or 

completeness of the data or analysis of data contained in the Postal Service’s annual periodic reports. See id. § 3050.11(a). In addition, PostCom 

comments that the Postal Service performance on flats is “increasingly disappointing.” PostCom Comments at 9.
Docket No. ACR2023 - 37 -

(4) Commission Analysis

The Commission’s analysis of USPS Marketing Mail Flats examines cost coverage, the 

intra-class subsidy, and changes in the product-level mail mix.

(a) FY 2023 Cost Coverage and Unit Contribution

As described above, the cost coverage for USPS Marketing Mail Flats was 64.5 percent in 

FY 2023, 2.2 percentage points lower than in the prior year. Library Reference PRC-LRACR2023-4. As shown in Figure III-6, the unit contribution of USPS Marketing Mail Flats 

was -29.7 cents in FY 2023, a 5.6 cent decrease from FY 2022. Because cost coverage and 

unit contribution are functions of both cost and revenue, the Commission also shows unit 

cost and revenue trends in Figure III-6. Unit revenues increased by 12.3 percent, from 48.2 

cents in FY 2022 to 54.1 cents in FY 2023.

The Postal Service reports that the unit attributable cost of USPS Marketing Mail Flats 

increased by 11.6 cents, or by 16.0 percent; unit mail processing costs increased by 5.3 

cents, or 13.4 percent; unit delivery costs increased by 4.8 cents, or 20.7 percent; and unit 

transportation costs increased by 1.1 cents, or 15.8 percent between FY 2022 and FY 2023. 

January 19 Response to CHIR No. 2, question 19.a. Furthermore, according to the Postal 

Service, “[i]n FY 2023, the estimate of the percentage of USPS Marketing Mail Flats 

manually processed increased by 6.1 percent, likely contributing to the overall increase in 

mail processing unit costs.” Id. However, the Postal Service also states that “the specific cost 

impacts of the shift to manual processing are not known.” February 9 Response to CHIR No. 

9, question 21.a.
Docket No. ACR2023 - 38 -

Figure III-6

USPS Marketing Mail Flats Unit Revenue, Attributable Cost,

and Contribution, FY 2019–FY 2023

Source: Library Reference PRC-LR-ACR2023-4.
Docket No. ACR2023 - 39 -

(b) Intra-Class Cross-Subsidy

In the FY 2010 ACD, as part of its findings of non-compliance, the Commission analyzed the 

intra-class subsidy received by USPS Marketing Mail Flats, specifically from USPS 

Marketing Mail Letters, and found that the rates for USPS Marketing Mail Flats “produced a 

substantial and growing cost coverage shortfall that burdened mailers of other [USPS 

Marketing Mail] products.”56 The Commission issued the FY 2010 ACD directive with the 

intent of enabling the Postal Service to reduce the contribution gap between these 

products.57

In FY 2010, the fiscal year in which the directive was issued, the contribution gap between 

USPS Marketing Mail Letters and USPS Marketing Mail Flats was 16.8 cents. By FY 2022, the 

contribution gap was 35.3 cents. In FY 2023, the contribution gap between these two 

products reached a new high of 40.8 cents. Over the long term, the unit contribution for 

USPS Marketing Mail Flats has decreased by 21.5 cents since FY 2010, while during the 

same time, the unit contribution for USPS Marketing Mail Letters has gone up slightly.

(c) Changes in the Product-Level Mail Mix

The Commission notes, as part of its analysis for USPS Marketing Mail Flats, that changes 

have occurred in the mail mix over time. Figure III-7 shows the distribution of USPS 

Marketing Mail Flats, USPS Marketing Mail Carrier Route, and USPS Marketing Mail High 

Density/Saturation Flats volumes. In past years, USPS Marketing Mail High 

Density/Saturation Flats came to occupy an increasing share of flat-shaped USPS Marketing 

Mail. Although all three products experienced volume decreases in absolute terms in FY 

2023, the Postal Service reports that USPS Marketing Mail Flats volumes declined by 17.3 

percent, whereas USPS Marketing Mail High Density/Saturation Flats declined by 5.9 

percent. January 19 Response to CHIR No. 2, question 16.a. (revised).

The Postal Service posits that differences in the rate of volume decline were “primarily 

driven by industry-specific market and economic conditions, customer-specific changes 

(e.g. bankruptcy), and price signals.” Id. For example, according to the Postal Service, USPS 

Marketing Mail Flats volume may have been impacted by the anticipation of a recession in 

FY 2023 particularly by postal customers in the finance and insurance industry, whereas 

USPS Marketing Mail High Density/Saturation Flats are primarily used by customers 

outside these industries and thus potentially less affected by the anticipated recession. See 

id. The Postal Service offers some evidence that the financial and insurance industries are 

56 Docket No. ACR2010-R, Order on Remand, August 9, 2012, at 8 (Order No. 1427); see id. at 8-10; FY 2010 ACD at 105-07; see also U.S. Postal 

Serv. v. Postal Regul. Comm’n, 676 F.3d 1105, 1107-08 (D.C. Cir. 2012). The Commission identified several factors used in its determination 

including a significant and growing cost coverage shortfall; the duration of the shortfall over a significant period; evidence that the cost 

coverage shortfall was likely to increase further; a significant adverse impact on users of other mail products (some of whom could be 

competitors of mailers of the subsidized mail product) requiring subsidization of the non-complying product; failure of the Postal Service to 

address the shortfall by rate increases, cost decreases, or a combination thereof, despite the capability to do so; and the failure of the Postal 

Service to provide an adequate explanation for not taking necessary remedial steps designed to ameliorate the cost coverage shortfall. Order 

No. 1427 at 9.

57 See id. at 8. The contribution gap is calculated as the difference between the unit contribution made by USPS Marketing Mail Letters and the 

unit contribution made by USPS Marketing Mail Flats.
Docket No. ACR2023 - 40 -

leading USPS Marketing Mail volume loss; however, it does not clearly show that this loss is 

due to exogenous factors such as anticipation of a recession. See January 19 Response to 

CHIR No. 9, question 18.

Figure III-7

Volume Distribution of USPS Marketing Mail Flats, Carrier Route,

and High Density/Saturation Flats, FY 2019–FY 2023

Source: Library Reference PRC-LR-ACR2023-4.

Additional changes occurred in the distribution of nonprofit and commercial mail within 

the USPS Marketing Mail Flats product as shown in Figure III-8. The Postal Service states 

that the proportion of nonprofit Flats increased in FY 2023 to 33.7 percent. FY 2023 ACR at 

22.
Docket No. ACR2023 - 41 -

Figure III-8

USPS Marketing Mail Flats Commercial-Nonprofit Mail Mix, FY 2019–FY 2023

Source: Library Reference PRC-LR-ACR2023-4.

Changes in the mail mix of commercial and nonprofit mail can serve to dampen the 

expected effects of rate increases on unit revenue for the USPS Marketing Mail Flats 

product, as nonprofit pieces, which by law are required to have lower rates compared to 

their commercial counterparts, make up a larger percentage of the total volume. See 39 

U.S.C. § 3626(a)(6)(A). In addition, the Postal Service noted that nonprofit mailpieces tend 

to have different characteristics that push costs upwards. Specifically, nonprofit volume is 

less destination-entered, generally less concentrated, and where nonprofit volume is 

concentrated it is less 5-digit-presorted than commercial volume. January 19 Response to 

CHIR No. 2, question 17.a. However, the increasing proportion of nonprofit mail in the mail 

mix is not unique to USPS Marketing Mail Flats and the Postal Service is “concerned” about 

this mix generally. Id. question 17.c. The Commission will continue to monitor these trends.

(5) FY 2023 Directive

Given the persisting severity of the deficiency in cost coverage for USPS Marketing Mail 

Flats, the Commission continues to find that this product violates 39 U.S.C. § 101(d) by 

constituting an intra-class subsidy.

Pursuant to 39 C.F.R. § 3030.221, whenever the Postal Service files a rate adjustment filing 

affecting the USPS Marketing Mail class, it is required to increase the rate for USPS 

Marketing Mail Flats by a minimum of 2 percentage points above the percentage increase 

for the class. At the same time, the Commission recognizes that rate increases alone will not 
Docket No. ACR2023 - 42 -

result in this product’s compliance with 39 U.S.C. § 101(d). The full solution must come 

from a combination of revenue increases and cost reductions. The Commission urges the 

Postal Service to continue to pursue effective cost reductions.

The Commission finds that the cost coverage for USPS Marketing Mail Flats remained severely 

deficient in FY 2023 and reminds the Postal Service that under 39 C.F.R. § 3030.221, it must 

propose a rate increase for USPS Marketing Mail Flats that is at least 2 percentage points 

above the average increase for the class in any rate adjustment filing affecting USPS 

Marketing Mail. In addition, the Commission urges the Postal Service to continue to pursue 

cost reductions of flat-shaped products, including USPS Marketing Mail Flats.

B. USPS MARKETING MAIL CARRIER ROUTE

(1) FY 2023 Results

In FY 2023, USPS Marketing Mail Carrier Route had a cost coverage of 98.7 percent, down 

from 99.4 percent in FY 2022. Library Reference PRC-LR-ACR2023-4. The Postal Service 

states that, in FY 2023, unit revenue increased by 9.1 percent, while unit costs rose by 9.9 

percent. FY 2023 ACR at 21. The Postal Service states that the decrease in cost coverage 

may result from the 2.9 percentage point increase in the proportion of nonprofit mail to 

10.2 percent of Carrier Route volume and corresponding decline in the proportion of 

commercial mail. See id.

The Postal Service states that the most significant drivers of the cost increase for USPS 

Marketing Mail Carrier Route in FY 2023 were increases in the unit cost for delivery and 

transportation, the former, at least in part, due to wage increases. See January 19 Response 

to CHIR No. 2, question 18.a.

(2) Prior Commission Directive

In the FY 2022 ACD, the Commission required that the Postal Service propose rate 

increases for USPS Marketing Mail Carrier Route that were at least 2 percentage points 

above the class average for the USPS Marketing Mail class whenever it files a rate 

adjustment filing affecting USPS Marketing Mail. FY 2022 ACD at 52-53. The Postal Service 

increased rates for USPS Marketing Mail Carrier Route more than 2 percentage points 

above the class average in Docket Nos. R2023-2 and R2024-1, with a 7.388 percent 

increase in Docket No. R2023-2 and a 3.963 percent increase in Docket No. R2024-1.58 The 

class average for USPS Marketing Mail was 5.378 percent and 1.961 percent, respectively.

See Order No. 6526 at 66; Order No. 6814 at 34.

(3) Comments on USPS Marketing Mail Carrier Route

The Public Representative notes that cost coverage was below 100 percent for the USPS 

Marketing Mail Carrier Route product in FY 2023. PR Comments at 11. The Public 

Representative asserts that the Postal Service's explanations for the decline in cost 

coverage appear to be incomplete. Id. at 12. According to the Public Representative’s 

58 See Order No. 6526 at 66; Order No. 6814 at 34; FY 2023 ACR at 21.
Docket No. ACR2023 - 43 -

analysis, “the decrease in cost coverage seems to have been the result of both an increase in 

nonprofit volumes, which have a lower revenue per piece, and an even larger decrease in 

commercial volumes, which have a higher revenue per piece.” Id. (emphasis omitted). The 

Public Representative states that, although the rate increases in FY 2022 may have 

contributed to USPS Marketing Mail Carrier Route’s 99.3 percent cost coverage in FY 2022, 

“it may also have caused the sharp volume decline of 14.7 percent overall in FY 2023.” Id. 

The Public Representative urges the Postal Service to be mindful in future rate proceedings 

of the effect of rate increases on the demand for the USPS Marketing Mail Carrier Route 

product. Id.

PostCom observes that Carrier Route has experienced significant cost increases since FY 

2010. See PostCom Comments at 8. In view of such cost increases, PostCom questions the 

usefulness of rate increases for Carrier Route. See id. at 8-9. According to PostCom, the 

Postal Service “would arguably be better off holding prices constant to limit volume losses 

rather than driving additional volume from an inflexible and inefficient network.” Id. at 9. 

PostCom further comments that “this phenomenon is likely to worsen given that the Postal 

Service has committed to semi-annual price increases for Market Dominant products, thus 

availing itself of two opportunities per year to utilize the Commission’s ill-considered price 

adder for non-compensatory products.” Id.

PostCom also comments generally that the Commission should look beyond product-level 

cost coverage. See id. at 9-10. In particular, “PostCom is concerned that a singular emphasis 

on repairing product level cost coverages through higher prices may damage USPS 

Marketing Mail.” Id. at 9. In PostCom’s view, because the two non-compensatory USPS 

Marketing Mail products, USPS Marketing Mail Carrier Route and USPS Marketing Mail 

Flats, “account for only ten percent of USPS Marketing Mail,” the rate increases for these 

products directed by 39 C.F.R. § 3030.221 “will have a trivial effect on the Postal Service’s 

financial performance.” Id. at 9, 10. Thus, according to PostCom, “the Commission should 

consider the context of the Postal Service’s overall operations, cost structure, and financial 

condition, as well as the impacts on mailers, when attempting to address this 

noncompliance.” Id. at 10.

ACMA contends that increasing USPS Marketing Mail Carrier Route rates by a minimum of 

2 percentage points above the class average is unjust and unreasonable. ACMA Comments 

at 2, 23. Specifically, ACMA argues that USPS Marketing Mail Carrier Route costs show 

evidence of “misbehavior” or are questionable59 or “defective.” Id. at 22-23. For example, 

ACMA contends that “several mail processing cost categories” are assumed, without 

justification, to be 100 percent variable with volume and that, as a result, attributable costs 

improperly include fixed costs. Id. at 23. In ACMA’s view, such costs contributed to the 

product not covering its attributable cost. See id. ACMA also argues that increases in 

nonprofit mail volume and declines in commercial mail volume likely led to reduced USPS 

59 See, e.g., id. at 22 (asserting “that there are good reasons for questioning the validity of several categories of costs, carrier costs in 

particular”).
Docket No. ACR2023 - 44 -

Marketing Mail Carrier Route revenues and thus likely contributed to the USPS Marketing 

Mail Carrier Route product’s failing to cover its attributable costs. See id. at 2, 20-22.

Because of these concerns, ACMA contends that enforcing 39 C.F.R. § 3030.221 as it relates 

to USPS Marketing Mail Carrier Route would be unfair to users of the product and 

associated products. See id. at 23-24. Consequently, ACMA requests that the Commission 

waive the requirements of 39 C.F.R. § 3030.221 with respect to USPS Marketing Mail 

Carrier Route in 2024. See id.; cf. id. at 2. ACMA further supports its request by arguing that 

enforcing 39 C.F.R. § 3030.221 as it relates to USPS Marketing Mail Carrier Route does not 

increase predictability in rates, increase Postal Service pricing flexibility, recognize the 

value of mail service, recognize the effect of rate increases on mailers, and is not necessary 

to assure adequate revenues for the Postal Service. See id. at 24.

In its reply comments, the Postal Service states that every USPS Marketing Mail product 

experienced a cost coverage drop in FY 2023 and that USPS Marketing Mail Carrier Route’s 

cost coverage drop was the smallest in comparison. See Postal Service Reply Comments at 

12. In the Postal Service’s view, this supports “above-average” rate increases for USPS 

Marketing Mail Carrier Route. See id. at 12-13, 14. In addition, the Postal Service also 

comments that it agrees with ACMA’s view that a shift in the mix of USPS Marketing Mail 

toward a greater proportion of lower-priced nonprofit volume and the overstatement of 

mail processing volume variabilities negatively affect cost coverage. See id. at 14. The Postal 

Service comments that the assumption of “virtually 100 percent volume variability in mail 

processing operations” is “crude” and “dated,” although the Postal Service recognizes that it 

is based on an accepted analytical principle. Id. at 15. Thus, the Postal Service states that 

“the Commission should recognize that the apparent stickiness of ostensibly volumevariable mail processing costs may reflect, at least to some degree, not so much on 

management’s cost-control competence as on lost economies inherent to network 

operations that are not reflected in the legacy methodology.” Id.

The Postal Service also comments on ACMA’s request for a waiver of 39 C.F.R. § 3030.221 

as it relates to USPS Marketing Mail Carrier Route for FY 2024 saying it generally supports 

“a more flexible approach” under which the Board of Governors “would have the discretion 

to allocate at least 2 percentage points of pricing authority above the class average to a 

given non-compensatory product...based on their assessment of all relevant factors. But 

they would not be mandated to do so when they did not deem it prudent.” Id. at 15-16. The 

Postal Service further argues that “Carrier Route’s apparent non-compensatory status is 

highly contingent” and may be affected by resolution of two pending petitions to change 

analytical principles. Id. at 16. Thus, “the Postal Service would join ACMA in welcoming 

Commission consideration of additional pricing flexibility concerning Carrier Route 

specifically, and non-compensatory market-dominant products generally, at the 

appropriate times.” Id.
Docket No. ACR2023 - 45 -

(4) Commission Analysis

As Figure III-9 shows, USPS Marketing Mail Carrier Route has not made any positive 

contribution from FY 2019 to FY 2023. Although the Postal Service has increased unit 

revenue by raising rates above the class average, these rate increases have not been 

enough to keep up with the changes in unit cost over the last 5 fiscal years. Since FY 2019, 

unit cost increased by 7.3 cents, while unit revenue increased by only 6.9 cents. In FY 2023, 

the reported increase in unit revenue was 9.1 percent; however, the increase in reported 

unit cost was 9.9 percent. FY 2023 ACR at 21. Thus, the Commission is concerned that the 

“cost-reduction initiatives”60 that the Postal Service mentions do not seem to be sufficient.

Figure III-9

USPS Marketing Mail Carrier Route

Unit Revenue, Unit Attributable Cost, and Unit Contribution, FY 2019–FY 202361

Source: Library Reference PRC-LR-ACR2023-4.

Figure III-10 illustrates changes in cost coverage for USPS Marketing Mail Carrier Route. 

Since its highest level of 151.2 percent in FY 2008, cost coverage has dropped by 52.5 

percentage points. From FY 2022 to FY 2023, USPS Marketing Mail Carrier Route cost 

coverage declined by 0.7 percent.

60 Postal Service Reply Comments at 14; see January 19 Response to CHIR No. 2, question 18 (discussing plans and strategies the Postal Service 

has for controlling USPS Marketing Mail Carrier Route cost).

61 Complete FY 2019 through FY 2023 USPS Marketing Mail Carrier Route data can be found in Library Reference PRC-LR-ACR2023-4.
Docket No. ACR2023 - 46 -

Figure III-10

USPS Marketing Mail Carrier Route Cost Coverage, FY 2008–FY 2023

Source: Library Reference PRC-LR-ACR2023-4.

PostCom’s recommendations that the Postal Service hold rates constant to limit volume 

loss and that the Commission should not focus on product-level cost coverage would 

conflict with 39 C.F.R. § 3030.221 and its rate increase requirement. Moreover, holding 

rates constant and failing to focus on product-level cost coverage would not address the 

intra-class subsidies that compensatory products provide to non-compensatory products, 

to the detriment of users of compensatory products. Additionally, if holding rates constant 

does not reverse volume loss, constant rates and declining volume would lead to further 

revenue decline, making it more difficult for cost-cutting measures on their own to bring 

the product into compliance with 39 U.S.C. § 101(d).

To the extent that PostCom takes issue with the requirements of 39 C.F.R. § 3030.221 (see 

PostCom Comments at 9-10), such issues are outside the scope of the FY 2023 ACR. To the 

extent that PostCom takes issue with accepted analytical principles for cost attribution (see 

id. at 8-9), PostCom is reminded that it can propose changes to such accepted analytical 

principles in accordance with 39 C.F.R. § 3050.11.

The Commission has considered ACMA’s comments regarding its concerns with costs for 

USPS Marketing Mail Carrier Route, especially its concerns about mail processing cost 
Docket No. ACR2023 - 47 -

volume variabilities, and the Postal Service’s associated reply comments. However, annual 

periodic reporting is required to use only accepted analytical principles. See 39 C.F.R. 

§ 3050.10. Thus, the FY 2023 ACR is not the appropriate docket to consider ACMA’s 

comments about the volume variabilities of certain mail processing costs. Nevertheless, any 

interested person may file a proposal to change accepted analytical principles to improve 

the quality, accuracy, or completeness of the data or analysis of data contained in the Postal 

Service's annual periodic reports in appropriate proceedings. See 39 C.F.R. § 3050.11(a).

To the extent that ACMA has requested a waiver of 39 C.F.R. § 3030.221 as it relates to 

USPS Marketing Mail Carrier Route, ACMA’s request is denied because it does not meet the 

applicable standard and because it is procedurally deficient.

39 C.F.R. § 3010.161 governs waivers of Commission rules. “Any person may file a motion 

requesting that any requirement imposed by regulation...be waived.” 39 C.F.R. 

§ 3010.161(a). Further, “[m]otions for waiver may be granted in whole or in part to the 

extent permitted by law upon a showing of good cause and that such waiver will be 

consistent with the public interest and will not unduly prejudice the interests of other 

participants.” Id. § 3010.161(c). Further, the Commission previously provided express 

guidance to ACMA about filing a motion requesting a waiver of 39 C.F.R. § 3030.221.62

ACMA has not shown that granting a waiver will not unduly prejudice the interests of other 

participants as required by 39 C.F.R. § 3010.161(c). In fact, granting a waiver would likely 

prejudice other mailers. Increasing rates for the USPS Marketing Mail Carrier Route 

product above the percent increase for the USPS Marketing Mail class as required by 39 

C.F.R. § 3030.221 means that the USPS Marketing Mail Carrier Route product would bear a 

greater proportion of the USPS Marketing Mail rate increase and that other products in the 

class would bear a lesser proportion of the class’s rate increase. However, waiving the 39 

C.F.R. § 3030.221 rate increase on USPS Marketing Mail Carrier Route would likely lead to 

greater increases in the rates of other USPS Marketing Mail products compared to what the 

rates would be if 39 C.F.R. § 3030.221 is enforced with respect to USPS Marketing Mail 

Carrier Route (or compared to banked rate authority that could be applied to other USPS 

Marketing Mail products). This could prejudice users of other USPS Marketing Mail 

products. Moreover, granting a waiver also would likely prejudice other USPS Marketing 

Mail products because it would not address the intra-class subsidy that compensatory 

USPS Marketing Mail products provide to the non-compensatory USPS Marketing Mail 

Carrier Route product.

Further, ACMA has not shown that granting a waiver will be consistent with the public 

interest as required by 39 C.F.R. § 3010.161(c). ACMA focuses on the fairness interests of 

users of the USPS Marketing Mail Carrier Route product (and related products), not the 

public interest. See ACMA Comments at 23-24. As discussed above, waiving enforcement of 

39 C.F.R. § 3030.221 as to the USPS Marketing Mail Carrier Route product benefits users of 

62 See Docket No. RM2023-12, Order Denying Motion for Temporary Waiver of 39 C.F.R. § 3030.221, October 23, 2023, at 5-6 (Order No. 6748).
Docket No. ACR2023 - 48 -

that product at the expense of users of other USPS Marketing Mail products. Because 

granting the waiver request would harm certain private interests and advance other 

private interests, it is not appropriate to conclude, without further support, that granting 

the waiver request will be consistent with the public interest.

In addition, ACMA has not shown good cause for granting the waiver as required by 39 

C.F.R. § 3010.161(c). ACMA argues that, because, in its view, USPS Marketing Mail Carrier 

Route “costs are too high,” it is unjust and unreasonable to rely on such costs to determine 

that USPS Marketing Mail Carrier Route is non-compensatory and subject to the rate 

increase provisions of 39 C.F.R. § 3030.221. ACMA Comments at 23 (emphasis omitted). 

Separately, ACMA argues that enforcing 39 C.F.R. § 3030.221 with respect to USPS 

Marketing Mail Carrier Route would be unjust and unreasonable because “the rate 

increases have been large and that the failure to achieve profitability is likely a plague of 

Nonprofit-volume increase concurrent with Commercial-volume decrease.” Id. at 2. 

However, when costs are attributed based on accepted analytical principles, good cause is 

not demonstrated by asserting that such costs are “too high.” The Commission must use 

accepted analytical principles to evaluate Postal Service periodic reporting. See 39 C.F.R. 

§§ 3050.10, 3050.11. Additionally, to the extent that the USPS Marketing Mail Carrier Route 

product was non-compensatory in FY 2023 (and further from cost coverage compared to 

FY 2022) because it generated insufficient revenue, directing a rate increase is not an 

unjust or unreasonable approach to addressing such insufficient revenue.

Finally, ACMA’s request for a waiver is procedurally deficient. As noted above, requests for 

waivers of Commission rules must be made by motion. 39 C.F.R. § 3010.161(a). Moreover, 

the Commission previously advised ACMA to file a motion if it wished to request a waiver 

of 39 C.F.R. § 3030.221. See Order No. 6748 at 5-6. Because ACMA included its request in its 

comments, rather than filing it as a motion, ACMA’s request failed to comply with 39 C.F.R. 

§ 3010.161(a) and with Order No. 6748’s guidance. Complying with such procedural 

requirements is important for ensuring transparency and a fair opportunity for interested 

persons to respond.

The Commission notes that the Postal Service’s comments about a more flexible approach 

to the requirements of 39 C.F.R. § 3030.221 are beyond the scope of the instant review of 

the FY 2023 ACR.

The Commission finds that the FY 2023 revenue for USPS Marketing Mail Carrier Route was 

not sufficient to cover attributable cost. The Commission reminds the Postal Service that 

under 39 C.F.R. § 3030.221, the Postal Service must propose a rate increase for USPS 

Marketing Mail Carrier Route that is at least 2 percentage points above the average increase 

for USPS Marketing Mail whenever the Postal Service files a rate adjustment filing affecting 

USPS Marketing Mail. In addition, the Commission urges the Postal Service to continue to 

pursue cost reductions of flat-shaped products, including USPS Marketing Mail Carrier Route.
Docket No. ACR2023 - 49 -

D. Fully Compensatory Classes

1. First-Class Mail

A. FY 2023 RESULTS

As a class, First-Class Mail covered its attributable costs in FY 2023 and had an overall cost 

coverage of 211.2 percent, an increase compared to the 210.7 percent cost coverage in FY 

2022. Similar to FY 2022, each product within First-Class Mail covered its costs for FY 

2023. Table III-8 provides the cost coverage for each First-Class Mail product as well as the 

overall class for the last 5 fiscal years.

 

Table III-8

First-Class Mail Cost Coverage, FY 2019–FY 2023

Source: Library Reference PRC-LR-ACR2023-3.

B. COMMENTS

The Public Representative finds that First-Class Mail products overall covered their 

attributable costs in FY 2023. PR Comments at 6. The Public Representative notes that 

while cost coverage improved by approximately 1 percent, rising attributable costs 

remains an issue, particularly since each product within the class suffered a decrease in 

volume. Id. at 6-7. The Public Representative identifies a possible relationship between 

price increases in one fiscal year and volume decline in the following fiscal year. Id. at 8. 

The Public Representative suggests that this potential relationship warrants further study. 

Id.

NPPC highlights that costs rose on a per-unit basis in FY 2023 while volume fell by 

approximately 6 percent. NPPC Comments at 3. Specifically, NPPC notes that regarding 

Presorted Letters, attributable costs increased “substantially” while volumes declined. Id. at 

3-4. NPPC argues that while workhours did decline in FY 2023, “the Postal Service captured 

far fewer workhour savings tha[n] it should have.” Id. at 4. Finally, NPPC notes that despite 

a 9.8 percent increase in prices, First-Class Mail revenues increased “by only 2.5 percent.” 

Id. at 7. NPPC posits that this reduction was primarily due to the 6.1 percent reduction in 

Fiscal 

Year

First-Class 

Mail Overall

Single-Piece 

Letters/Postcards

Presorted 

Letters/Postcards Flats

Outbound 

Single-Piece 

International

Inbound 

Letter Post

FY 2019 194.3% 156.1% 292.9% 109.0% 145.7% 78.5%

FY 2020 197.9% 163.3% 281.0% 100.2% 128.3% 83.3%

FY 2021 193.7% 148.9% 279.9% 98.9% 152.8% 122.2%

FY 2022 210.7% 154.4% 307.0% 108.8% 171.1% 128.0%

FY 2023 211.2% 158.0% 296.7% 113.5% 170.2% 129.1%
Docket No. ACR2023 - 50 -

volume in First-Class Mail, which was “more than 2 percent larger than in either FY 2022 or 

FY 2021.” Id.

C. COMMISSION ANALYSIS

The Commission finds that all First-Class Mail products covered their attributable costs in 

FY 2023. Overall, cost coverage improved from FY 2022 and revenues for all First-Class 

Mail products increased in FY 2023.63 However, volumes for all First-Class Mail products 

declined at a larger rate than in either FY 2021 or FY 2022.64 Most notably, volumes for 

Flats fell below 1 million pieces.65

The Commission encourages the Postal Service to consider the concerns expressed by mailers 

and the Public Representative with respect to the effect of recent rate increases on volume 

and the effects of volume decline on costs and efficiency measures.

D. OTHER ISSUES — FIRST-CLASS MAIL NON-MACHINABLE 

SURCHARGE

In both the FY 2021 and FY 2022 ACDs, the Commission addressed comments from the 

Greeting Card Association (GCA) regarding increases in the non-machinable surcharge for 

First-Class Mail Single-Piece Letters. FY 2021 ACD at 72-75; FY 2022 ACD at 67-69.

In the FY 2021 ACD, after conducting a balancing test of the relevant statutory factors and 

objectives in 39 U.S.C. § 3622(b) and (c), the Commission concluded that the nonmachinable surcharge complied with all relevant statutory provisions and reaffirmed the 

decision in Docket No. R2021-2.66

The Commission took up the issue again in the FY 2022 ACD after GCA noted concerns that 

the non-machinable surcharge targeted personal correspondence and that the processing 

costs for non-machinable single-piece letters were “substantially overestimated.” FY 2022 

ACD at 67-69. The Commission concluded that the non-machinable surcharge did not 

“target” personal correspondence because “the majority of it is machinable and hence not 

subject to the non-machinable surcharge” and that “even with recent increases in the nonmachinable surcharge, non-machinable letters still cost more to process and deliver than 

the Postal Service recovers after the non-machinable surcharge is applied.” Id. at 68-69.

63 Compare Library Reference USPS-FY23-1, Excel file “Public_FY23CRAReport.xlsx,” tab “Cost 1,” cells: D11:D19, with Docket No. ACR2022, 

Library Reference USPS-FY22-1, folder “FY22.1.PCRA.Files,” Excel file “Public_FY22CRAReport.xlsx,” tab “Cost 1,” cells D11:D19.

64 See Library Reference USPS-FY23-1, Excel file “Public_FY23CRAReport.xlsx,” tab “Volume 1,” cell D14:D22; Docket No. ACR2022, Library 

Reference USPS-FY22-1, folder “FY22.1.PCRA.Files,” Excel file “Public_FY22CRAReport,” tab “Volume 1,” cells D14:D22; Docket No. ACR2021, 

Library Reference USPS-FY21-1, December 29, 2021, folder “USPS.FY21.1.CRA.Files,” Excel file “Public_FY21CRAReport.xlsx,” tab “Volume 1,” 

cells D14:D22.

65 Library Reference USPS-FY23-1, Excel file “Public_FY23CRAReport.xlsx,” tab “Volume 1,” cell D20.

66 See generally Docket No. R2021-2, Order on Price Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals, Package Services, and 

Special Services Products and Related Mail Classification Changes, July 19, 2021 (Order No. 5937).
Docket No. ACR2023 - 51 -

As part of its comments related to the FY 2023 ACR, GCA continues to express its concern 

with the increase in the non-machinable surcharge for First-Class Mail Single-Piece Letters. 

GCA Comments at 8-9. GCA observes that in the most recent rate adjustment case,67 “the 

already excessive non-machinable surcharge [increased] from $0.40 to $0.44,” which 

represents a 10 percent increase and a larger increase than any other price within the 

Single-Piece First-Class. GCA Comments at 8. GCA also notes that the non-machinable 

surcharge has “nearly tripled” since 2017. Id.

The Commission continues to adhere to the view that “the non-machinable surcharge is not 

a standalone price, but a surcharge added onto the price for a Single-Piece First-Class Mail 

Letter, if such a letter is non-machinable.” FY 2021 ACD at 72. Therefore, as a result of the 

most recent rate proceeding, the price of a Single-Piece First-Class Mail Nonmachinable 

Stamped Letter increased from $1.06 to $1.12, an approximately 5.7 percent increase and a 

difference of 6 cents for a given non-machinable mail piece.68 As noted previously, 

characterizing the price increase solely as a percentage of the increase in the surcharge 

“misrepresents the actual change in price mailers will experience for an individual” nonmachinable letter. See Order No. 5937 at 87.

GCA acknowledges that “some ‘officially’ non-machinable pieces do require different 

(manual) handling at additional cost.” GCA Comments at 8 (internal footnote omitted). But 

GCA insists that it defies credulity to conclude “without convincing proof” that the 

additional cost “has tripled in six years, so that every non-machinable letter imposes that 

level of cost.” Id. To justify the level of non-machinable surcharge, GCA requests that the 

Commission require information on: “(i) the actual additional cost of a non-machinable 

letter, including a specification of where (processing, collection, transportation, delivery) 

that cost is incurred, and (ii) the actual extent to which ‘officially’ non-machinable letters 

are actually handled, throughout the system, in the same way as those which meet 

machinability criteria.” Id. at 8-9.

In support of this request, GCA states that “[t]he Commission has agreed that not all [nonmachinable pieces] do require manual handling.” GCA Comments at 8 n.17 (citing FY 2021 

ACD at 74). In its discussion on how the surcharge comports with the objective in 39 U.S.C. 

§ 3622(b)(8), the Commission previously noted that the non-machinable surcharge is 

“charged to pieces that generally require manual processing and therefore are more costly 

for the Postal Service to process.” Order No. 5937 at 87. And as noted in the FY 2021 ACD, 

“[o]bjective 8 endeavors to strike a balance between rates that are excessive to mailers and 

rates that threaten the financial integrity of the Postal Service, but does not require, as GCA 

implies, any kind of calculation or finding that the amount of the rate precisely incentivizes 

a particular behavior or outcome.” FY 2021 ACD at 74-75.

67 See Order No. 6814.

68 For Nonmachinable Metered Letters, the price increased from $1.03 to $1.08, an approximately 4.9 percent increase. Order No. 6814. See

also Order No. 6526.
Docket No. ACR2023 - 52 -

Similarly, here, objective 8 does not require the precision GCA implies is necessary. With 

respect to the costs to the Postal Service of handling non-machinable letters, the 

Commission reiterates that the relevant consideration is “the difference between the total 

reported cost for handling Non-machinable Metered Letters compared to the total reported 

cost for handling Machinable Metered Letters.” FY 2022 ACD at 68.

For FY 2023, the reported unit mail processing cost for Nonmachinable Metered Letters 

was 35.768 cents higher than for Machinable Metered Letters.69 The reported unit delivery 

cost for Nonmachinable Metered Letters was 15.524 cents higher than for Machinable 

Metered Letters. Id. cells D11:D12. The reported unit collection cost was the same for both 

price categories. Id. cells E11:E12.

Thus, in FY 2023, Nonmachinable Metered Letters cost on average 51.292 cents more to 

process and deliver than Machinable Metered Letters. Id. cells B11:B12, D11:D12, E11:E12. 

The non-machinable surcharge is currently 44 cents.70 This means that the difference 

between the surcharge and costs for machinable and non-machinable letters in FY 2023 is 

greater than in FY 2022. See FY 2022 ACD at 68. Therefore, even if not all non-machinable 

pieces require manual processing, the surcharge remains below the difference in costs such 

that the Postal Service is still not covering the difference.

2. Special Services

As a class, Special Services covered its attributable cost in FY 2023 and had an overall cost 

coverage of 163.0 percent, which is an increase from FY 2022’s cost coverage of 155.5 

percent. Table III-9 contains the cost coverages of a selection of key products from the 10 

total Special Services products as well as the overall class cost coverage for the last 5 fiscal 

years.71 All 10 Special Services products covered their attributable costs in FY 2023.72

69 Library Reference USPS-FY23-10, December 29, 2023, Excel file “USPS-FY23-10+FCM+Letters.xlsx,” tab “Summary,” cells B11:B12.

70 In Order No. 6814, the Commission approved the current non-machinable surcharge of 44 cents. Compare Single-Piece Machinable rates to 

Single-Piece Non-machinable rates. Order No. 6814, Attachment at 1-2.

71 The 10 Special Services products are: (1) Ancillary Services; (2) International Ancillary Services; (3) Address Management Services; (4) Caller 

Service; (5) Credit Card Authentication; (6) International Reply Coupon Service; (7) International Business Reply Mail Service; (8) Money Orders; 

(9) Post Office Box Service; and (10) Stamp Fulfillment Services, available at https://www.prc.gov/mail-classification-schedule. Cost coverage 

information for products not appearing in Table III-9 can be found in Library Reference PRC-LR-ACR2023-7.

72 See Library Reference PRC-LR-ACR2023-7. In the FY 2023 ACR filed on December 29, 2023, the Postal Service stated that all Special Services 

products covered costs except for Stamped Envelopes, which had a cost coverage of 79.8 percent. FY 2023 ACR at 45. On February 22, 2024,

the Postal Service filed errata to the FY 2023 ACR which, among other changes, revised the cost coverage for Stamped Envelopes to 147.5 

percent based on revenue that was excluded from the December 29, 2023 filing. Notice of the United States Postal Service of Revisions to 

Certain Pages of the FY 2023 Annual Compliance Report -- Errata, February 22, 2024, at 1-2, 3. The Commission notes that Stamped Envelopes 

is a service that is part of the Ancillary Services product, which had an overall cost coverage of 146.4 percent in FY 2023.
Docket No. ACR2023 - 53 -

Table III-9

Special Services Cost Coverage, FY 2019–FY 2023

Fiscal Year

Total Special 

Services 

Mail

Ancillary 

Services

International 

Ancillary 

Services

Address 

Management 

Services

Money 

Orders

Post Office 

Box Service

Stamp 

Fulfillment 

Services

FY 2019 136.9% 145.6% 100.6% 299.1% 105.5% 115.1% 94.5%

FY 2020 143.7% 135.3% 94.8% 266.9% 97.7% 228.6% 142.7%

FY 2021 141.0% 133.7% 127.6% 318.8% 88.5% 218.9% 136.6%

FY 2022 155.5% 146.4% 204.9% 593.6% 99.2% 236.9% 127.7%

FY 2023 163.0% 146.4% 184.7% 1055.0% 133.1% 231.9% 179.2%

Source: Library Reference PRC-LR-ACR2023-7.

As Table III-9 shows, the cost coverage for the Special Services class in FY 2023 was the 

highest it has been in the last 5 fiscal years, reflecting a trend of class cost coverage 

improvement year over year in most years. Table III-9 further illustrates that cost 

coverages for listed Special Services products are higher in FY 2023 compared to FY 2019, 

but that only half of the listed products had an increase in cost coverage between FY 2022 

and FY 2023.

As also shown in Table III-9, Money Orders did not cover its attributable costs between FY 

2020 and FY 2022 and was the sole Special Services product to fail to cover its attributable 

costs in FY 2022. In FY 2023, Money Orders covered its attributable costs with a cost 

coverage of 133.1 percent, a substantial improvement over FY 2022’s cost coverage of 99.2 

percent. The Postal Service attributes this improvement to a 34 percent increase in unit 

revenue driven by recent price increases, which was more than sufficient to offset a 1 

percent increase in unit costs in FY 2023. FY 2023 ACR at 46.

The Commission finds that all Special Services products covered their attributable costs in FY 

2023. The Commission encourages the Postal Service to continue to seek ways to improve the 

cost coverage of the Special Services class and to pay particular attention to improving the 

cost coverage of products and services that experienced cost coverage declines between FY 

2022 and FY 2023.
Docket No. ACR2023 - 54 -

CHAPTER IV. COMPETITIVE PRODUCTS

A. Introduction

In this chapter, the Commission reviews Competitive products to determine whether any 

rates or fees in effect during FY 2023 were not in compliance with 39 U.S.C. § 3633, which:

• Prohibits subsidization of Competitive products by Market Dominant 

products: 39 U.S.C. § 3633(a)(1).

• Requires that each Competitive product cover its attributable cost: 39 U.S.C. 

§ 3633(a)(2).

• Requires that, collectively, Competitive products cover an appropriate share 

of the Postal Service’s institutional costs: 39 U.S.C. § 3633(a)(3).

The principal FY 2023 findings for Competitive products are:

• Revenues for Competitive products as a whole exceeded incremental costs. 

Thus, Competitive products were not subsidized by Market Dominant 

products, thereby satisfying 39 U.S.C. § 3633(a)(1).

• Revenues for four Competitive products with rates of general applicability 

did not cover attributable costs and therefore did not comply with 39 U.S.C. 

§ 3633(a)(2). Those products are:

1. Inbound Parcel Post

2. International Surface Air Lift (ISAL)

3. International Money Transfer Service—Outbound (IMTS—Outbound)

4. Competitive International Ancillary Services
Docket No. ACR2023 - 55 -

• Revenues for two domestic NSAs,73 as well as eight outbound international 

NSAs74 and Inbound Express Mail Service (EMS) did not cover attributable 

costs and therefore did not comply with 39 U.S.C. § 3633(a)(2). 

• Collectively, the total contribution made by Competitive products was 32.1 

percent of total institutional costs, which is greater than both the 5.5 percent 

or the formula-derived 10.4 percent requirement. Therefore, Competitive 

products satisfied the appropriate share requirement of 39 U.S.C. 

§ 3633(a)(3) during FY 2023.

B. Cross-Subsidy Provision: 39 U.S.C. 

§ 3633(a)(1)

39 U.S.C. § 3633(a)(1) requires that Competitive products not be subsidized by Market 

Dominant products. To determine compliance, the Commission uses the incremental cost 

test, which calculates the collective costs incurred by Competitive products as a group, and 

compares those costs to the collective revenue generated by Competitive products. This 

provides a more rigorous test because the collective incremental costs of Competitive 

products are greater than the sum of the attributable cost of each product. As long as the 

revenue from Competitive products exceeds those products’ incremental costs, the 

Commission can conclude that no cross-subsidization has occurred.

The Taxpayers Protection Alliance (TPA) expressed concern that the Postal Service’s 

estimates are not reported with more detailed calculations because “volume variable costs, 

product specific costs, and inframarginal costs remain non-public information” and that 

“flawed...attribution assumptions” may contribute to “skewed cost coverage figures.” TPA 

Comments at 2.

In contrast, Pitney Bowes states that "the public FY2023 ACR data confirm that the Postal 

Service’s competitive products continue to comply with all applicable pricing 

requirements.” Pitney Bowes Comments at 3. Additionally, Pitney Bowes finds that the 

“Competitive products are not being subsidized by market dominant products and, thus, 

there is no evidence of anticompetitive pricing.” Id. at 4. Amazon notes that the “examples 

cited by TPA rehash criticisms of the approved costing methods that the Commission has 

73 Priority Mail Contract 543 and Parcel Select Contract 52.

74 International Priority Airmail, Commercial ePacket, Priority Mail Express International, Priority Mail International & First-Class Package 

International Service Contract 4, International Priority Airmail, Commercial ePacket, Priority Mail Express International, Priority Mail 

International & First-Class Package International Service Contract 9, International Priority Airmail, Commercial ePacket, Priority Mail Express 

International, Priority Mail International & First-Class Package International Service Contract 11, International Priority Airmail, Commercial 

ePacket, Priority Mail Express International, Priority Mail International & First-Class Package International Service with Reseller Contract 7, 

International Priority Airmail, International Surface Air Lift, Commercial ePacket, Priority Mail Express International, Priority Mail International 

& First-Class Package International Service with Reseller Contract 1, International Priority Airmail, International Surface Air Lift, Commercial 

ePacket, Priority Mail Express International, Priority Mail International & First-Class Package International Service Contract 2, Priority Mail 

Express International, Priority Mail International & First-Class Package International Service Contract 5, and one serial numbered agreement 

under the Global Expedited Package Services (GEPS)—Non Published Rates 15 product.
Docket No. ACR2023 - 56 -

repeatedly considered and rejected in prior proceedings” in support of its conclusion that 

Competitive products are not being subsidized by Market Dominant products. Amazon 

Reply Comments at 1. The Public Representative notes that the Competitive products’ 

group revenue exceeded their incremental costs and concludes that Market Dominant 

products did not subsidize Competitive products in FY 2023. PR Comments at 24.

None of the commenters offer evidence to suggest that the incremental costs of 

Competitive products exceeded their revenues in FY 2023.

The Commission notes that interested parties may request access to nonpublic materials 

by filing a motion pursuant to 39 C.F.R. § 3011.301. In the instant docket, no party has done 

so. To the extent that commenters challenge Competitive product cost attribution, the 

Commission continues to note that the purpose of the ACD is to determine compliance with 

existing regulations using established methodology. See FY 2022 ACD at 71; FY 2021 ACD 

at 77; FY 2020 ACD at 69-70. Recommendations for improving specific cost attribution 

methodologies are appropriately addressed in dockets considering changes to those 

methodologies.

In FY 2023, the incremental costs of Competitive products were $21.183 billion and the 

total revenues of Competitive products were $33.350 billion. Accordingly, in FY 2023, 

revenues from Competitive products exceeded incremental costs.

The Commission finds Competitive products satisfied 39 U.S.C. § 3633(a)(1) in FY 2023.

C. Product Cost Coverage Provision: 39 U.S.C. 

§ 3633(a)(2)

39 U.S.C. § 3633(a)(2) requires that the revenue for each Competitive product cover its 

attributable cost. Below, the Commission discusses the FY 2023 financial performance for 

four separate Competitive product groupings:75

• Competitive domestic products with rates of general applicability

• Competitive domestic products consisting of NSAs

• Competitive international products with rates of general applicability

• Competitive international products consisting of NSAs

75 A fifth group, Competitive nonpostal services, is not specifically discussed because all products in the group covered their costs in FY 2023. 

Library Reference USPS-FY23-NP32, December 29, 2023, PDF file “PROTECTED_FY23-NP32+NonPublic+IAA+Preface.pdf,” at 3-4.
Docket No. ACR2023 - 57 -

1. Competitive Domestic Products with Rates of 

General Applicability

A. GENERAL COMPLIANCE

In FY 2023, there were 13 Competitive domestic products with rates of general 

applicability: Priority Mail Express; Priority Mail; Parcel Select; Parcel Return Service;76

First-Class Package Service;77 USPS Retail Ground;78 USPS Ground Advantage;79 Address 

Enhancement Services; Greeting Cards, Gift Cards, and Stationery; Competitive Ancillary 

Services;80 Premium Forwarding Service; Post Office Box Service; and Shipping and Mailing 

Supplies.

The Commission finds that, in FY 2023, every Competitive domestic product with rates of 

general applicability covered its attributable cost81 and, thereby, satisfied the statutory 

requirements of 39 U.S.C. § 3633(a)(2).

B. POSTAL SERVICE MOTION FOR WAIVER RELATED TO 

USPS GROUND ADVANTAGE

39 C.F.R. § 3050.10 requires the Postal Service to use only accepted analytical principles in 

its annual periodic reports to the Commission, which includes the Postal Service’s ACR. 

Proposed changes to analytical principles are reviewed in rulemaking proceedings 

conducted pursuant to 39 C.F.R. § 3050.11.

On December 8, 2023, the Postal Service filed a motion to waive 39 C.F.R. § 3050.10 with 

respect to certain costs for USPS Ground Advantage. See generally Motion for Waiver. Citing 

the fourth quarter implementation date for USPS Ground Advantage, the Postal Service 

argues that compliance with 39 C.F.R. § 3050.10 in this instance is “impossible,” and that 

there was “insufficient time to attempt to acquire the necessary data, iron out all of the 

details of the methodology, and present and litigate a proposal in time to incorporate the 

results of such litigation into ACR preparation.” Motion for Waiver at 1-2. The Postal 

76 Parcel Return Service had rates of general applicability through January 21, 2023. Docket No. MC2022-95, Order Removing Parcel Return 

Service as a Rate of General Applicability, October 24, 2022 (Order No. 6310).

77 First-Class Package Service had rates of general applicability through July 8, 2023. Docket Nos. CP2023-113 and CP2023-114, Order 

Concerning Changes in Rates of General Applicability and Classifications for First-Class Package Service and Parcel Select, June 7, 2023 (Order 

No. 6536).

78 Retail Ground had rates of general applicability though July 8, 2023. Docket Nos. MC2022-81 and MC2022-82, Order Removing USPS Retail 

Ground from the Competitive Product List and Approving Competitive Classification Changes to First-Class Package Service and Parcel Select, 

October 28, 2022 (Order No. 6318) (approving removing of Retail Ground on a date to be specified); Docket Nos. MC2022-81 and MC2022-82, 

USPS Notice of Effective Date, February 10, 2023 (setting effective date of removal Retail Ground as July 9, 2023).

79 USPS Ground Advantage had rates of general applicability beginning July 9, 2023. Order No. 6536. Additional discussion of this product’s 

compliance is discussed in Section IV.C.1.B., infra.

80 The Competitive Ancillary Services product consists of the following services: Adult Signature, Package Intercept Service, Premium Data 

Retention and Retrieval Service, and Label Delivery Service. See Mail Classification Schedule (MCS) § 2645, available at 

https://www.prc.gov/mail-classification-schedule.

81 See Library Reference PRC-LR-ACR2023-1, Excel file “FY23 Summary_NPLR-1.xlsx,” tab “Total All Mail Appendix A.”
Docket No. ACR2023 - 58 -

Service seeks a waiver to “allow development of an interim solution” by having the 

Commission review the proposed new methodology on an interim basis in this proceeding. 

Id. at 2. On December 22, 2023, the Commission took the Motion for Waiver under 

advisement. See generally Order No. 6894.

Motions for waiver are governed by 39 C.F.R. § 3010.161, which states that such motions 

“may be granted in whole or in part to the extent permitted by law upon a showing of good 

cause and that such waiver will be consistent with the public interest and will not unduly 

prejudice the interests of other participants.” 39 C.F.R. § 3010.161(c).

The Public Representative notes that “it is possible that the volume profile of the USPS 

Ground Advantage product may differ considerably from the profiles of two distinct legacy 

products” and suggests detailed data is needed to “better understand the unique cost and 

volume characteristics of the new USPS Ground Advantage product.” PR Comments at 28. 

The Postal Service explained in response that the product-level cost reporting for USPS 

Ground Advantage already captures its unique cost causing activities by using sampling 

systems designed to capture product-level cost information associated with accepting, 

processing, transporting, and delivering each parcel. USPS Reply Comments at 20. The 

Postal Service further explained that it “aimed to find the most appropriate balance 

between adhering to accepted principles that were in place for the legacy products and 

providing the most accurate cost figures for each NSA that included USPS Ground 

Advantage.” Id. at 21.

The Commission observes that the classification changes revising the product were 

approved in October 2022,82 at which time the Commission noted that the Postal Service 

would need to seek and obtain approval of a change in analytical principles if it intended to 

eliminate existing distinctions in mail processing cost data. Order No. 6318 at 17, 20; see

Order No. 6894 at 6. The Postal Service failed to obtain such approval before implementing 

changes that prevented it from collecting mail processing cost data and additional 

transportation cost data that would have been required to comply with 39 C.F.R. § 3050.10. 

That failure is directly responsible for the Postal Service’s present circumstances and the 

“impossibility” of compliance with 39 C.F.R. § 3050.10 that the Postal Service claims 

justifies a waiver. See Motion for Waiver at 1-4.

Nevertheless, having reviewed the interim methodologies for the mail processing and 

transportation costs presented in the ACR, and additional information provided in the 

Postal Service’s responses to CHIR Nos. 2, 5, and 7,83 the Commission finds that the interim 

methodology represents the best available information on USPS Ground Advantage costs, 

and that the data that would be necessary to apply accepted analytical principles is not 

available. In particular, the Commission notes that the scope of the departures from 

82 At the time of approval, the classification changes were made to First-Class Package Service; the revised product was later renamed to USPS 

Ground Advantage. Order No. 6536 at 26.

83 See CHIR No. 2, questions 5-11; CHIR No. 6, question 11; CHIR No. 7, question 11.
Docket No. ACR2023 - 59 -

accepted analytical principles in the interim methodology is limited, and the changes made 

appear to be based on either a straightforward analytical framework tailored to the USPS 

Ground Advantage product, or else are similar to other cost models, as represented by the 

Postal Service in its Motion for Waiver. Motion for Waiver at 2-3. The Commission makes 

no findings as to whether the interim methodology represents an improvement on the 

accuracy, quality, or completeness of the data in comparison to accepted analytical 

principles—such a determination will be made in a subsequent rulemaking proceeding 

pursuant to 39 C.F.R. § 3050.11.

Although this situation was foreseeable and avoidable,84 the Commission acknowledges 

that, at the time the Motion for Waiver was filed, the Postal Service lacked the necessary 

data to comply with 39 C.F.R. § 3050.10 with regards to the USPS Ground Advantage costs 

in question and had no means to collect that data retrospectively. The Motion for Waiver, 

the proposed interim methodology, and the Postal Service’s responses to the CHIRs appear 

to demonstrate a good-faith effort on the part of the Postal Service to mitigate the 

consequences of its failure to promptly file a petition for a change of analytical principles. 

The Commission therefore finds that the Postal Service has demonstrated good cause for 

the Motion for Waiver, as required by 39 C.F.R. § 3010.161(c).

The Commission further finds that, given the unavailability of the data necessary to apply 

accepted analytical principles, it is in the public interest for the Commission to rely on the 

interim methodology as the best available data to make the compliance determination 

required by 39 U.S.C. § 3653. See generally 39 C.F.R. § 3010.161(c). The Commission bases 

this finding in part on the limited scope of the deviation from accepted analytical principles 

in the interim methodology. The limited scope of the changes also minimizes any prejudice 

to other parties. See id. Combined with the prompt initiation of a rulemaking to change 

accepted analytical principles—which will provide interested parties with a full 

opportunity to examine the changes and provide comments—the Commission finds that 

granting the Motion for Waiver would not unduly prejudice the interests of other 

participants. See id.

The Commission therefore grants the Motion for Waiver and notes that its review of the 

compliance of the USPS Ground Advantage product in FY 2023 is based on the Postal 

Service’s interim methodology.85 As discussed above, the Commission will determine 

whether the interim methodology and any potential further changes proposed by the 

Postal Service represent an improvement on the accuracy, quality, or completeness of the 

data in a rulemaking proceeding, which the Commission will direct the Postal Service to 

promptly initiate. The Commission encourages the Postal Service to include in its petition 

proposed methods for maintaining distinctions in mail processing costs based on 

84 See Order No. 6894 at 6.

85 Specifically, the interim methodology is required to distribute measured costs between the USPS Ground Advantage product and NSAs that 

offer USPS Ground Advantage service.
Docket No. ACR2023 - 60 -

machinability and using those distinctions to more accurately estimate costs related to the 

actual processing of USPS Ground Advantage pieces. See Order No. 6318 at 17.

The Commission emphasizes the importance of basing compliance determinations only on 

accepted analytical principles. As discussed in Order No. 6894, rulemaking proceedings 

conducted pursuant to 39 C.F.R. § 3050.10 not only provide interested parties with an 

opportunity to comment, but also permit the Commission to review proposed new 

methodologies without the statutory 90-day time limit imposed on the ACD process. Order 

No. 6894 at 7; see 39 U.S.C. § 3653(b). Similarly, reviewing a novel methodology as part of 

the ACD process impedes the Commission’s ability to conduct the required compliance 

review within the prescribed timeframe. Any change in the Postal Service’s operations or 

data collection practices that prevents the Postal Service from collecting the data necessary 

to file its periodic reports using accepted analytical principles conflicts with 39 C.F.R. 

§ 3050.10 and impedes the Commission’s statutorily mandated duties. The Commission 

will therefore require the Postal Service to seek and obtain approval for a change to 

accepted analytical principles prior to implementing any such change to its operations or 

data collection practices. Accordingly, the Commission expects that future similar waivers 

of 39 C.F.R. § 3050.10 will not be necessary.

The Motion of the United States Postal Service for Waiver of Rule 3050.10 with Respect to 

Disaggregated Ground Advantage Costs, filed December 8, 2023, is granted. The Postal Service 

shall file a request to initiate a rulemaking docket to consider costing methodology for USPS 

Ground Advantage no later than 60 days after the issuance of this compliance determination.

To ensure compliance with 39 C.F.R. § 3050.10, the Commission directs the Postal Service to 

seek and obtain Commission approval for a change in accepted analytical principles pursuant 

to 39 C.F.R. § 3050.11 prior to implementing any change that would prevent the Postal Service 

from collecting data necessary to comply with 39 C.F.R. § 3050.10.

2. Competitive Domestic Products Consisting of 

NSAs

In FY 2023, there were 856 Competitive domestic products consisting of NSAs, as displayed 

in Figure IV-1.

86 Pursuant to 39 U.S.C. § 3633(a)(2), the Commission finds that all but two 

Competitive domestic NSAs covered their attributable costs in compliance with this 

statutory requirement. The non-compliant Competitive domestic NSAs in question, Priority 

Mail Contract 543 and Parcel Select Contract 52, have been terminated. See FY 2023 ACR at 

98. Although eight additional agreements had individual components that failed to cover 

attributable costs, each agreement covered its total attributable costs.87

86 The 856 products include agreements that were extended via amendment.

87 See January 19 Response to CHIR No. 2, question 2; Library Reference USPS-FY23-NP34, January 23, 2024. The Public Representative noted 

that his review suggests that only three domestic agreements had non-compensatory components. PR Comments at 27. The Commission notes 

that the Public Representative appears to be using a narrower definition of “components” that excludes five of the agreements with 

components that failed to cover attributable costs listed in the January 19 Response to CHIR No. 2, question 2.
Docket No. ACR2023 - 61 -

Figure IV-1

Competitive Domestic NSA Products in Effect During FY 2023

In the FY 2022 ACD, the Commission directed the Postal Service to file quarterly summary 

spreadsheets listing all NSAs active during the prior quarter and identifying all extensions, 

expirations, and early terminations. The Commission notes that the Postal Service has filed 

timely reports for FY 2023 Quarters 2 through 4 as well as FY 2024 Quarter 1 in Docket No. 

ACR2022.88 The Commission issued eight CHIRs in the docket to clarify discrepancies in the 

88 See Docket No. ACR2022, Library Reference USPS-FY22-NP45, April 7, 2023; Docket No. ACR2022, Notice of the United States Postal Service 

of Filing of USPS-FY22-NP51 and Application for Nonpublic Treatment, July 7, 2023; Docket No. ACR2022, Notice of the United States Postal 

Service of Filing of USPS-FY22-NP56 and Application for Nonpublic Treatment, October 10, 2023; Docket No. ACR2022, Notice of the United 

States Postal Service of Filing of USPS-FY22-NP60 and Application for Nonpublic Treatment, January 8, 2024.
Docket No. ACR2023 - 62 -

quarterly reports.89 Typical causes for such discrepancies have included the Postal 

Service’s failure to file termination notices with the Commission, failure to file termination 

notices in the appropriate docket, and typographical errors such as incorrect customer 

names.90 Overall, the quarterly reports have improved recordkeeping and assisted in 

timely identification and reconciliation of discrepancies. The access to up-to-date NSA 

records has made the Commission’s review of the FY 2023 NSA reports more efficient. 

As discussed above, with the granting of the Motion for Waiver, the Commission bases its 

compliance determinations for NSAs offering USPS Ground Advantage on the Postal 

Service’s proposed interim methodology.

In addition to the USPS Ground Advantage product launched in FY 2023, the Postal Service 

expanded its use of Connect eCommerce (CeC) contracts. In June, the Commission denied 

requests to add new CeC contracts to the Competitive product list and requests to amend 

four existing CeC contracts on the grounds that the supporting workpapers failed to 

demonstrate that each agreement should cover its attributable cost.91 In Order No. 6546, 

the Commission encouraged the Postal Service to refile higher price floors in a dedicated 

docket, noting that the Commission’s “current procedures for reviewing NSAs are not 

intended to address novel issues raised concurrently in multiple dockets,” such as common 

price floors. Order No. 6546 at 12. The Postal Service instead opted to file revised price 

floors as part of its request to amend an existing CeC NSA in Docket No. CP2022-88.92 After 

further clarification and thorough evaluation of the revised price floors, the Commission 

approved their use for CeC contracts with the requirement that the Postal Service file 

quarterly reports tracking the volume mix, cost, and revenue for each CeC agreement in 

order to allow the Commission to monitor the reliability of using the national average when 

projecting customers’ volume. Order No. 6773 at 9-10. The Commission notes that the 

Postal Service has timely filed its first quarterly report for CeC contracts, and all such 

contracts were in compliance in FY 2023.

Multiple CHIRs were issued in the instant proceeding pertaining to domestic NSA 

Competitive products and support files to clarify data. See, e.g., CHIR No. 2. The overall 

89 See Docket No. ACR2022, Chairman's Information Request No. 28 and Notice of Filing Under Seal, April 27, 2023; Docket No. ACR2022, 

Chairman's Information Request No. 31 and Notice of Filing Under Seal, May 25, 2023; Docket No. ACR2022, Chairman's Information Request 

No. 33 and Notice of Filing Under Seal, June 14, 2023; Docket No. ACR2022, Chairman's Information Request No. 35 and Notice of Filing Under 

Seal, July 18, 2023; Docket No. ACR2022, Chairman's Information Request No. 36 and Notice of Filing Under Seal, August 7, 2023; Docket No. 

ACR2022, Chairman's Information Request No. 38 and Notice of Filing Under Seal, October 25, 2023; Docket No. ACR2022, Chairman’s 

Information Request No. 39 and Notice of Filing Under Seal, November 7, 2023; Docket No. ACR2022, Chairman's Information Request No. 41 

and Notice of Filing Under Seal, December 6, 2023.

90 See, e.g., Docket No. CP2020-170 (Postal Service failed to file notice of early termination of contract Priority Mail Non-Published Rates 2-

FY21-0799).

91 See Docket No. MC2023-143 et al., Order Denying Postal Service Requests to Add Priority Mail, First-Class Package Service & Parcel Select 

Contracts to the Competitive Product List and Providing Guidance, June 16, 2023 (Order No. 6546); Docket No. CP2022-74 et al., Order Denying 

Amendments to Priority Mail Express, Priority Mail, First-Class Package Service & Parcel Select Negotiated Service Agreements, June 20, 2023 

(Order No. 6547).

92 See Docket No. CP2022-88, Order Approving Amendment to Priority Mail Express, Priority Mail, First-Class Package Service & Parcel Select 

Negotiated Service Agreement, November 2, 2023, at 5-6 (Order No. 6773).
Docket No. ACR2023 - 63 -

topics involved the need for further clarification of data due to insufficient source notes; 

reconciliation of values across various spreadsheets; and inquiries on costing 

methodologies including the interim USPS Ground Advantage cost models.93 The 

Commission encourages the Postal Service to continue to improve the explanation of its 

NSA costing materials provided as part of its ACR.

The Commission finds that Priority Mail Contract 543 and Parcel Select Contract 52 were not 

in compliance with 39 U.S.C. § 3633(a)(2) in FY 2023. However, because these contracts have 

already terminated, no further action is required.

To ensure accurate recordkeeping and timely identification of any discrepancies, the 

Commission directs the Postal Service to file in the instant proceeding, on a quarterly basis, a 

summary spreadsheet listing all NSAs active during the prior quarter and identifying all 

extensions, expirations, and early terminations including exact dates and respective notices 

filed. Each report must include correct contract partner names, contract type and number, 

docket number(s), and dates in the identical format as ACR reports. Each report is due within 

7 days after the conclusion of each quarter of the fiscal year, with the first such report due 

April 8, 2024, and the last such report due January 9, 2025. The Commission encourages the 

Postal Service to review the spreadsheet and related docket filings each quarter to identify 

errors, ensure the quality and accuracy of the spreadsheet, and file notices of termination or 

errata where necessary.

3. Competitive International Products with Rates of 

General Applicability

Eleven Competitive international mail products have rates and fees of general applicability: 

Outbound International Expedited Services; Outbound Priority Mail International; 

International Priority Airmail (IPA); ISAL; Outbound Single-Piece First-Class Package 

International Service; Inbound Letter Post Small Packets and Bulky Letters; Inbound Parcel 

Post (at Universal Postal Union (UPU) rates); International Direct Sacks—Airmail M-Bags; 

IMTS—Outbound; IMTS—Inbound; and International Ancillary Services.

The Commission finds that four of these products, Inbound Parcel Post (at UPU rates), ISAL, 

IMTS—Outbound, and International Ancillary Services, did not cover their costs 

attributable and did not satisfy 39 U.S.C. § 3633(a)(2).94

93 See, e.g., CHIR No. 2, questions 5-11, 15; CHIR No. 6, question 11; CHIR No. 7, questions 11-12.

94 See FY 2023 ACR at 99-107. See also Library Reference USPS-FY23-NP2, December 29, 2023.
Docket No. ACR2023 - 64 -

A. INBOUND PARCEL POST (AT UPU RATES)

(1) FY 2023 Results

Inbound Parcel Post (at UPU rates)95 consists of inbound air and surface parcels for which 

rates are set according to a formula and cap determined in the UPU Acts.96 In FY 2023, for 

the first time in many years,97 Inbound Parcel Post (at UPU rates) did not cover its 

attributable cost. In fact, cost coverage decreased substantially from FY 2022 to FY 2023.98

The Postal Service notes that Inbound Parcel Post (at UPU rates) experienced higher 

processing, delivery, and purchased transportation costs in FY 2023 compared to FY 2022. 

FY 2023 ACR at 99. The Postal Service states that it “cannot increase these rates 

unilaterally above the applicable cap and, absent other incentives to negotiate rate 

increases for this service, is constrained in negotiations with other postal operators by the 

fact that other postal operators can insist on resorting to default UPU rates.” Id. at 100. The 

Postal Service notes that it sought and obtained the maximum allowable rate increases for 

Inbound Parcel Post (at UPU rates) that took effect on January 1, 2024.99

In addition, under seal, the Postal Service provides further explanations for the cost 

increases experienced by Inbound Parcel Post (at UPU rates) as well as information on 

forfeited revenue due to its inability to meet certain UPU requirements for parcel rate 

bonuses100 in FY 2023. See January 19 Response to CHIR No. 2, question 28; February 16 

Response to CHIR No. 9, question 15.

(2) Comments

The Public Representative notes “significant differences in unit cost changes experienced 

by inbound air and surface parcels subject to UPU rates between FY 2022 and FY 2023, 

which resulted in significantly different financial performance for volumes under the 

95 Inbound Parcel Post (at UPU rates) service, with the exception of transit mail, is not sealed against inspection. The insertion of 

correspondence, with the exception of archived materials, exchanged between persons other than sender and the addressee or persons living 

with them, is prohibited. Single-Piece Inbound Parcel Post (at UPU rates) service is subject to the provisions of the Universal Postal Convention 

and the UPU Parcel Post Regulations. Inbound Parcel Post (at UPU rates) includes transit revenue for parcels transiting from a foreign country 

to another foreign country through the United States. Postage and other charges paid by the sender are determined by the country of origin. 

See MCS § 2310.

96 The UPU is a United Nations specialized agency comprising 192 member countries, including the United States. Member countries negotiate 

international agreements governing the exchange of international mail, including applicable rates for the delivery of international mail. See

Regulations to the Convention, Final Protocol, Article 33-201, Inward land rates, Berne 2021, for rates applicable to Inbound Parcel Post (at UPU 

rates) (available at https://www.upu.int/en/universal-postal-union/about-upu/acts#acts-of-the-union).

97 For example, Inbound Parcel Post (at UPU rates) was compensatory in FY 2018 through FY 2022. See FY 2018 ACD at 104; FY 2019 ACD at 77; 

FY 2020 ACD at 73; FY 2021 ACD at 81; FY 2022 ACD at 75.

98 See Library Reference PRC-LR-ACR2023-NP2, Excel file “PRC-LR-ACR2023-NP2 UNIFIED ICRA.xlsx,” tab “ACR2023 Intl Products;” Docket No. 

ACR2022, Library Reference PRC-LR-ACR2022-NP2, March 29, 2023, Excel file “PRC-LR-ACR2022-NP2 UNIFIED ICRA_Updated030923.xlsx,” tab 

“ACR2022 Intl Products.”

99 Id. (citing Docket No. CP2024-100, Order Acknowledging Changes in Rates for Inbound Parcel Post (at UPU Rates), December 19, 2023, at 5 

(Order No. 6877)).

100 The Postal Service reports under seal “third-party service performance results on which financial penalties or bonuses are based and 

estimations of forfeited revenues based on such service performance, for international inbound letter post and international inbound parcel 

post (Inward Land Rates), as required by 39 C.F.R. § 3050.21(j)....” Roadmap Document, supra note 11, at 119.
Docket No. ACR2023 - 65 -

product’s two components.” PR Comments at 29. He notes that “[i]n addition to inflationlinked adjustments, postal operators might qualify for additional rate increases in the form 

of bonuses, which they can earn for the provision of certain service features and their 

performance in the provision of respective service features.” Id. at 29-30. He notes that 

review of relevant International Bureau (IB) Circulars suggests that the Postal Service 

qualified for the bonus-related increases to Inbound Parcel Post (at UPU rates) in FY 2022 

and FY 2023, and that the Postal Service confirms that it obtained the maximum allowable 

rate increases for CY 2024. Id. at 30.

With respect to the product’s future cost coverage, the Public Representative notes that 

“the Postal Service referred to the improved efficiencies and cost reductions that its 

Delivering for America (DFA) Plan should deliver, without addressing why, this far into the 

DFA Plan’s implementation, efficiencies have declined and costs have increased, or whether 

these trends would continue before reaching inflection points.” Id. He concludes that absent 

additional relevant details, he is “unable to form an expectation regarding future cost 

coverage for the Inbound Parcel Post (at UPU rates) product.” Id.

In response to the Public Representative’s comments, the Postal Service states that it 

provided additional information about the unit cost increases in FY 2023. Postal Service 

Reply Comments at 22 (citing January 19 Response to CHIR No. 2, question 28). The Postal 

Service also states that as part of the DFA Plan, during the second half of FY 2023 it reduced 

costs by shifting more mail and packages from the air network to the more efficient surface 

network and by continuing modernization efforts to transform its legacy network into a 

more efficient one.101 The Postal Service asserts that network modernization is expected to 

lead to significant improvements in service performance, revenue growth, cost efficiency, 

and other areas.102 However, it cautions that it faces “[h]igh inflation and supply chain 

disruptions, which have significantly increased [its] labor, fuel, energy, equipment, and 

facility costs.”103 It also cautions that “[s]ome of the cost-saving and revenue-generation 

gains will require three to five years for results to be fully realized on [its] income 

statement.”104

(3) Commission Analysis

The Commission recognizes that the Postal Service is constrained by the UPU’s maximum 

allowable inflation-based increase that it requested from the UPU and which the 

Commission acknowledged in Order No. 6877. However, the Commission observes that the 

Postal Service forfeited revenue due to its inability to meet certain UPU requirements for 

parcel rate bonuses. February 9 Response to CHIR No. 9, questions 15.a.-15.b. This revenue 

101 Id. (citing United States Postal Service, Delivering for America, Responses of the United States Postal Service to the Reporting Requirements 

Specified in the Postal Service Reform Act of 2022, FY 2023 3rd and 4th Quarter, December 4, 2023, at 15, 21 (Postal Service FY 2023 Q3 and Q4 

DFA Report)).

102 Postal Service Reply Comments at 22 (citing Postal Service FY 2023 Q3 and Q4 DFA Report at 27).

103 Postal Service Reply Comments at 22-23 (citing Postal Service FY 2023 Q3 and Q4 DFA Report at 29).

104 Postal Service Reply Comments at 22-23 (citing Postal Service FY 2023 Q3 and Q4 DFA Report at 29-30).
Docket No. ACR2023 - 66 -

would have improved the product’s cost coverage, although would not have made it 

compensatory. Furthermore, the Postal Service confirms that it has forfeited revenue for 

the past 5 fiscal years. Response to CHIR No. 12, question 1. The Commission is concerned 

about such missed revenue opportunities. Forfeiting revenue, of any amount, is not in the 

financial best interest of the Postal Service, particularly given that the product is now noncompensatory.

The Commission notes the general increases in costs, especially increases in mail 

processing, delivery, and transportation costs for Inbound Parcel Post (at UPU rates) 

relative to FY 2022 and is concerned about the Postal Service’s ability to anticipate them, 

especially cost increases caused by wage increases. The Commission notes that the Postal 

Service believes that the DFA Plan will lead to improved efficiencies and reduced costs. 

However, the Commission shares the Public Representative’s concern that so far, the DFA 

Plan has not led to such results, and it is unclear when such results may occur.

The Commission directs the Postal Service to take all necessary steps to ensure that it meets 

all UPU requirements for parcel rate bonuses. The Commission also directs the Postal Service 

to provide a progress report on its efforts to this end, including detailing any technology and 

process limitations, and to provide its most recently available UPU report cards for FY 2024 

showing the Postal Service’s compliance with all UPU parcel rate bonus requirements within 

180 days of the issuance of this ACD. The Commission further directs the Postal Service to 

provide the amount of any revenue forgone on UPU bonuses on parcel rates with an 

explanation of the calculation with all future Annual Compliance Reports

The Commission encourages the Postal Service to work through the UPU to change the 

methodology to calculate the remuneration for Inbound Parcel Post (at UPU rates) to bring it 

to a compensatory level. The Commission also encourages the Postal Service to continue to 

expend a reasonable amount of resources given the size of the product to explore and 

implement measures to reduce the unit cost of Inbound Parcel Post (at UPU rates). The Postal 

Service shall report on these measures and results in the FY 2024 ACR.

B. INTERNATIONAL SURFACE AIR LIFT (ISAL)

(1) FY 2023 Results

In FY 2023, ISAL105 did not cover its attributable cost. FY 2023 ACR at 100. The Postal 

Service states that the primary reason is substantially higher settlement expenses related 

specifically to accounting adjustments for outbound Letter Post volume from a prior fiscal 

year, which artificially inflated the settlement benchmarks for ISAL and other outbound 

105 ISAL service is an international bulk service for mailing First-Class Mail International and Outbound Single-Piece First-Class Package 

International Service items. ISAL shipments are dispatched to the foreign destinations and entered into that country’s surface or nonpriority 

mail system for delivery. See MCS § 2325.
Docket No. ACR2023 - 67 -

Letter Post products.106 The Postal service notes that “[a]bsent these unexpected general 

ledger expenses that are associated with prior fiscal year volume, ISAL likely would have 

been compensatory in FY 2023.” FY 2023 ACR at 100.

The Postal Service further notes that because of these accounting adjustments, which also 

“materially impacted the financials for numerous outbound international NSAs,” it is 

motivated to “carefully review the established methods used to benchmark settlement 

costs and investigate whether a proposed change that would be presented as a rulemaking 

docket before the Commission is warranted.” Id. at 100-01. The Postal Service highlights 

that it “raised prices for the ISAL product (non-NSA ISAL) by 12.0 percent on January 22, 

2023.”107 The Postal Service states that prices for the ISAL product are “scheduled to 

increase by 3.5 percent on January 21, 2024, which should help address the cost coverage 

for the ISAL product (non-NSA ISAL) for FY 2024, and moving forward.”108

The Postal Service acknowledges that while accounting adjustments are ordinary, the size 

of the adjustment in FY 2023 is “considered to be a ‘one-off’ occurrence” and the Postal 

Service expects ISAL to cover its costs in the future. January 19 Response to CHIR No. 2, 

questions 29.d., 29.f. Furthermore, the Postal Service states that although there will likely 

always be a lag between volume and settlements, the Postal Service is “working toward 

more timely settlement expenses” and has “improved the accrual settlement processes that 

occur at the end of the [CY] with the particular foreign post so as to avoid unexpected 

settlement expenses.” Id. question 29.d. In addition, the Postal Service states it is 

considering whether it will file a petition to initiate a rulemaking docket to benchmark 

settlement costs separately for the particular foreign post at issue from other countries 

and/or exclude prior fiscal year settlements from the benchmarking factors. Id. question 

29.h.

(2) Comments

The Public Representative observes “substantial increases in settlement expenses for ISAL, 

some of which appear to be associated with the payment of terminal dues, while others 

appear to be associated with return of outbound letterpost items to sender.” PR Comments 

at 31. He further notes these expenses were incorporated into a special account “intended 

for reporting of settlement expenses associated with products other than ISAL.” Id. at 31-

32. This, he notes, “appears to be a change in the distribution of incurred settlement 

106 Id. Specifically, the Postal Service explains that settlement processes established with a particular foreign post for prior calendar years (CYs) 

were based on estimated monthly interim items per kilogram (IPKs). January 19 Response to CHIR No. 2, questions 29.a.-29.b. The Postal 

Service states that, after the end of each CY, an adjustment to the payments is made based upon the final IPKs agreed upon by both parties. Id.

The Postal Service states the large variance between interim IPKs and the final IPKs in CY 2021 necessitated adjustments to payments. Id. The 

Postal Service notes this large change in the IPKs was “related to a specific mailer that had an unusually high packet IPK throughout [CY] 2021 

and has exited the ISAL market as of July 2021.” Id. The Postal Service also notes that revised accruals for CY 2022 and CY 2023 were entered in 

the General Ledger in FY 2023 to mitigate future, large accounting adjustments. Id.

107 Id. at 101 (citing Docket No. CP2023-42, Order Approving Price Adjustments for Competitive Products, December 22, 2022, at 3 (Order No. 

6384)).

108 FY 2023 ACR at 100 (citing Docket No. CP2024-52, Order Concerning Changes in Rates of General Applicability and Classifications for 

Competitive Products, December 22, 2023, at 3 (Order No. 6895)).
Docket No. ACR2023 - 68 -

expenses between international mail products,” and he encourages the Commission to 

inquire about it. Id. at 32. The Commission did so, and the Postal Service provided 

explanations under seal. See generally Response to CHIR No. 14, question 1.

The Public Representative also discusses that the UPU started allowing designated postal 

operators to request and collect remuneration for returned undeliverable letter post items 

starting in CY 2022. Id. at 32-34. The Commission addresses these comments below in 

Section IV.C.5.A.

(3) Commission Analysis

ISAL has generally covered its attributable cost in prior years.109 Its failure to cover cost in 

FY 2023 appears to be a unique occurrence that resulted from the large, unexpected 

difference between interim and final items per kilo (IPKs) with a particular foreign post 

that necessitated a large accounting adjustment, as well as lag time between volume and 

settlement.

The Commission finds that ISAL was not in compliance with 39 U.S.C. § 3633(a)(2) in FY 2023. 

The Commission recognizes that ISAL has generally covered its cost in prior years, and this is 

likely a unique issue, as confirmed by the Postal Service. Nonetheless, the Commission directs 

the Postal Service to file a report within 180 days of the issuance of this ACD on its progress 

toward a more timely settlement process as well as a status report on its consideration of a 

potential rulemaking. Should the Postal Service conclude that a rulemaking is not 

appropriate, it shall discuss how it reached this conclusion in its status report. The 

Commission also encourages the Postal Service to monitor the impact of the price increase 

that took effect in January 2024 on the product and to request further price increases as 

necessary based on its continued assessment of the product’s projected cost coverage. 

C. INTERNATIONAL MONEY TRANSFER SERVICE—

OUTBOUND

(1) FY 2023 Results

In FY 2023, the outbound component of IMTS—Outbound110 did not cover its attributable 

cost. FY 2023 ACR at 103. The product has exhibited inconsistent cost coverage for more 

than a decade. FY 2022 ACD at 78. To address cost coverage issues with IMTS—Outbound, 

the Postal Service states that it increased prices for IMTS—Outbound by about 305 percent 

in July 2022 in response to the Commission’s directive in the FY 2021 ACD.111

109 For example, ISAL was compensatory in FY 2018 through FY 2022. See FY 2018 ACD at 104; FY 2019 ACD at 77; FY 2020 ACD at 73; FY 2021 

ACD at 81; FY 2022 ACD at 75.

110 IMTS—Outbound enables customers in the United States to make payments or transfer funds to individuals or firms in foreign destinations. 

See MCS § 2620.

111 FY 2023 ACR at 104 (citing Docket No. CP2022-62, Order Approving Changes in Rates and Classifications of General Applicability for 

Competitive Products, June 8, 2022 (Order No. 6195); FY 2021 ACD at 86).
Docket No. ACR2023 - 69 -

As in previous years, the Postal Service cited Order No. 2825, which established a non-InOffice Cost System (IOCS) methodology to distribute IMTS costs to IMTS—Outbound and 

IMTS—Inbound based on their respective transaction volumes.112 However, the Postal 

Service notes that in FY 2023, there was no IMTS—Inbound transaction volume, so IMTS—

Inbound was assigned no costs. FY 2023 ACR at 103.113 The Postal Service further notes 

that the limited number of IOCS tallies for both IMTS—Inbound and IMTS—Outbound in FY 

2023 resulted in significant cost variations. Id. at 103-04. The Postal Service continues to 

believe that the costing methodology approved in Order No. 2825 is an improvement 

compared to the strict IOCS method that existed previously and has no plan to propose a 

new methodology. January 19 Response to CHIR No. 2, question 31.a. The Postal Service 

explains that it “could evaluate whether an entirely non-IOCS-based approach may be more 

appropriate for attributing costs to IMTS, both inbound and outbound.”114 However, 

according to the Postal Service, “[s]pending resources to improve the costing methodology 

of this product which has very low volume does not reflect an optimal use of limited 

resources.” Id.

(2) Comments

The Public Representative notes that the Postal Service has taken steps to terminate paper 

international postal money order agreements that comprise the IMTS—Inbound product. 

PR Comments at 35. He observes that this has led to reduced transactions under both IMTS 

products. Id. The Public Representative further expresses concern that without any 

reportable transactions for IMTS—Inbound, the current costing methodology distributes 

the entirety of costs to IMTS—Outbound. Id. at 36. The Public Representative believes it 

would be beneficial to consider ways to distribute costs between the two IMTS products 

more proportionally to the way the Postal Service incurs them for the underlying paper or 

electronic money order transactions. Id.

(3) Commission Analysis

IMTS—Outbound has been non-compensatory for several years.115 In its FY 2022 ACD, the 

Commission encouraged the Postal Service to monitor the impact on the product of the 

price increase that took effect in July 2022 and to request further price increases as 

necessary based on its continued assessment of the impact of the increase on the cost 

coverage of the IMTS—Outbound product. Id. However, the Postal Service did not request 

any price increase for IMTS—Outbound in FY 2023.116

112 FY 2023 ACR at 103 (citing Docket No. RM2015-13, Order Approving Analytical Principles Used in Periodic Reporting (Proposal Five), 

November 19, 2015 (Order No. 2825)).

113 The Postal Service has attempted to address cost coverage issues with IMTS—Inbound in recent years by terminating or modifying IMTS—

Inbound Agreements with foreign countries. Id. at 104-05 (discussing termination of IMTS—Inbound agreements with Canada, Japan, and other 

countries). 

114 February 16 Response to CHIR No. 10, question 18.b. For example, the Postal Service suggests “modeling the cost for cashing IMTS money 

orders based on an expectation of the window transaction time.” Id.

115 For example, IMTS—Outbound was non-compensatory in FY 2020, FY 2021, and FY 2022. See FY 2020 ACD at 74; FY 2021 ACD at 84; FY 2022 

ACD at 78.

116 See Order No. 6384; Docket No. CP2023-151, Order Concerning Changes in Rates of General Applicability and Classifications for Competitive 

Products, June 23, 2023 (Order No. 6552).
Docket No. ACR2023 - 70 -

The Commission acknowledges the Postal Service’s progress in terminating nearly all 

IMTS—Inbound agreements, but notes that this strategy, the costing methodology 

approved in Order No. 2825, and previous Commission directives117 have yet to produce 

the desired result of bringing IMTS—Outbound and IMTS—Inbound to compensatory 

levels consistently through the years. For several years, the Postal Service has 

acknowledged that the hybrid costing methodology for estimating and distributing IMTS 

costs to IMTS—Outbound and IMTS—Inbound results in significant fluctuations,118 often 

leading to negative contribution from both products. The Commission is concerned about 

the continued suitability of the hybrid costing methodology, but acknowledges that the 

resources required to improve it must be balanced with the benefits. 

The Commission finds that the IMTS—Outbound product was not in compliance with 39 U.S.C. 

§ 3633(a)(2) in FY 2023. The Commission directs the Postal Service to propose a price 

increase for the IMTS—Outbound product that more adequately reflects the costs of the 

product in its next request to adjust prices of general applicability for Competitive products.

The Commission encourages the Postal Service to consider potential costing methodological 

changes or special cost studies that would improve the cost estimation of IMTS products. 

D. INTERNATIONAL ANCILLARY SERVICES

In FY 2023, the International Ancillary Services product did not cover its attributable 

cost.119 More specifically, Inbound Competitive International Registered Mail did not cover 

its attributable cost in FY 2023, causing the International Ancillary Services product to be 

non-compensatory.120

(1) Inbound Competitive International Registered Mail FY 

2023 Results

In FY 2023, Inbound Competitive International Registered Mail did not cover its 

attributable cost, resulting in the International Ancillary Services product being noncompensatory. FY 2023 ACR at 101. This product did not cover its attributable cost in 4 out 

of the 5 preceding fiscal years.121 The Postal Service states that in comparison with FY 

2022, the percentage decline in revenue exceeded the percentage decline in costs in FY 

2023, resulting in lower cost coverage and contribution. FY 2023 ACR at 101. At the same 

117 See, e.g., FY 2021 ACD at 86; FY 2022 ACD at 80.

118 See, e.g., Docket No. ACR2020, United States Postal Service FY 2020 Annual Compliance Report, December 29, 2020, at 69 (FY 2020 ACR); 

Docket No. ACR2021, United States Postal Service FY 2020 Annual Compliance Report, December 29, 2021, at 86 (FY 2021 ACR); Docket No. 

ACR2022, United States Postal Service FY 2020 Annual Compliance Report, December 29, 2022, at 95 (FY 2022 ACR); FY 2023 ACR at 103-104.

119 FY 2023 ACR at 101. International Ancillary Services consists of International Certificate of Mailing, Inbound International Tracked Delivery 

Service, Competitive International Registered Mail (which further includes Outbound Competitive International Registered Mail and Inbound 

Competitive International Registered Mail), Outbound International Return Receipt, Outbound International Insurance, and Customs Clearance 

and Delivery Fee. See MCS § 2615.

120 FY 2023 ACR at 101. The Competitive International Registered Mail component (MCS § 2615.2) of the International Ancillary Services product 

includes Inbound Competitive International Registered Mail and Outbound Competitive International Registered Mail. See MCS § 2615.2. For 

the remainder of the discussion on International Ancillary Services, the Commission will refer to Inbound Competitive International Registered 

Mail as a sub-component of the International Ancillary Services product.

121 See FY 2018 ACD at 108; FY 2020 ACD at 77; FY 2021 ACD at 88; FY 2022 ACD at 80.
Docket No. ACR2023 - 71 -

time, the Postal Service states that the UPU schedule of rate increases in CYs 2023 through 

2025 should help improve cost coverage.122

The Postal Service further describes revenue it receives due to its participation in the UPU’s 

voluntary supplementary remuneration program (SRP), as well as under the Inbound 

Competitive PRIME Registered Service Agreement 1 and the Inbound Competitive PRIMEUSPS Registered Service Agreement, as representing separate sources of additional 

revenue associated with inbound registered items. FY 2023 ACR at 102.

In response to Commission directives in the FY 2022 ACD,123 the Postal Service reports on 

these additional sources of revenue in Library Reference USPS-FY23-NP2, noting that there 

were no Inbound Competitive International Multi-Service Agreements with Foreign Postal 

Operators in effect in FY 2023 that included inbound registered items. FY 2023 ACR at 102. 

In addition, the Postal Service provides an update on its efforts to move registered mail to a 

tracked offering in September 2023.124 The Postal Service further notes that in October 

2023, the UPU adopted changes to “confine registered service to items containing 

documents only, which will limit the scope, and should further mitigate the impact of 

registered mail internationally by CY2026.”125

(2) Comments

The Public Representative notes the Postal Service did not address what caused the 

percentage decline in revenue that exceeded the percentage decline in costs. PR Comments 

at 38. He states that available data suggests that, on a per piece basis, Inbound Competitive 

International Registered Mail’s unit costs increased by a substantially larger amount than 

unit revenue. Id. He neither expects the reported financial performance for Inbound 

Competitive International Registered Mail to improve in FY 2024 nor expects improvement 

in the overall financial performance of all inbound registered items. Id. at 39. However, 

with respect to the changes adopted by the UPU and the Postal Service’s efforts to move 

registered mail to a tracked offering, all things being equal, he believes there is “potential to 

improve financial performance for the International Ancillary Services product starting in 

FY 2026.” Id.

(3) Commission Analysis

The Commission finds that the International Ancillary Services product was noncompensatory in FY 2023 due to Inbound Competitive International Registered Mail not 

122 See FY 2023 ACR at 101; see also Universal Postal Convention and Final Protocol, Article 28.8, Terminal dues, General provisions, August 26, 

2021, Abidjan (available at https://www.upu.int/en/universal-postal-union/about-upu/acts).

123 FY 2022 ACD at 83.

124 See id. at 103. See also Docket No. ACR2022, Sixth Response of the United States Postal Service to Commission Requests for Additional 

Information in the FY 2022 Annual Compliance Determination, September 25, 2023.

125 FY 2023 ACR at 103. Specifically, the UPU Congress adopted changes to the UPU Convention (Article 18) that will require the offering 

internationally of (a) inbound tracked delivery service for letter post items containing goods (i.e., small packets) as of January 1, 2025; and (b) 

registered service for items containing documents only as of January 1, 2026. In other words, starting in CY 2026, registered service for items 

containing goods will not be generally available internationally.
Docket No. ACR2023 - 72 -

covering its attributable cost in FY 2023. The Postal Service has expressed its expectation 

for improved cost coverage for Inbound Competitive International Registered Mail based 

on CY increases in per item UPU rates since at least FY 2017.126 Despite this expectation, 

the Commission notes that the cost coverage has been declining since 2018.127

The Postal Service continues to highlight its participation in the UPU’s voluntary 

supplementary remuneration program for inbound registered items as an additional 

source of revenue and points to the Inbound Competitive PRIME Registered Service 

Agreement 1 and the Inbound Competitive PRIME-USPS Registered Service Agreement as 

separate sources of contribution.128 Nevertheless, Inbound Competitive International 

Registered Mail continues to be non-compensatory and the Commission is unable to 

consider revenue received under separate products on the Mail Classification Schedule 

(MCS) to evaluate the financial performance of Inbound Competitive International 

Registered Mail. 

The Commission commends the Postal Service for its efforts to incentivize foreign postal 

operators (FPOs) to migrate registered volumes to the lower-cost tracked offering and 

leveraging its bilateral and multilateral agreements with FPOs to achieve this goal. The 

Commission further applauds the UPU’s decision to limit the use of registered service to 

letters and flats containing documents starting in CY 2026 because its successful adoption 

will contribute towards the overall migration of mail items containing goods from the 

registered service to the tracked offering.

The Commission finds that the International Ancillary Services product was not in compliance 

with 39 U.S.C. § 3633(a)(2) in FY 2023 because one of its sub-components, Inbound 

Competitive International Registered Mail, did not cover its attributable cost. The Commission 

directs the Postal Service to file a follow-up report on its efforts to move registered items to a 

tracked offering within 180 days of the issuance of this ACD and in the FY 2024 ACR. This 

filing should include a specific description of the Postal Service’s plan, including anticipated 

major milestones and progress toward achieving them.

126 See Docket No. ACR2017, United States Postal Service Fiscal Year 2017 Annual Compliance Report, December 29, 2017, at 44 (FY 2017 ACR); 

Docket No. ACR2018, United States Postal Service Fiscal Year 2018 Annual Compliance Report, December 28, 2018, at 43 (FY 2018 ACR); Docket 

No. ACR2019, United States Postal Service Fiscal Year 2019 Annual Compliance Report, December 27, 2019, at 35 (FY 2019 ACR); see also FY 

2020 ACR at 68; FY 2021 ACR at 85; FY 2022 ACR at 94; FY 2023 ACR at 101.

127 See Docket No. ACR2017, Library Reference PRC-LR-ACR2017-NP2, March 29, 2018; Docket No. ACR2018, Library Reference PRC-LRACR2018-NP2, April 12, 2019; Docket No. ACR2019, Library Reference PRC-LR-ACR2019-NP2, March 25, 2020; Docket No. ACR2020, Library 

Reference PRC-LR-ACR2020-NP2, March 29, 2021; Docket No. ACR2021, Library Reference PRC-LR-ACR2021-NP2, March 29, 2022; Docket No. 

ACR2022, Library Reference PRC-LR-ACR2022-NP2, March 29, 2023; Library Reference PRC-LR-ACR2023-NP2.

128 See FY 2017 ACR at 44; FY 2018 ACR at 43; FY 2019 ACR at 35-36; FY 2020 ACR at 68; FY 2021 ACR at 85-86; FY 2022 ACR at 94; FY 2023 ACR 

at 102.
Docket No. ACR2023 - 73 -

4. Competitive International Products Consisting of 

NSAs

Competitive international mail also includes products with rates and fees not of general 

applicability that are established pursuant to one or more NSAs.

At the request of the Postal Service, and to address administrative concerns involving 

product reporting and classification on the Competitive product list, the Commission 

permitted the grouping of functionally equivalent international NSAs with the express 

understanding that each NSA within a product must cover its attributable cost.129

Functionally equivalent international NSAs are collectively evaluated as a product for 

compliance with 39 U.S.C. § 3633(a)(2).

The Postal Service reports volume, revenue, and cost data for each Competitive 

international NSA comprising Competitive international products with activity, and 

separately lists Competitive international NSAs with no activity during the Fiscal Year. See

Library Reference USPS-FY23-NP2. For FY 2023, the Postal Service provides data for 285 

international NSAs, 263 of which include negotiated rates for outbound mail and 22 of 

which include negotiated rates for inbound mail.130

The financial results for Competitive outbound and inbound international products 

consisting of NSAs are discussed below.

A. COMPETITIVE OUTBOUND INTERNATIONAL PRODUCTS 

CONSISTING OF NSAS

(1) FY 2023 Results

Competitive outbound international products with negotiated rates are classified on the 

Competitive product list. Under outbound NSAs, mailers must commit to tendering 

specified minimum volume, revenue, or both on an annual basis in exchange for reduced 

rates from the Postal Service.131 Additional postal services may be available for products 

with rates and fees not of general applicability.132 Figure IV-2 shows the FY 2023 product 

category for each of these products for which the Postal Service reports FY 2023 financial 

results.

129 See, e.g., Docket No. CP2011-34, et al., Order Approving Five Additional Global Expedited Package Services 3 Negotiated Service Agreements, 

December 1, 2010, at 5 (Order No. 601).

130 Library Reference USPS-FY23-NP2; Library Reference PRC-LR-ACR2023-NP2. The Commission counts each serial-numbered agreement 

included under the Global Expedited Package Services—Non-Published Rates (GEPS—NPR) products as one NSA in this summary value.

131 The Commission has previously expressed concern that the Postal Service does not always enforce customers’ minimum volume 

commitments. See Docket Nos. MC2019-127 and CP2019-136, Order Adding Priority Mail Express & Priority Mail Contract 92 to the Competitive 

Product List, April 30, 2019, at 5 (Order No. 5077). The Commission continues to monitor compliance with statutory requirements regardless of 

adherence to contractual minimum volume requirements.

132 See, e.g., MCS §2510.7.5 for additional services available to products included in the Global Reseller Expedited Package Contracts category.
Docket No. ACR2023 - 74 -

Figure IV-2

Competitive Outbound International Products by Category, FY 2023133

Source: Library Reference USPS-FY23-NP2.

133 This figure includes outbound international products by product category for which the Postal Service reports financial results, for which 

there is a total of 233 agreements. It also includes 30 agreements with no recorded activity.
Docket No. ACR2023 - 75 -

The Postal Service reports financial results for each outbound international NSA within 

these products.134 In FY 2023, although total Competitive international products consisting 

of NSAs covered their attributable costs, eight outbound contracts did not cover their 

attributable costs. FY 2023 ACR at 106. The Postal Service notes that of these eight 

contracts, three have expired, one is scheduled to expire on April 30, 2024,135 and the final 

four are scheduled to expire on May 31, 2024. Id. The Postal Service provides financial 

workpapers under seal for the final four active outbound international NSAs and states that 

based on the analysis presented in the workpapers, those agreements are expected to 

cover costs because of the price changes approved in Docket No. CP2024-52, effective 

January 21, 2024.136

The Postal Service states that accounting adjustments related to outbound Letter Post that 

impacted ISAL, discussed above, “also materially impacted the financials for numerous 

Outbound NSAs” and that absent the accounting adjustments “only one, instead of four, 

active outbound agreements would have been non-compensatory in FY 2023.” FY 2023 

ACR at 106. The Postal Service states that the impact of these accounting adjustments on 

numerous outbound international NSAs has prompted it to carefully review the established 

methodology for benchmarking settlement costs and investigate whether it should propose 

a methodology change in a rulemaking docket before the Commission. Id. at 107.

(2) Comments

The Public Representative notes that an increasing proportion of format E letter post137

volume under outbound Competitive international NSAs has not generated sufficient 

revenue to cover its costs from FY 2021 to FY 2023. PR Comments at 41. Although the 

Postal Service expects the four NSAs that are currently non-compensatory to cover their 

costs as a result of the price changes approved in Docket No. CP2024-52, the Public 

Representative is skeptical about the projected cost coverages due to unrealistic cost 

assumptions and different volume profile assumptions for the four NSAs from those in 

Docket No. CP2024-52. Id. at 42-43. The Public Representative “hesitates to be optimistic” 

that the referenced price changes will improve the financial performance of the four NSAs. 

Id. at 43.

(3) Commission Analysis

The Commission acknowledges the potential volume shifts for format E letter post and 

other ICRA products within an agreement and closely monitors each agreement to ensure 

134 In FY 2023, the Postal Service reports financial results for 233 outbound international NSAs and serial-numbered agreements. For the 

remaining 30 outbound international NSAs and serial-numbered agreements, the Postal Service reports no activity. See Library Reference USPSFY23-NP2.

135 The Postal Service explains that this contract “had negative revenue resulting from a refund during a transition from one contract period to 

the next, but was subsequently impacted by the customer no longer mailing pursuant to an international NSA with the Postal Service.” Id.

Therefore, this contract is essentially inactive.

136 January 19 Response to CHIR No. 2, question 29.c. (citing Order No. 6895).

137 Format E letter post consists of bulky letters containing documents and small packets containing goods. See Universal Postal Union, 

Regulations to the Convention, Berne 2021, Article 17- 102.2 (available at https://www.upu.int/UPU/media/upu/files/aboutUpu/acts/05-

actsRegulationsConventionAndPostalPayment/actsRegulationsToTheConventionAndFinalProtocol.pdf).
Docket No. ACR2023 - 76 -

that it conforms in all respects to 39 U.S.C. § 3633 and 39 C.F.R. § 3035.107. In addition, the 

Commission has previously expressed concern that the Postal Service does not always 

enforce customers’ minimum volume and/or revenue commitments. See Order No. 5077 at 

5. The Commission has similar doubts that, based on the price changes approved in Docket 

No. CP2024-52, the financial performance of these NSAs will be compensatory after 

January 21, 2024, the effective date of the price changes.

The Commission concludes that Competitive outbound international products consisting of 

NSAs satisfied 39 U.S.C. § 3633(a)(2), except for eight Competitive outbound international 

NSAs that did not cover their attributable costs.138 Of these agreements, three have expired 

and five are still in effect.139 The Commission strongly recommends that the Postal Service 

continually monitor the financial performance of each outbound international NSA, ensure 

built-in contingencies are sufficient to ensure the product remains compensatory, and take 

steps to terminate or renegotiate agreements that are non-compensatory. The Commission 

continues to strongly encourage the Postal Service to enforce the minimum volume and/or 

revenue requirement in each NSA and to seriously consider the viability of certain outbound 

NSAs whose projected cost coverage calls into question whether their financial performance 

will be compensatory given the current volatility of cost increases in transportation, 

processing, and delivery, and losses in economies of density. 

To ensure accurate recordkeeping and timely identification of any discrepancies, the 

Commission directs the Postal Service to file in this docket, on a quarterly basis, a summary 

spreadsheet listing all NSAs active during the prior quarter and identifying all extensions, 

expirations, and early terminations. Each report is due within 7 days after the conclusion of 

each quarter of the fiscal year, with the first report due April 8, 2024, and the last report due 

January 7, 2025. The Commission encourages the Postal Service to review the spreadsheet and 

related docket filings each quarter to identify errors, ensure the quality and accuracy of the 

spreadsheet, and file notices of termination or errata where necessary.

B. COMPETITIVE INBOUND INTERNATIONAL PRODUCTS 

CONSISTING OF NSAS

Competitive inbound international products with negotiated rates are classified on the 

Competitive product list. Inbound international agreements entered into by the Postal 

Service and one or more FPOs provide inbound services and prices that are available only 

to mailers meeting defined eligibility requirements for mail preparation, content, size, and 

weight limitations. Figure IV-3 shows the product category for each inbound international 

product for which the Postal Service reports FY 2023 financial results.

138 The Commission notes that one of these eight NSAs was a serial-numbered agreement within the GEPS—NPR 15 product. Although this NSA 

did not cover its attributable cost, the GEPS—NPR 15 product as whole covered its attributable cost.

139 As noted above, one of these five NSAs, which is scheduled to expire on April 30, 2024, is inactive due to the customer no longer mailing 

pursuant to this NSA.
Docket No. ACR2023 - 77 -

Figure IV-3

Competitive Inbound International Products by Category, FY 2023140

Source: Library Reference USPS-FY23-NP2.

The Postal Service reports financial results for each inbound Competitive NSA within these 

products.141 In FY 2023, each inbound Competitive international product and each inbound 

Competitive NSA within these products covered their attributable costs, with the exception 

of Inbound EMS.

(1) Inbound Express Mail Service (EMS) FY 2023 Results

In FY 2023, Inbound EMS142 did not cover its attributable cost. FY 2023 ACR at 105. This 

product has been compensatory for at least the past 5 fiscal years.143 The Postal Service 

notes that the product experienced lower unit revenue and higher unit costs for processing, 

140 This figure includes inbound international products by product category for which the Postal Service reports financial results, for which there 

is a total of 13 agreements. For the remaining nine inbound international NSAs, the Postal Service reports no activity. See Library Reference 

USPS-FY23-NP2.

141 In FY 2023, the Postal Service reports financial results for 13 inbound international NSAs. For the remaining 9 inbound international NSAs, 

the Postal Service reports no activity. See Library Reference USPS-FY23-NP2.

142 Inbound EMS are Inbound Express Mail services offered pursuant to negotiated service agreements. Inbound EMS service is reliable, highspeed and available from most countries. See MCS § 2515.6.

143 For example, Inbound EMS was compensatory in FY 2018 through FY 2022. See FY 2018 ACD at 110; FY 2019 ACD at 82-84; FY 2020 ACD at 

84; FY 2021 ACD at 93; FY 2022 ACD at 88.
Docket No. ACR2023 - 78 -

delivery, and purchased transportation that resulted in it being non-compensatory for FY 

2023. FY 2023 ACR at 105. The Postal Service further notes that it is currently reviewing 

this matter and will investigate to identify whether any solutions can be introduced before 

Inbound EMS rates may be changed for CY 2025.144

The Postal Service has full authority and flexibility to change Inbound EMS rates for the CY. 

However, the Postal Service chose not to increase Inbound EMS rates for CY 2023 and CY 

2024.145 The Postal Service provides under seal explanations for these decisions not to 

increase Inbound EMS rates as well as further details on the cost increases for Inbound 

EMS in FY 2023. See January 19 Response to CHIR No. 2, questions 30.a.-30.b.; February 2 

Response to CHIR No. 7, questions 13.a.-13.d.

The Postal Service also provides under seal an explanation for forfeited Inbound EMS 

revenue due to its failure to meet certain requirements of the UPU EMS Pay-forPerformance Plans146 in CY 2022 and CY 2023. See February 13 Response to CHIR No. 9, 

question 14.b.

(2) Comments

The Public Representative notes that the Postal Service does not explain what caused the 

inadequate revenues or offer its expectation for the product’s financial performance in FY 

2024. PR Comments at 39. He observes substantial unit cost increases and unit revenue 

decreases over the last two FYs. Id. at 40. He recommends that the Commission direct the 

Postal Service to increase prices for Inbound EMS for CY 2025 and to limit unit cost 

increases for the product. Id.

In response to the Public Representative’s comments, the Postal Service states it provided 

an explanation of the cost increases experienced by Inbound EMS under seal. Postal Service 

Reply Comments at 23 (citing January 19 Response to CHIR No. 2, question 30.b.). The 

Postal Service also states that it “intends to carefully review cost coverage for Inbound EMS 

in the next few months, prior to the rate increase notification deadline of August 31, 2024, 

for rates for inbound EMS to go into effect on January 1, 2025, and determine whether to 

increase rates for CY 2025.” Postal Service Reply Comments at 23-24.

(3) Commission Analysis 

The Commission is concerned that the Postal Service knowingly forfeited the opportunity 

to increase Inbound EMS rates for 2 consecutive years. Notwithstanding the cost increases, 

144 FY 2023 ACR at 105-06. Inbound EMS rate changes must be notified to the UPU by August 31 preceding the calendar year in which they 

would take effect.

145 See International Bureau Circular 184, EMS delivery rates for 2023, November 21, 2022; International Bureau Circular 155, EMS delivery 

rates for 2024, September 18, 2023. See also January 19 Response to CHIR No. 2 question 30.a.; February 2 Response to CHIR No. 7, question 

13.a.

146 The Postal Service reports under seal “third-party service performance results on which financial penalties or bonuses are based and 

estimations of forfeited revenues based on such service performance, for international inbound letter post and international inbound parcel 

post (Inward Land Rates), as required by 39 C.F.R. § 3050.21(j), and for international inbound EMS, as required by 39 C.F.R. § 3050.21(j) and PRC 

Order Nos. 5212 (at 5), 5660 (at 7), and 5966 (at 5).” Roadmap Document, supra note 11, at 119.
Docket No. ACR2023 - 79 -

it is the Postal Service’s prerogative to raise rates above the increased cost to ensure the 

product is compensatory. The Postal Service’s explanation for its decision not to raise 

Inbound EMS rates for CY 2023 and CY 2024 does not relieve it of its financial 

responsibility to continuously monitor the cost projections of the product to ensure its 

projected cost coverage will remain sufficient. As is evident in the FY 2023 ACR, although 

the Postal Service believed that Inbound EMS would be compensatory in CY 2023 when it 

made the decision not to raise the rates, the product ended up being non-compensatory 

due to increased attributable cost. The product’s non-compensatory nature in FY 2023 

raises serious questions about whether it will be compensatory in FY 2024 as the Postal 

Service also did not increase its Inbound EMS rates for CY 2024. The Commission 

acknowledges the Postal Service’s statement that it “is currently reviewing this matter and 

will investigate to identify whether any solutions can be introduced before default Inbound 

EMS rates may be changed for CY 2025.” FY 2023 ACR at 105-06.

The Commission is also concerned that the Postal Service forfeited revenue for Inbound 

EMS for failing to meet certain requirements of the UPU’s EMS Pay-for-Performance Plans 

in CY 2022 and CY 2023 since the forfeited revenue could have at least increased the cost 

coverage of Inbound EMS even if it would not have made the product compensatory.

The Commission concludes that Competitive inbound international products consisting of 

NSAs satisfied 39 U.S.C. § 3633(a)(2), except for Inbound EMS that did not cover its 

attributable cost. The Commission finds that the Inbound EMS product was not in compliance 

with 39 U.S.C. § 3633(a)(2) in FY 2023.

The Commission directs the Postal Service to increase the price of Inbound EMS to a 

compensatory level at the next available opportunity, which would be by August 31, 2024, for 

rates to go into effect in CY 2025.

In addition, regardless of whether the Postal Service decides to increase its annual rates for 

Inbound EMS in the future or not, the Commission directs the Postal Service to file for 

Commission approval each year Inbound EMS rates for the following CY and related financial 

workpapers. These financial workpapers should demonstrate estimated cost coverage and 

incorporate the most recently available cost projections. They should be filed with the 

Commission for approval on or before August 16 each year in the event that new rates need to 

be communicated to the UPU by August 31.

Furthermore, the Commission directs the Postal Service to identify and fix issues impeding the 

Postal Service from being able to collect full remuneration for Inbound EMS in accordance 

with the UPU EMS Pay-for-Performance Plan, to file a report within 180 days of the issuance 

of this ACD on progress it is making to fix those issues, and to provide all available EMS report 

card results for FY 2024. The Commission also directs the Postal Service to file the applicable 

UPU EMS Pay-for-Performance Plans with its future annual filings in the ACR docket.
Docket No. ACR2023 - 80 -

To ensure accurate recordkeeping and timely identification of any discrepancies, the 

Commission directs the Postal Service to file in this docket, on a quarterly basis, a summary 

spreadsheet listing all NSAs active during the prior quarter and identifying all extensions, 

expirations, and early terminations. Each report is due within 7 days after the conclusion of 

each quarter of the fiscal year, with the first report due April 8, 2024, and the last report due 

January 7, 2025. The Commission encourages the Postal Service to review the spreadsheet and 

related docket filings each quarter to identify errors, ensure the quality and accuracy of the 

spreadsheet, and file notices of termination or errata where necessary.

5. Other Issues Related to International Products

A. REMUNERATION FOR RETURNED UNDELIVERABLE 

LETTER POST ITEMS

The Public Representative states that the 27th UPU Congress amended the UPU Convention 

and the UPU Postal Operations Council subsequently amended the Regulations to the UPU 

Convention to establish remuneration for returned undeliverable letter post items,147

effective January 1, 2022.148 The Public Representative states that given the large number 

of designated operators, such settlements could result in increases in both settlement 

expenses (for items returned to the Postal Service) and in revenues (should the Postal 

Service claim such remuneration for returning undeliverable letter post items to foreign 

posts). PR Comments at 33.

The Postal Service provided information under seal about remuneration it collected for 

returning undeliverable letter post items to foreign posts and remuneration it paid to 

foreign posts for their return of undeliverable letter post items to the Postal Service. See

February 9 Response to CHIR No. 9, question 16.

The Commission commends the Postal Service for increasing revenue by collecting 

remuneration for the return of undeliverable letter post items for which it could not prior to 

CY 2022 and encourages the Postal Service to maximize this revenue. The Commission directs 

the Postal Service to specify the remuneration it pays to and receives from each foreign 

designated operator for the return of undeliverable letter post items in its future ACRs. This 

information should include the formats (letters, flats, and small packets/bulky letters) to 

which the remuneration applies.

147 In the UPU context, “letter post” includes letters, flats, and small packets/bulky letters. The Postal Service’s Market Dominant Inbound Letter 

Post product consists of letters and flats. It consists of inbound international pieces that contain only documents and encompass letters (to 

include aerogrammes and postcards), and large letters. See MCS § 1130. The Postal Service’s Competitive Inbound Letter Post Small Packets 

and Bulky Letters product consists of small packets and bulky letters. Inbound Letter Post Small Packets may contain goods or documents and 

goods, and Bulky Letters contain documents. See MCS § 2340.

148 See PR Comments at 32 (citing International Bureau Circular 150, Amendments to the Convention Regulations, September 27, 2021 (IB

Circular 150)). See also UPU IB Circular 2, Designated operators that can be remunerated for the return of undeliverable letter-post items from 

2024 (IB Circular 2), January 8, 2024.
Docket No. ACR2023 - 81 -

B. FORFEITED REVENUE BASED ON UPU QUALITY LINK TO 

TERMINAL DUES SCORE

Under the UPU Quality Link to Terminal Dues, the Postal Service has the potential to 

maximize revenue for Inbound Letter Post (letters and flats) and Inbound Letter Post Small 

Packets and Bulky Letters (small packets and bulky letters) with a bonus of up to 5 percent 

of the remuneration, known as terminal dues, that it receives. It may also receive a penalty 

of up to 5 percent on the terminal dues it receives for not achieving the UPU-established 

annual service performance target.149

The Postal Service provides information under seal about its forfeited revenue due to not 

meeting the UPU service performance target150 in CY 2022 and in CY 2023 Q1 through Q3. 

See Library Reference USPS-FY23-NP30, PDF file “PROTECTED Preface USPS-FY23-

NP30.pdf;” see also February 9 Response to CHIR No. 9, question 17.d. The Postal Service 

states that, if necessary, it could incorporate the potential bonus of 5 percent of terminal 

dues that it would have received if it achieved or exceeded the UPU annual service 

performance target in its Inbound Letter Post forfeited revenue calculations in its future 

ACR filings, if applicable. February 9 Response to CHIR No. 9, question 17.c.

The Commission notes that the Postal Service could maximize revenue for Inbound Letter 

Post (letters and flats) and Inbound Letter Post Small Packets and Bulky Letters (small 

packets and bulky letters) if it achieves or exceeds the UPU service performance target. The 

Commission further acknowledges the Postal Service’s willingness to incorporate the 

potential bonus of 5 percent of terminal dues in its Inbound Letter Post forfeited revenue 

calculations in its future ACR filings, if applicable.

The Commission directs the Postal Service to incorporate in future ACRs any potential 

terminal dues bonus that it would have received if it met or exceeded the UPU annual service 

performance target in a CY in its Inbound Letter Post and Inbound Letter Post Small Packets 

and Bulky Letters forfeited revenue calculations, if applicable.

149 See UPU Regulations to the Convention, Final Protocol, Berne 2021, Article 31-109; see also Quality Link User Group, QLUG User Manual, 

April 2021, at 8 (available at 

https://www.upu.int/UPU/media/upu/files/postalSolutions/remuneration/Supplementary%20REM/userManualQlugEn.pdf).

150 The Postal Service reports under seal “third-party service performance results on which financial penalties or bonuses are based and 

estimations of forfeited revenues based on such service performance, for international inbound letter post and international inbound parcel 

post (Inward Land Rates), as required by 39 C.F.R. § 3050.21(j)....” Roadmap Document, supra note 11, at 119.
Docket No. ACR2023 - 82 -

D. Appropriate Contribution Provision: 

39 U.S.C. § 3633(a)(3)

39 U.S.C. § 3633(a)(3) requires the Commission to “ensure that all competitive products 

collectively cover what the Commission determines to be an appropriate share of the 

institutional costs of the Postal Service.” The appropriate share represents a minimum 

contribution level, functioning as a floor for all Competitive products collectively.151 39 

U.S.C. § 3633(b) requires the Commission to review the appropriate share requirement 

every 5 years to determine whether the requirement “should be retained in its current 

form, modified, or eliminated.” In implementing section 3633 after the PAEA was enacted, 

the Commission set the initial appropriate share requirement at 5.5 percent of total 

institutional costs. In FY 2012, the Commission conducted its first review of the 

appropriate share and found it suitable to maintain the requirement at 5.5 percent.

Following its second review of the appropriate share, which was initiated in FY 2017, the 

Commission implemented a new formula-based methodology for determining what the 

appropriate share should be. Under this approach, the appropriate share is updated 

annually as part of the ACD. Order No. 4963 at 27. The Commission determined in the 

FY 2021 ACD that the appropriate share for FY 2023 would be 10.4 percent.152

1. Comments on Appropriate Contribution 

Provision

The Postal Service states that the total Competitive product contribution for FY 2023 was 

$12.167 billion, or 32.1 percent of total institutional costs, an amount that complies with 

the requirements of 39 U.S.C. § 3633(a)(3). FY 2023 ACR at 107.

The Public Representative and Pitney Bowes both concur that Competitive products were 

in compliance with 39 U.S.C. § 3633(a)(3) for FY 2023. PR Comments at 44-45; Pitney 

Bowes Comments at 4.

151 See Docket No. RM2007-1, Order Proposing Regulations to Establish a System of Ratemaking, August 15, 2007, ¶ 3056 (Order No. 26); 

Docket Nos. RM2017-1 and RM2022-2, Supplemental Notice of Proposed Rulemaking and Order Initiating the Third Review of the Institutional 

Cost Contribution Requirement for Competitive Products, November 18, 2021, at 46-47 (Order No. 6043).

152 FY 2021 ACD at 97-100. Use of the formula-based approach has been subject to ongoing litigation. See United Parcel Serv., Inc. v. Postal 

Regul. Comm’n, 955 F.3d 1038 (D.C. Cir. 2020); Docket Nos. RM2017-1 and RM2022-2, Order Finalizing Rule Relating to the Institutional Cost 

Contribution Requirement for Competitive Products, January 9, 2023 (Order No. 6399); Petition for Review, United Parcel Serv., Inc. v. Postal 

Regul. Comm’n, No. 23-1006 (D.C. Cir. filed Jan. 10, 2023), ECF No. 1980905; Judgment, United Parcel Serv., Inc. v. Postal Regul. Comm’n, No. 

23-1006 (D.C. Cir. filed Mar. 22, 2024), ECF No. 2046217 (denying UPS petition for review). The Commission explained in the FY 2020 ACD that it 

would not use the formula-derived appropriate share amount for purposes of determining compliance with 39 U.S.C. § 3633(a)(3) until this 

matter has been resolved. FY 2020 ACD at 91. Given the continuing litigation of this issue the Commission will once again refrain from using the 

formula-derived appropriate share amount for purposes of determining compliance with 39 U.S.C. § 3633(a)(3) in FY 2023. However, because 

the formula is recursive, the Commission has continued to perform the relevant calculations to determine what the formula-based appropriate 

share would be, in order to avoid any disruption in the formula’s operation while this issue is being addressed. FY 2020 ACD at 91.
Docket No. ACR2023 - 83 -

2. Commission Analysis

A. FY 2023 APPROPRIATE SHARE

In FY 2023, the total institutional costs of the Postal Service were $37.858 billion. See 

Library Reference PRC-LR-ACR2023-1. In FY 2023, the total contribution made by 

Competitive products collectively to institutional costs was $12.167 billion (approximately 

32.1 percent of total institutional costs), which surpasses either the 5.5 percent 

requirement or the formula-derived 10.4 percent requirement.153 Therefore, the Postal 

Service was compliant with 39 U.S.C. § 3633(a)(3).

The Commission finds that in FY 2023 Competitive products satisfied 39 U.S.C. 

§ 3633(a)(3) by covering an appropriate share of the Postal Service’s institutional costs.

B. FY 2024 APPROPRIATE SHARE

The formula-based approach to determining the appropriate share is recursive. Each year 

during the annual compliance review, the Commission determines the appropriate share 

for the upcoming fiscal year. Order No. 4963 at 26-27. In conducting its annual compliance 

review for FY 2022, which was carried out during FY 2023, the Commission applied the 

formula and determined that the appropriate share for FY 2024 would be 9.9 percent. 

FY 2022 ACD at 91-93.

C. FY 2025 APPROPRIATE SHARE

The Commission has applied the formula to determine that the appropriate share 

requirement for FY 2025 under the formula-based approach will be 9.6 percent. For a stepby-step explanation of the calculation, please see the library reference accompanying this 

report. See Library Reference PRC-LR-ACR2023-8.

Table IV-1

Appropriate Share Value, FY 2021–FY 2025

Fiscal Year Appropriate Share Value

FY 2021 9.1%

FY 2022 10.0%

FY 2023 10.4%

FY 2024 9.9%

FY 2025 9.6%

153 See Library Reference PRC-LR-ACR2022-1, Excel file “FY 22 Summary LR-1.xlsx,” tab “Total All Mail (Appendix A).”
Docket No. ACR2023 - 84 -

E. Pilot Program – Gift Cards

In FY 2021, the Postal Service initiated a pilot program (Pilot Program) at four Post Office 

retail locations to allow postal retail customers to use payroll and business checks to 

purchase stored value Gift Cards. Under the program, a customer is charged a fee of $5.95 

for a variable Gift Card up to $500. The total amount loaded on the Gift Card(s) cannot 

exceed $500 per day per customer and no cash is disbursed to the customer. Id. questions 

1.h., 1.j. Between September 13, 2021 and March 2022, a total of seven Gift Cards were 

purchased under the Pilot Program, generating a total fee revenue of $41.65. No sales have 

occurred since FY 2022 Quarter Two.

In the FY 2022 ACD, the Commission reminded the Postal Service that the Commission 

regulates what products may be offered and controls the addition and removal of products 

through the MCS and that future changes that have an impact on a product’s use or 

classification should be filed with the Commission. FY 2022 ACD at 98. The Commission 

established Docket No. MC2022-60 for the specific purpose of considering the Pilot 

Program and directed the Postal Service to file quarterly reports on the Pilot Program and 

the Gift Card product as a whole in that docket.

These reports were required to include information on volume, revenue, and costs (which 

should include training-related costs, labor costs associated with the retail transactions, 

and supply costs) separately for Gift Cards purchased as part of the Pilot Program and all 

Gift Cards. Id. at 98. The reports must also include whether Gift Cards, both in general and 

those sold as part of the Pilot Program, are likely to be mailed or otherwise promote the 

use of the mail (for example, number of Gift Cards purchased in a transaction that included 

other postal products). Id. Finally, the reports must include any plans for modifications or 

other future plans regarding the Pilot Program or Gift Card product, including any plans for 

termination of the Pilot Program. Id.

The Postal Service has filed four reports since the FY 2022 ACD. Despite the lack of sales, 

the Pilot Program remains operational with no plans for termination. Thus, questions 

remain as to the nature of the program. As long as the Pilot Program remains in effect, the 

Commission will continue to monitor the status of the program and explore the Postal 

Service’s plans for the program. With respect to the Gift Card product as a whole, the Pilot 

Program does not appear to have any effect on volume, revenue, costs, or the likelihood of 

gift cards being mailed. Therefore, the Commission will no longer require reporting on the 

Gift Card product as a whole.

The Commission directs the Postal Service to continue to report quarterly information on the 

Pilot Program. The report shall be filed in Docket No. MC2022-60 and shall include 

information on volume, revenue, and costs (which should include training development costs, 

as well as the costs of conducting the training, labor costs associated with the retail 

transactions, and supply costs). In addition, the report must include any plans for 

modifications or other future plans of the Pilot Program, including any plans for termination 

of the Pilot Program.
Docket No. ACR2023 - 85 -

F. Interagency Agreements

Pursuant to 39 U.S.C. § 3705(a), the Postal Service must submit a report to the Commission 

demonstrating that any nonpostal services in effect during the fiscal year under review 

complied with the requirements of chapter 37 of Title 39 of the United States Code. Chapter 

37 authorizes the Postal Service to enter into agreements with agencies of any state 

government, local government, or tribal government to provide property or nonpostal 

services to the public on behalf of such agencies for non-commercial purposes. 39 U.S.C. 

§ 3703. As to such agreements, the Postal Service's report must include costs, revenues, 

rates, and quality of service for each agreement or substantially similar set of agreements. 

39 U.S.C. § 3705(a)(1). The Postal Service states that there were no agreements with state, 

local, or tribal governments in effect during FY 2023. FY 2023 ACR at 109.

Chapter 37 also specifies that "[t]he Postal Service may establish a program to provide 

property and nonpostal services to other Government [i.e., Federal] agencies within the 

meaning of section 411[154], but only if such program provides a net contribution to the 

Postal Service, defined as reimbursement that covers at least 100 percent of the costs 

attributable....” 39 U.S.C. § 3704. For the Postal Service’s program to provide property and 

nonpostal services to other Government agencies within the meaning of 39 U.S.C. § 411, the 

Postal Service’s report to the Commission must include costs, revenues, rates, and quality 

of service155 for the overall program established under 39 U.S.C. § 3704. 39 U.S.C. 

§ 3705(a)(1). The Postal Service states that “all of the agreements [in effect in FY 2023 

under 39 U.S.C. chapter 37] were with federal agencies under preexisting Section 411 

authority.” FY 2023 ACR at 109.

As required by 39 U.S.C. § 3705 and Commission Order No. 6659,156 the Postal Service 

reported on costs, revenue, and rates for the interagency agreements (IAAs) that were in 

effect during FY 2023.157 The Postal Service provided copies of new agreements and 

154 Prior to the enactment of the PSRA, the Postal Service’s authority for these agreements was governed by 39 U.S.C. § 411, which authorizes 

the Postal Service to “furnish property and services” to “Executive agencies within the meaning of [5 U.S.C. § 105] and the Government 

Publishing Office....” 39 U.S.C. § 411. Section 105 of Title 5 of the United States Code specifies that an “’Executive agency’ means an Executive 

department, a Government corporation, and an independent establishment” of the United States Government, as those terms are defined in 5 

U.S.C. chapter 1. 5 U.S.C. § 105.

155 See Section V.A.5., infra, regarding quality of service.

156 39 U.S.C. § 3705; Order No. 6659. 39 U.S.C. § 3705(b)(2) authorizes the Commission to initiate proceedings to improve the quality, accuracy, 

or completeness of Postal Service data filed pursuant to 39 U.S.C. § 3705. In the FY 2022 ACD, the Commission directed the Postal Service to 

develop a proposed methodology for calculating and attributing costs and revenue to interagency agreements. FY 2022 ACD at 102. As 

directed, the Postal Service filed its proposal in Docket No. RM2023-7. In Order No. 6659, the Commission conditionally approved the Postal 

Service’s proposed methodology, subject to seven conditions. Order No. 6659 at 14-17. The Postal Service filed a motion for partial 

reconsideration of Order No. 6659, which is currently pending before the Commission. Docket No. RM2023-7, USPS Motion for Reconsideration 

and Clarification of Commission Order No. 6659, With Portions Filed Under Seal, September 15, 2023. 

157 FY 2023 ACR at 109-10; Library Reference USPS-FY23-20, December 29, 2023, PDF file “FY23-20+Public+IAA+Preface.pdf,” at 2; Library 

Reference USPS-FY23-NP32, PDF file “PROTECTED_FY23-NP32+NonPublic+IAA+Preface.pdf,” at 5.
Docket No. ACR2023 - 86 -

modifications to existing agreements made during FY 2023,158 and provided workbooks 

reflecting summary IAA information and the calculation of costs, revenue, and contribution 

for each category of IAA.159 In response to an information request, the Postal Service 

confirmed that costs attributable to IAAs were not treated as institutional costs in 

FY 2023.160

As shown in Figure IV-4, in total, there were 140 IAAs in effect in FY 2023 broken out 

among six categories. The program as a whole brought in $434 million in revenue and 

incurred $251 million in costs, for a contribution of $183 million.161

158 Order No. 6659 at 14. See Library Reference USPS-FY23-20, folder “Public Copies of Redacted IAA Agreements;” Library Reference USPSFY23-NP32, folder “NP Copies of Unredacted IAA Agreements.” In Order No. 6659, the Commission directed that with respect to copies of 

specific IAAs, the Postal Service should justify any filings made under seal and redact only the information claimed to be nonpublic. Order No. 

6659 at 14. However, consistent with Commission Order No. 6440, the Postal Service is allowed to file a single representative redacted public 

version of an agreement for the “Lease Agreements” category of IAAs, as well as for the “EEO Services” subcategory within the “Contracting 

Services” category of IAAs. See Docket No. ACR2022, Order Granting Motion for Extension of Time to Respond and for Partial Reconsideration 

of Question 9 of Chairman’s Information Request No. 10, February 10, 2023 (Order No. 6440).

159 Order No. 6659 at 15. See Library Reference USPS-FY23-NP32, Excel files “ACR 2023 IAA Summary.List.xlsx,” “FY2023 IAA NonPublic Financial 

Workbook.xlsx;” Library Reference USPS-FY23-NP34, folder “Q.40,” Excel file “ChIR.2.ACR 2023 IAA Summary.List.xlsx;” Library Reference USPSFY23-NP41, folder “Qs 15 and 16.d,” Excel file “FY2023 IAA NonPublic Financial Workbook CHIR 10.xlsx;” Library Reference USPS-FY23-NP41, 

folder “Q.16,” Excel files “ChIR10.Q16_COVIDTestKitFulfillment.xlsx,” “ChIR10Q16Resp.COVIDTestKits_FCPS_Analysis_FY23.xlsx,” 

“ChIR10Q16Resp.COVIDTestKits_GA_Analysis_FY23.xlsx,” “ChIR10Q16Resp.COVIDTestKits_PM_Analysis_FY23.xlsx,” 

“ChIR10Q16Resp.COVIDTestKits_Summary_FY23.xlsx.”

160 January 19 Response to CHIR No. 2, question 39. In Order No. 6659, the Commission directed the Postal Service to develop a proposed 

change in accepted analytical principles to enable the attribution of costs and related revenue to IAAs, which the Postal Service did. Order No. 

6659 at 16; see Docket No. RM2023-7, Response of the United States Postal Service to Order No. 6659, September 29, 2023.

161 See Notice of the United States Postal Service of Revisions to Certain Pages of the FY 2023 Annual Compliance Report – Errata, February 22, 

2024.
Docket No. ACR2023 - 87 -

Figure IV-4

Interagency Agreements by Category in Effect During FY 2023

Source: Library Reference USPS-FY23-NP34, folder “Q.40,” Excel file “ChIR.2.ACR 2023 IAA Summary.List.xlsx.”

The Commission continues to work with the Postal Service to finalize a methodology for 

calculating and attributing costs and revenue to IAAs. See generally Docket No. RM2023-7. 

For purposes of this compliance review of the overall IAA program pursuant to 39 U.S.C. 

§ 3705(e)(2), the record reflects that the total reimbursement the Postal Service received 

from other Federal agencies for services rendered pursuant to IAAs effective in FY 2023 

exceeded the total estimated cost associated with providing such services, which complies 

with 39 U.S.C. § 3704.

The Commission finds that the Postal Service complied with the applicable requirements of 39 

U.S.C. chapter 37 during FY 2023.
Docket No. ACR2023 - 88 -

CHAPTER V. SERVICE PERFORMANCE

A. Service Performance Results

1. Introduction

A. KEY FINDINGS

Figure V-1 presents the FY 2023 weekly service performance results for First-Class Mail. As 

shown, beginning in March of 2023 service performance results for First-Class Mail began 

lagging the FY 2022 results. Analyzing weekly service performance results at a class-level is 

a different approach than that taken in previous ACDs. However, the dataset underlying the 

analysis is from the Postal Service’s own public-facing dashboard. The service performance 

issues identified in the in-depth analysis in this Chapter strongly suggest that service 

performance failures are ongoing and systemic problems rather than isolated events 

causing accumulated failures.

Figure V-1

First-Class Mail

USPS Service Performance Dashboard Weekly Data, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File, available at https://spm.usps.com/#/main.

Key findings and the corresponding Commission directives/recommendations relating to 

service performance include:

• The Commission is concerned about the Postal Service’s continued failure to meet 

service performance targets:

o The majority (15) of the 27 Market Dominant products/categories measured 

failed to meet their targets in FY 2023.
Docket No. ACR2023 - 89 -

o The products/categories that failed to meet their targets in FY 2023 

represented 35.9 percent of Market Dominant mail volume and the 

products/categories that met their targets in FY 2023 represented 64.1 

percent of Market Dominant mail volume.

o This is the 9th year in a row that more than 48 percent of 

products/categories have failed to meet their targets.

o The Postal Service continues to fail to meet targets despite changes in service 

standards that have lengthened days to delivery for several 

products/categories over the past several years.

o The Commission directs the Postal Service to improve service performance 

results to achieve the applicable on-time percent target levels in FY 2024.

o The Commission has developed specific directives designed to increase 

transparency regarding service performance for non-compliant products. 

These directives elicit data from the Postal Service and information on the steps 

that the Postal Service will have to take to restore service performance for 

those products in FY 2024. These directives include continued Postal Service 

reporting of specific information developed from its internal metrics within 90 

days of the issuance of this ACD and as part of the Postal Service’s FY 2024 ACR.

• The Commission is concerned with the Postal Service’s inability to address key issues 

impacting service performance including:

o Employee Availability

▪ The Postal Service has been unable to mitigate seasonal fluctuations 

in employee availability.

▪ The Commission recommends that the Postal Service analyze trends in 

employee availability and focus its efforts to reduce seasonal variation 

in employee availability to improve service performance.

o Employee Turnover

▪ Employee turnover in the Processing & Distribution function has the 

most significant impact on service performance in the month 

immediately following the employee turnover and persists through 

the month after that.

▪ The Commission recommends that the Postal Service analyze the diverse 

impacts of employee turnover across functional areas to focus retention 

efforts where they are likely to yield the most benefit for service 

performance.

o Transportation Challenges

▪ In FY 2023 all districts saw a decline in Critically Late Trips (CLTs) 

compared to FY 2022.
Docket No. ACR2023 - 90 -

▪ The Postal Service continues to assert that it must first implement a 

new contract management system (Contract Logistics Enterprise 

Acquisition Resource (CLEAR)) and a new Integrated Logistics 

Environment (ILE) to enable assessing remedies for CLTs caused by 

suppliers.

▪ Because decreasing CLTs represents an opportunity to improve service 

performance across many products and categories, the Commission 

recommends that the Postal Service prioritize the migration to CLEAR 

and the full implementation of its ILE as soon as possible. The 

Commission also recommends continued consistent monitoring of 

delayed inventory to mitigate other transportation backlogs.

o Operational Changes by the Postal Service

▪ As in previous years, the Commission finds the Postal Service’s 

inability to quantify the impact of any of its operational improvement 

initiatives—particularly those related to nationwide changes in the 

nature of postal services—problematic. For an improvement initiative 

to be successful, it must be possible to identify its impact and 

determine if the initiative had the desired effect on service 

performance results.

▪ The Commission recommends that the Postal Service develop an 

independent method to enable it to isolate and measure the impact of 

specific improvement initiatives on service performance.

• The Commission is concerned that the operational and sample data used for the 

internal service performance measurement system may not fully capture the current 

nationwide service issues.

o The Postal Service uses a Collection Box sample to measure the persistent 

First Mile delays in Single-Piece First-Class Mail. Recent network and 

operational changes for collection mail implemented by the Postal Service in 

FY 2024 such as Optimized Collections may negatively impact the quality of 

this critical component of the service performance measurement system.

o The Postal Service uses automation scans and IMb data to measure the 

processing phase. Less than 70 percent of presort First-Class Mail was 

included in measurement each quarter of FY 2023. Similarly, the FY 2023 

volume in measurement for USPS Marketing Mail fluctuated between 65 and 

71 percent, with 68 percent of volume included in measurement for the fiscal 

year. Approximately 50 percent of Periodicals were included in 

measurement in each quarter of FY 2023. For Package Services in FY 2023, 

the percentage of mailpieces measured by IMb peaked in the second and 

third quarters at 30 percent and slipped down to 25 percent in Quarter 4. 

The primary obstacle to increasing the volume in service performance 
Docket No. ACR2023 - 91 -

measurement in FY 2023 is the limitations of the Postal Service’s operational 

data.

o The leading causes of mailpieces being excluded from measurement were the 

Postal Service’s failure to capture consistent and usable data.

o Missing “Start-the-Clock” scans was a leading cause to exclude eligible 

mailpieces from service performance measurement for presort First-Class 

Mail, Periodicals, and USPS Marketing Mail. Additionally, the “Start the Clock” 

time may not adequately reflect delays related to long waits in line for 

transportation.

o The Postal Service uses a Last Mile sample to measure the persistent Last 

Mile delays for each Market Dominant product.

o The Commission recommends that the Postal Service renew its focus on 

increasing the percentage of mail in measurement and analyzing and 

improving its mail in measurement program.

o The Commission intends to evaluate if the quality of service data has become 

significantly inaccurate pursuant to 39 U.S.C. § 3652(e)(2)(B) and to determine 

if any planned Postal Service changes to the “measurement systems, service 

standards, service goals or reporting methodologies [will] have a material 

impact on the accuracy, reliability, or utility of the [service performance] 

measurement” pursuant to 39 C.F.R. § 3055.5.

• The Commission is concerned regarding the impact of the DFA Plan on service 

performance:

o Given the lack of service performance data at the 5-Digit level, as well as a 

lack of clarity on the level of implementation and current scale and scope of 

the DFA Plan, the Commission is currently unable to assess the effects of the 

DFA Plan in FY 2023 on service.

o The Commission urges the Postal Service to be forthcoming with the data 

necessary to conduct a thorough evaluation of the DFA Plan's impact on service 

performance in Docket No. PI2023-4 and subsequent annual compliance 

determinations.
Docket No. ACR2023 - 92 -

Figure V-2 categorizes Market Dominant products according to whether or not they 

achieved their annual service performance targets for FY 2023.

Figure V-2

Market Dominant Products Service Performance Results, FY 2023

Source: Library Reference USPS-FY23-29, December 29, 2023, PDF file “FY23-29 Service Performance Report.pdf,” at 4-5, 9, 13, 16, 19-20 (FY 

2023 Service Performance Report).

First, the Commission provides context to the results in the background section below. 

Second, the Commission provides an overview of the factors in FY 2023 that affected the 

service performance of all Market Dominant products. Third, the Commission describes the 

systems the Postal Service uses to measure service performance for Market Dominant 

products. Fourth, the Commission discusses the Postal Service’s FY 2023 service 

performance results by class of mail. Fifth, the Commission discusses nonpostal services.
Docket No. ACR2023 - 93 -

B. BACKGROUND

Before the PAEA, the Postal Service had internal delivery service standards for major types 

of mail but lacked statutory guidance on how to establish delivery standards and did not 

measure and report delivery performance for most types of mail.162 The PAEA required the 

Postal Service to establish an initial set of service standards for Market Dominant products 

to take effect within 1 year of the PAEA’s enactment. 39 U.S.C. § 3691(a). The PAEA directed 

the Postal Service, in consultation with the Commission, to establish these standards “by 

regulation” and permitted revision “from time to time thereafter by regulation.”163 The 

PAEA also required the Postal Service to develop a “plan for meeting those [service] 

standards,” within which it was to “establish performance goals” for its delivery 

performance. PAEA § 302(a), (b)(1), 120 Stat. at 3219.

The Postal Service promulgated its initial service standards in 2007.164 As designed by the 

Postal Service, the standards specify the amount of time within which a customer may 

ordinarily expect that a particular mailpiece will be delivered, in accordance with a detailed 

set of “business rules.”165 The Postal Service has since revised these standards several 

times, including lengthening the service standards for First-Class Mail and end-to-end 

Periodicals by up to 2 days, effective October 1, 2021 (the beginning of FY 2022)166 and 

most recently by changing the critical entry times (CETs) for certain categories of 

Periodicals, effective January 29, 2023 (Quarter 2 of FY 2023).167

162 United States Government Accountability Office, Report No. GAO-06-733, U.S. Postal Service: Delivery Performance Standards, 

Measurement, and Reporting Need Improvement, published July 2006, at 2-4, available at https://www.gao.gov/assets/260/250894.pdf (GAO06-733).

163 Id. Any “change in the nature of postal services which will generally affect service on a nationwide or substantially nationwide basis” requires 

an advisory opinion by the Commission. Id. § 3661(b).

164 See Modern Service Standards for Market-Dominant Products, 72 Fed. Reg. 72,216 (Dec. 19, 2007) (codified at 39 C.F.R. parts 121 and 122).

165 Id. at 72,220. The Postal Service defines service standards as “[s]tated delivery performance goals for each mail class and product that are 

usually measured by days for the period of time taken by [the Postal Service] to handle the mail from end-to-end (that is, from the point of 

entry into the mailstream to delivery to the final destination).” United States Postal Service Publication 32, Glossary of Postal Terms, July 2013, 

available at http://about.usps.com/publications/pub32/pub32_terms.htm (Postal Service Glossary of Postal Terms). “Established service 

standards also include destination entry standards for mail entered by the mailer at or near a postal destination facility. A separate set of 

standards is established for noncontiguous states such as Alaska and Hawaii and territories such as American Samoa and Guam.” Id.

166 See Revised Service Standards for Market-Dominant Mail Products, 86 Fed. Reg. 43,941 (Aug. 11, 2021) (codified at 39 C.F.R. part 121); see 

also Docket No. N2021-1, Advisory Opinion on Service Changes Associated with First-Class Mail and Periodicals, July 20, 2021 (Docket No. 

N2021-1, Advisory Opinion). The Postal Service estimated that its proposed changes would impact 38.5 percent of First-Class Mail and 7 percent 

of Periodicals. See Docket No. N2021-1, Advisory Opinion at 1. The Postal Service also requested advisory opinions from the Commission 

regarding revisions to service standards for three Competitive products, First-Class Package Service, USPS Retail Ground, and Parcel Select 

Ground. See Docket N2021-2, Advisory Opinion on the Service Standard Changes Associated with First-Class Package Service, September 29, 

2021 (Docket No. N2021-2, Advisory Opinion); Docket No. N2022-1, Advisory Opinion on the Service Standard Changes Associated with USPS 

Retail Ground and Parcel Select Ground, June 9, 2022, (Docket No. N2022-1, Advisory Opinion). The Postal Service implemented these new 

service standards during FY 2022: on May 1, 2022, for First-Class Package Service and on August 1, 2022, for USPS Retail Ground and Parcel 

Select Ground. United States Postal Service, U.S. Postal Service Implements New First-Class Package Service Standards and Updates Priority 

Mail Service Standards, April 18, 2022, available at https://about.usps.com/newsroom/national-releases/2022/0418-usps-implements-new-firstclass-package-service-standards.htm; United States Postal Service, Postal Service Accelerates Delivery for Retail Ground, Parcel Select Ground 

Products, June 23, 2022, available at https://about.usps.com/newsroom/national-releases/2022/0418-usps-implements-new-first-classpackage-service-standards.htm.

167 See United States Postal Service, Changes to Periodical Critical Entry Times, Effective January 29, 2023, USPS Postal Pro (December 29, 2022), 

available at https://postalpro.usps.com/node/11634; see also Docket No. N2022-2, Advisory Opinion on Changes to the Critical Entry Times for 

Certain Categories of Periodicals, November 30, 2022 (Docket No. N2022-2, Advisory Opinion).
Docket No. ACR2023 - 94 -

As required by section 302 of the PAEA, the Postal Service also prepared a plan for meeting 

its service standards and, as a part of that plan, developed a set of percentage on-time 

performance targets.168 Since enactment of the PSRA on April 6, 2022, the Postal Service is 

now required to establish its targets within 60 days of the beginning of the fiscal year for 

which they will apply. 39 U.S.C. § 3692(a)(1). The Postal Service has explained that targets 

are set by the Board of Governors of the Postal Service, taking into account “prior year 

performance and expected operational improvement based on known network and 

operational changes.”169

Each year, the Commission must “make a written determination” as to “whether any 

service standards in effect during such year were not met.” 39 U.S.C. § 3653(b)(2). In this 

vein, 39 U.S.C. § 3692(a)(2) requires the Postal Service to “provide the previous fiscal 

year's performance targets in its Annual Compliance Report to the Postal Regulatory 

Commission for evaluation of compliance for each product.”

To make this assessment, the Commission compares the percentage of mailpieces that 

achieve the stated service standard against the targets established by the Postal Service.

The Postal Service intends to eventually raise its service performance targets to 95 percent 

on-time for all Market Dominant products consistent with its DFA Plan. See FY 2023 ACR at 

54. It asserts that its ability to do so depends on successful implementation of the ongoing 

network improvements laid out in the DFA Plan and, as such, it will set interim goals 

intended to show continued progress towards its ultimate 95 percent on-time target 

goal.170

However, the Postal Service fell short of meeting the target in over half of its products/ 

categories in FY 2023. The Commission has concerns regarding the pace of improvement in 

service performance. For example, for domestic First-Class Mail categories, the 

performance results reveal that two categories (2-Day Single-Piece Letters/Postcards and 

Overnight Presorted Letters/Postcards) exhibited no improvement, while the progress 

observed in other categories was minimal. If the Postal Service were to improve each year 

from now on by the same amount as observed in FY 2023, it would take a minimum of 3 

years for 2-Day Presorted Letters and Postcards and 3-5-Day Presorted Letters and 

Postcards to reach 95 percent on-time service performance. It would take 39 years for 3-5-

Day Single-Piece Letters and Postcards to achieve this result.

168 See United States Postal Service, Postal Accountability and Enhancement Act § 302 Network Plan, June 2008, at 7; The Three R’s of the Postal 

Network Plan: Realignment, Right-Sizing, and Responsiveness, Hearing Before the Subcomm. on Federal Workforce, Postal Service, and Dist. of 

Columbia of the H. Comm. on Oversight and Gov’t Reform, 110th Cong., at 47 (July 24, 2008) (statement of Patrick R. Donahoe, Deputy 

Postmaster General/Chief Operating Officer, United States Postal Service) (stating that the Postal Service would fulfill its section 302 mandate 

by, among other things, establishing “‘percentage on-time’ targets [that] will be shared with the Commission and will serve as the basis for its 

annual review of [the Postal Service’s] service standards compliance[]”).

169 Docket No. ACR2022, Library Reference USPS-FY22-29, December 29, 2022, PDF file “PREFACE folder FY22-29.pdf,” at 5 (Docket No. 

ACR2022, Library Reference USPS-FY22-29 Preface).

170 See January 19 Response to CHIR No. 1, question 17.b.; Docket No. ACR2022, Library Reference USPS-FY22-29 Preface at 4-5.
Docket No. ACR2023 - 95 -

2. Issues Affecting Service Performance for All 

Market Dominant Products in FY 2023

A. OVERVIEW

During FY 2020 and FY 2021, the Postal Service claimed that the COVID-19 pandemic had a 

substantial impact on service performance, specifically by reducing employee availability, 

disrupting its contract transportation arrangements, and altering the traditional mail mix. 

See, e.g., FY 2021 ACD at 108. While the worst COVID-19 pandemic impacts subsided during 

FY 2022, low employee availability and transportation challenges—along with significant 

operational changes made by the Postal Service—continue to impact the Postal Service’s 

FY 2023 Market Dominant service performance results. These factors are discussed in 

detail below.

B. LOW EMPLOYEE AVAILABILITY

In FY 2022, the Postal Service stated that employee availability shortages caused by the 

COVID-19 pandemic began to subside after Quarter 1 of FY 2022. See FY 2022 ACR at 54-

55; FY 2022 Service Performance Report at 6. The Postal Service notes that “[e]mployee 

availability can be affected by numerous factors, many of which are not within the control 

of the Postal Service, such as overall economic factors, employment, labor, and public 

health conditions.” February 2 Response to CHIR No. 7, question 2. The Postal Service 

claims that it made “several efforts to improve employee availability, including maintaining 

the authorized career workforce, replacing attrition, increasing supervisory staffing, and 

providing flexibility through part-time (pre-career) workforce.” Id.

Figure V-3 presents overall employee availability by month for FY 2021, FY 2022, and 

FY 2023.
Docket No. ACR2023 - 96 -

Figure V-3

Employee Availability, by Month, FY 2021–FY 2023

Source: January 12 Response to CHIR No. 1, question 1, Excel file “ChIRNo 1 Q1 Employee Availability Data;” Docket No. ACR2022, Responses of the 

United States Postal Service to Questions 1-13 of Chairman’s Information Request No. 3, January 17, 2023, question 3, Excel file 

“ChIR.3.Q.3.FY22_EmployAvailblty.xlsx” (Docket No. ACR2022, Response to CHIR No. 3); Docket No. ACR2021, Responses of the United States Postal 

Service to Questions 1-15 of Chairman’s Information Request No. 6, February 1, 2022, question 4, Excel file “ChIR.6 Q.4_Data_ChIR.1 Q.13b.xlsx” 

(Docket No. ACR2021, Response to CHIR No. 6).

Employee availability showed only a slight improvement in FY 2023 compared to both FY 

2022 and FY 2021 despite the fact that COVID-19 pandemic-related impacts should have 

abated. Monthly, it surpassed FY 2022 levels for 9 months of the year. Annually, there was a 

0.5 percent increase compared to FY 2022.

According to the Postal Service, as part of its efforts to improve the fluidity of its network, it 

began increasing staff levels in FY 2022, “aiming to enhance processing efficiency.” FY 2023 

ACR at 50. Specifically, it reports that it did so “by converting non-career employees to 

career in Mail Processing.”171 In this way, the Postal Service attempted to “improve the 

fluidity of [its] network” and update its operations as a whole. FY 2023 Division Report at 

1. The Postal Service explains that it maintained the increased staffing levels in FY 2023. 

FY 2023 ACR at 50.

The Postal Service represents that it has undertaken “efforts to increase the proportion of 

career employees, in the interest of greater seasonal resilience and improved service 

performance.” FY 2023 ACR at 2. However, these efforts appear to have had little impact on 

seasonal trends observed in employee availability. For all 3 years, maximum employee 

availability was consistently observed in March, hovering around 80 percent. Conversely, 

the lowest employee availability occurred in July for FY 2023 and FY 2021, at 73.5 percent 

171 Library Reference USPS-FY23-29, December 29, 2023, PDF file “FY23-29 Division Reports.pdf,” at 1 (FY 2023 Division Report).
Docket No. ACR2023 - 97 -

and 73.0 percent, respectively, and in January for FY 2022 at 71.4 percent.

172 The 

Commission finds that despite its efforts the Postal Service has been unable to mitigate 

seasonal fluctuations in employee availability.

The Commission recommends that the Postal Service analyze trends in employee availability 

and focus its efforts to reduce seasonal variation in employee availability to improve service 

performance.

Figure V-4 displays employee availability in FY 2023 by function: mail processing (Function 

1), delivery services (Function 2), and customer service (Function 4).

Figure V-4

Employee Availability, by Function, by Month, FY 2023

Note: A complete list of the Postal Service’s functions and Labor Distribution Codes appears in Docket No. R2006-1, Library Reference USPS-LR-L-55, 

May 3, 2006, folder “LR-L-55 electronic version (.doc & .excel),” folder “lr-l-55 part1,” PDF file “_Labor Distribution Codes.pdf.”

Source: January 12 Response to CHIR No. 1, question 1, Excel file “ChIR No 1 Q1 Employee Availability Data.”

172 The January 2022 employee availability was particularly challenged compared to January 2021 and 2023 due to the coronavirus omicron 

variant and a national labor shortage rendering it difficult to hire part-time workers. See Docket No. ACR2022, Library Reference USPS-FY22-29, 

December 29, 2022, PDF file “FY22-29 Service Performance Report.pdf,” at 6 (FY 2022 Service Performance Report).
Docket No. ACR2023 - 98 -

Figure V-4 provides insight into the fluctuation of employee availability, at the national 

level, throughout FY 2023. These data indicate that the Postal Service’s national employee 

availability was consistently lower for mail processing than delivery services and customer 

service. National employee availability for mail processing (Function 1) was most 

challenged in July, while both delivery services (Function 2) and customer service 

(Function 4) had the lowest availability in January 2023.

The Postal Service is unable to quantify the impact of employee availability on service 

performance. January 12 Response to CHIR No. 1, question 9. However, it identifies several 

steps that it took to address issues with employee availability. The Postal Service explains 

generally that a continuous hiring process is required to maintain the career workforce, 

replace attrition, and “provid[e] flexibility through part-time (pre-career) workforce.” 

January 26 Response to CHIR No. 6, question 3. It states that, though staffing levels for precareer employees remained consistent in most areas of the country, some regions 

experienced local staffing shortages. Id. To mitigate these shortages, the Postal Service 

explains that it worked with the National Association of Letter Carriers to identify “pockets 

of hard to hire locations,” after which the parties negotiated joint Memoranda of 

Understanding allowing for external hires to career positions. Id.

Additionally, the Postal Service explains that high employee turnover (i.e., employees 

leaving the Postal Service and being replaced with new hires) is “likely to be associated 

with lower service performance” because “[o]n-time service performance depends on 

timely completion of a sequential series of operational steps, and less experienced 

employees are likely to face greater challenges in completing their portion of these steps in 

the required time frame.” January 12 Response to CHIR No. 1, question 14.a.
Docket No. ACR2023 - 99 -

Figure V-5 displays employee turnover in FY 2023 by function:

Figure V-5

Monthly Turnover by Function, FY 2022–FY 2023

Source: January 12 Response to CHIR No. 1, question 14.c., Excel file “ChIR No. 1 Q14a Turnover PFC FY22-23.”
Docket No. ACR2023 - 100 -

The Postal Service reports that it is unable to quantify the magnitude of the relationship 

between employee turnover and service performance “because of the simultaneous 

occurrence of too many other variables.” January 12 Response to CHIR No. 1, question 14.a. 

The Commission analyzed this relationship by conducting a preliminary correlation 

analysis between turnover for different functions and service performance for several mail 

categories.173 The Commission confirms that there is a consistent negative relationship 

between Processing & Distribution turnover and service performance across various 

categories of mail. Additionally, the Commission finds that turnover in the Processing & 

Distribution function has the most significant impact on service performance in the month 

immediately following the employee turnover in question.174 This correlation persists, 

albeit slightly weakened, after 2 months before dropping off at 3 months and remaining 

relatively stable thereafter. This persistent negative correlation highlights the potential 

impact of turnover for this function on service performance, underscoring the importance 

of addressing turnover issues to maintain and improve service performance.

For the Logistics function, the Commission finds that although there is only a weak negative 

correlation between turnover and service performance, the impact of turnover on service 

performance is immediate and lasts into the subsequent month.175 For the Retail & Delivery 

function, the Commission observes a strong negative correlation between turnover and 

service performance for flat-shaped categories of mail, and weaker correlation between 

turnover and service performance for letter-shaped categories of mail.176

The Commission recommends that the Postal Service analyze the diverse impacts of employee 

turnover across functional areas to focus retention efforts where they are likely to yield the 

most benefit for service performance.

173 A preliminary correlation analysis was conducted on 2 years of monthly data encompassing turnover and performance metrics. It is 

important to note that the sample size of months falls below the typical threshold of 30, which is commonly used for robust statistical analysis. 

As such, the findings are considered preliminary and subject to revision as more data becomes available. The analysis focused on exploring 

correlations between turnover and service performance, as well as turnover and service performance at lags of 1, 2, 3 and 4 months. These 

correlations were examined separately for each functional area, including Logistics, Processing & Distribution, and Retail & Delivery, for nine 

categories of mail that include: (1) First-Class Mail Presorted Letters/Postcards 2-Day; (2) First-Class Mail Single-Piece Letters/Postcards 2-Day; 

(3) First-Class Mail Single-Piece Letters/Postcards 3-Day; (4) Outside County 3-Day; (5) Outside County 2-Day; (6) First-Class Mail Flats 2-Day; (7) 

USPS Marketing Mail Carrier Route 3-to-5-Day; (8) USPS Marketing Mail Flats; and (9) USPS Marketing Mail High Density and Saturation 

Flats/Parcels 3-to-5-Day.

174 The correlation coefficients for lags 0, 1, 2, and 3 are consistently negative for all categories of mail analyzed. This suggests a consistent 

inverse relationship between turnover in the Processing & Distribution area and service performance, regardless of the time lag considered. 

Many of the lag 1 correlations observed are clustered around the range of -0.5 to -0.6, indicating a moderate to strong negative correlation 

between turnover and service performance.

175 The Commission observes consistently negative correlations at lags 0 and 1 across all categories of mail. Correlation coefficients range from -

0.15 to -0.38 at lag 0 and from -0.16 to -0.34 at lag 1.

176 The Commission finds negative correlations at lags 0, 1, and 2. The largest magnitude of correlation is observed at lag 0, followed by a 

tapering off effect in subsequent lags. For flat-shaped mail, the correlation coefficients at lag 0 range from -0.44 for First-Class Mail Flats 2-Day 

to -0.74 for Periodicals Outside County 3-Day.
Docket No. ACR2023 - 101 -

C. TRANSPORTATION CHALLENGES

Transit has been a major area of concern in the Commission’s past evaluations of the Postal 

Service’s service performance results.177 The COVID-19 pandemic exacerbated the Postal 

Service’s challenges relating to transporting mailpieces that were destined for an address 

outside of the local service area from which the mailpiece was mailed.178 After completing 

origin processing, the Postal Service assigns mail to the air or surface network for 

transportation to a facility closer to the addressee. Because the Postal Service does not 

operate its own aircraft, it contracts with commercial airlines to rent space for mail on 

passenger flights as well as cargo-only flights.179 To move mail to the next facility via the 

surface network, the Postal Service may use contractors or Postal Service career employees 

as drivers. OIG Report No. 20-144-R20 at 8.

The Postal Service states that it considers surface transportation to be less expensive and 

more reliable than air transportation. FY 2023 ACR at 49. As such, the Postal Service 

asserts that it is working to transition from air to surface transportation as well as to 

“optimiz[e] [its] surface transportation network to reduce trips and improve utilization.” 

Id. To allow for this shift, it implemented new service standards for certain First-Class Mail 

and Periodicals and also changed the Periodicals’ CETs. Id. According to the Postal Service, 

based on the 8 months of FY 2023 when the new CETs were in effect for Periodicals, the 

CET changes improved the processing score by 2.8 percentage points.180

The Postal Service states that it is also “focus[ed] on merging letter and flat products into 

streamlined, shape-based mailflows as opposed to class-based mailflows” to “increase 

density in containers and trucks and facilitate greater use of ground transportation.” FY 

2023 Division Report at 1. The Postal Service also explains that local Divisions have been 

working with Headquarters Logistics to optimize surface transportation schedules, 

including by identifying “opportunities to create new service-responsive surface lanes to 

reduce reliance on the air network.” Id. at 3. Additionally, according to the Postal Service, 

“[t]rue transit root causes such as contractor failures are shared with Headquarters 

Logistics in order to develop mitigation plans.” Id.

177 See, e.g., FY 2022 ACD at 110-16; FY 2021 ACD at 112-17; FY 2020 ACD at 108-16; FY 2019 ACD at 106-12, 119-21.

178 Local service area, or local zone, refers to a nonnumbered zone that applies to mail deposited at any Post Office for delivery to addresses 

within the delivery area of that Post Office. This includes ZIP Codes assigned to postal facilities, Post Office Box sections, Caller Service, vertical 

improved mail units in buildings, and delivery units. See Postal Service Glossary of Postal Terms.

179United States Postal Service, Delivering for America: Our Vision and Ten-Year Plan to Achieve Financial Sustainability and Service Excellence, 

March 23, 2021, at 12, available at https://about.usps.com/what/strategic-plans/delivering-for-america/assets/USPS_Delivering-ForAmerica.pdf (“The Postal Service does not own planes and is forced to rely on third parties for air transport."); United States Postal Service, 

Office of Inspector General, Report No. 20-144-R20, Transportation Network Optimization and Service Performance, June 5, 2020, at 8, 

available at https://www.uspsoig.gov/sites/default/files/reports/2023-01/20-144-R20.pdf (OIG Report No. 20-144-R20).

180 See January 12 Response to CHIR No. 1, question 16, Excel file “CHIR No. 1 Q16 Periodicals CET.xlsx.” The Postal Service calculates this 

number by estimating the volume that would have been processed under the previous Periodicals’ CET, calculates the relevant processing 

score, and compares that score to the actual FY 2023 results. See id.
Docket No. ACR2023 - 102 -

The Postal Service tracks surface trips that arrive more than 4 hours late, referred to as 

CLTs.181 The Postal Service states that “[t]he CLT is identified by [comparing] the actual 

arrival scan [to the] scheduled arrival scan at the destination facility.”182

Figure V-6 illustrates the number of CLTs for First-Class Mail on highway contract routes 

(HCRs) on an annual basis for FY 2022 and FY 2023.

Figure V-6

First-Class Mail CLTs for HCRs, by Area and Nation, FY 2022–FY 2023

Source: January 12 Response to CHIR No. 1, question 3, Excel file “ChIR No. 1 Q3a CLT Added FY2022 and FY2023 SV;” Docket No. ACR2022, Library 

Reference USPS-FY22-29, December 29, 2022, Excel file “CLT FY22 11.20.2022.xlsx;” Docket No. ACR2021, Response of the United States Postal 

Service to Question 1 of Chairman’s Information Request No. 19, February 24, 2022, question 1.

181 February 9 Response to CHIR No. 9, question 9.a.; Docket No. ACR2015, Responses of the United States Postal Service to Questions 1-20 of 

Chairman’s Information Request No. 22, November 15, 2016, question 12.b.i.

182 Docket No. ACR2017, Responses of the United States Postal Service to Questions 1-19 of Chairman’s Information Request No. 2, January 17, 

2018, question 7.b.iii.; Docket No. ACR2019, Responses of the United States Postal Service to Questions 1-41 of Chairman’s Information 

Request No. 4, January 24, 2020, question 30.b.
Docket No. ACR2023 - 103 -

In FY 2023, the Postal Service implemented a change in its data source for reporting on 

CLTs. January 12 Response to CHIR No. 1, question 3.a. Previously, CLT data was collected 

through the legacy system, which derived information from the Enterprise Data 

Warehouse. See January 26 Response to CHIR No. 6, question 2.b. The new data source for 

CLT reporting utilizes the Surface Visibility (SV) CLT dashboard, which accesses surface 

transportation scan data directly from the SV database. Id. According to the Postal Service, 

the updated approach incorporates the latest organizational structure and network 

changes, including facility activations and deactivations. Id. For comparison purposes the 

Postal Service provided data using both the legacy and the new system. See id. question 2.c. 

The following analysis is based on CLTs measured using the SV CLT dashboard.

The number of nationwide First-Class Mail CLTs for HCRs experienced significant 

fluctuations over the last few years. CLTs notably increased from FY 2020 to FY 2021, then 

tapered off slightly in FY 2022.183 In FY 2023 all districts saw a decline in CLTs compared to 

FY 2022. See January 26 Response to CHIR No. 6, question 2.c.

The cause for a given CLT is determined by platform personnel during operations using 

their own observations and information from the supplier operating the trip.184 CLTs 

designated as caused by the Postal Service include those related to dock congestion and 

operations, “late inbound [and] late outbound,” dock personnel issues, mail processing 

issues, late processing, cancelled trips, failure to bring mail to the loading dock, equipment 

and mechanical failures, “station/customer service op[erations],” customer delay, schedule 

failure, driver unavailability, “load after depart,” and “late inbound PVS.”185 CLTs 

designated as caused by outside forces are those due to “traffic, weather, construction, and 

accidents.” Docket No. ACR2021, Response to CHIR No. 9, question 2. The Postal Service 

does not define what specific incidents constitute contractor failures. See id.

Figure V-7 shows the number of total CLTs for all products, disaggregated by responsible 

party for FY 2022 and FY 2023.186

183 January 12 Response to CHIR No. 1, question 3, Excel file “ChIR No. 1 Q3a CLT Added FY2022 and FY2023 SV.”

184 Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-29 of Chairman’s Information Request No. 1, January 18, 

2022, question 28.a.

185 See Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-22 of Chairman’s Information Request No. 9, 

February 7, 2022 (Docket No. ACR2021, Response to CHIR No. 9), Excel file “ChIR.9 Q2_Late Trip Reasons FY21 vs FY20.xlsb.”

186 The Commission has reservations about relying on the Postal Service's categorization of CLTs, especially considering the deficiencies in the 

current system that have been highlighted through the Postal Service's explanation of the benefits of transitioning to the Integrated Logistics 

Environment (ILE). The current system depends on manual scans by Postal Service dock employees to record on-time arrivals and departures. 

This reliance may lead to an overinflation of CLTs categorized as contractor failures, as trucks waiting in line may not receive immediate scans. 

See February 2 Response to CHIR No. 7, question 7.
Docket No. ACR2023 - 104 -

Figure V-7

Total CLTS, by Responsible Party, FY 2022–FY 2023

Source: January 12 Response to CHIR No. 1, question 3, Excel file “ChIR No. 1 Q3a CLT Added FY2022 and FY2023 SV.xlsb.”

Not only did total CLTs decrease between FY 2022 and FY 2023, Postal Service-caused 

CLTs, contractor-caused CLTs, and CLTs caused by outside factors (e.g., weather delays) all 

decreased in FY 2023. Contractor-caused CLTs decreased the most significantly from 

62,071 in FY 2022 to 30,038, which represents a decrease of 51.6 percent, decreasing the 

share of Contractor-caused CLTs from 69.1 percent to 64.3 percent.

Figure V-8 presents the distribution of causes as a percent of total annual CLTs for FY 2022 

and FY 2023.
Docket No. ACR2023 - 105 -

Figure V-8

Total CLTS and Proportional Representation, by Responsible Party, FY 2022–FY 2023

Source: January 12 Response to CHIR No. 1, question 3, Excel file “ChIR No. 1 Q3a CLT Added FY2022 and FY2023 SV.xls.”

This data illustrate that the distribution of CLT causes remained relatively consistent 

between FY 2022 and FY 2023, with contractors responsible for the majority of CLTs in 

both years.

Although the Postal Service tracks the number of CLTs, it remains unable to quantify the 

impact of CLTs on service performance results. See January 12 Response to CHIR No. 1, 

question 10. The Postal Service states that it attempted to remediate CLTs through 

initiatives focused on achieving operational clearance targets, addressing issues with 

supplier performance, and training and developing employees. See January 12 Response to 

CHIR No. 1, question 3.b.

In terms of CLTs caused by late processing and containers that were not ready to load, the 

Postal Service states that it has retained the additional processing employees that were 

added in the past 2 years and continues to expand “package sort[] capacity” and refine each 

facility’s operating plan “ensuring timely clearance and adherence to service standards.”187

According to the Postal Service, it measures Operating Plan Precision (OPP) in an effort to 

understand how each facility is dispatching mail in a timely manner. Library Reference 

USPS-FY23-29 Preface at 12. It also states that its introduction of the “Operational 

187 Library Reference USPS-FY23-29, December 29, 2023, PDF file “FY23-29 Preface.pdf,” at 12 (Library Reference USPS-FY23-29 Preface).
Docket No. ACR2023 - 106 -

Engineer” and “Operational Support Specialists,” as well as the Ground Advantage product, 

has led to a better understanding of mail routing, labeling, and dispatching, thus increasing 

service performance. Id. at 13.

In terms of CLTs related to supplier performance, the Postal Service states that it has 

“conducted[] regular training sessions for field personnel” designed to increase their 

understanding and management of supplier performance. Id. The Postal Service also 

continues to assert that it is considering the implementation of liquidated damage contract 

clauses to address supplier-caused CLTs and it explains that it has developed a new 

contract management system (CLEAR) that, along with its new ILE, “will enable all the 

other process improvements that the Postal Service wants to implement, including, 

potentially, a method for assessing remedies for late trips.” January 12 Response to CHIR 

No. 1, question 4.a. The Postal Service explains that, prior to ILE, its primary source of 

arrival and departure information was manual scans by employees, but that ILE “enables 

enhanced tracking and visibility into Highway Contract Route (HCR) trip arrival and 

departure times using multiple sources to include EDI, GPS, and scanning at the dock, 

allowing for improved accuracy for on-time performance tracking.” February 2 Response to 

CHIR No. 7, question 7.b. According to the Postal Service, this enhanced tracking (unlike 

manual scans, which do not provide a reliable basis for assessing actual truck 

transportation performance), “will provide the level of accuracy needed to support the 

assessment of damages.” Id. The Postal Service expects to migrate all its HCR contracts to 

CLEAR—a necessary step in transitioning to ILE—by the end of FY 2024. Id. question 7.f.

As CLTs can result in delayed inventory, which negatively impacts service performance, the 

Commission examines monthly inventory delays. Figure V-9 shows the delayed inventory 

by month for FY 2021 through FY 2023.188

188 “Delayed inventory” is defined as “mailpieces that remain on hand at their facility and that have not received their next expected processing 

operation scan by 0659 for destinating final processing operations and 0600 for all other operations.” Docket No. ACR2021, Response of the 

United States Postal Service to Question 1 of Chairman’s Information Request No. 22, February 28, 2022, question 1.
Docket No. ACR2023 - 107 -

Figure V-9

Delayed Inventory, by Month, FY 2022–FY 2023

Source: Response to CHIR No. 1, question 8, Excel file “ChIR No. 1 Q8a FY23 Delayed Inventory.xlsx.”

As depicted in Figure V-9, inventory delays remained relatively stable throughout FY 2023, 

mirroring patterns observed in FY 2022. Similar to the previous fiscal year, delays were 

more prevalent during the early months of the fiscal year. Notably, December posed the 

greatest challenge for First-Class Letters and Flats in both years. For USPS Marketing Mail, 

more significant delays were observed in October and November, with approximately 600 

million delays recorded for both in FY 2022 and approximately 700 million delays 

recorded for both in FY 2023. In the case of Periodicals, inventory delays fluctuated from a 

low of 65 million pieces in May 2022 to a peak of 125 million pieces in July 2022.

Because decreasing CLTs represents an opportunity to improve service performance across 

many products and categories, the Commission recommends that the Postal Service prioritize 

the migration to CLEAR and the full implementation of its ILE as soon as possible. The 

Commission also recommends that continued consistent monitoring of delayed inventory to 

mitigate other transportation backlogs.

D. OPERATIONAL CHANGES BY THE POSTAL SERVICE

In the past several years, the Postal Service claimed that unprecedented package volume 

contributed to decreased Market Dominant service performance during the Postal Service’s 

peak season and subsequent months. See FY 2021 ACD at 117. Specifically, as a result of the 

COVID-19 pandemic, many people increased their reliance on e-commerce and mailordering, which consequently increased the demand for packages in FY 2020 and FY 2021, 

leading to a variety of compounding issues. Id. More information regarding these mail mix 

changes and their effects on service performance is available in the Commission’s FY 2021 

ACD. See FY 2021 ACD at 117-19.

In March of 2021, the Postal Service published its DFA Plan, one of the goals of which was 

to achieve service excellence (defined, as explained above, as meeting or exceeding 95 
Docket No. ACR2023 - 108 -

percent on-time delivery for all products). FY 2023 ACR at 48. The Postal Service explains 

that the DFA Plan “is a living plan” that is constantly being evaluated and updated and that, 

pursuant to the DFA Plan, “the Postal Service makes operational adjustments on a regular 

basis, at the local, district, division, and national level.” January 19 Response to CHIR No. 1, 

question 17.a.

The Postal Service identifies the Richmond Regional Processing and Delivery Center 

(RPDC) as an example of “both the complications that can arise in implementation, and how 

[the Postal Service has] learned and made adjustments to [its] DFA initiatives to improve 

execution.” Response to CIR No. 1. It explains that, after several issues arose after the July 

29, 2023 implementation of the Richmond RPDC that impacted regional service 

performance, it dispatched a team of 20 employees "from Headquarters to identify and 

correct for errors,” including preexisting weaknesses in the facility, “issues with machine 

sort plans and adherence to the operating plan following activation, issues with the 

transportation schedule and its alignment with operations, and issues with staffing and 

scheduling.” Response to CIR No. 1, question 1; February 9 Response to CHIR No. 9, 

question 8. The Postal Service asserts that it used the lessons learned in Richmond to 

adjust the planning and execution processes for other RPDCs. Response to CIR No. 1, 

question 1.

In response to numerous information requests, and despite the Postal Service repeatedly 

emphasizing the importance of the DFA Plan on its future service performance, the Postal 

Service did not share meaningful information about the implementation of the plan and its 

anticipated impact; instead, it generally reiterated the talking points it had previously made 

in its press releases. See, e.g., January 19 Response to CHIR No. 1, question 17.a. The 

Commission has opened Docket No. PI2023-4 to examine the recent and anticipated 

network changes related to the DFA Plan and more information can be found in that 

ongoing docket.

To effectuate the DFA Plan and to respond to the mail mix shifts that coincided with the 

COVID-19 pandemic (declining mail volume), the Postal Service began to implement a 

variety of operational changes. For instance, the Postal Service explains that it undertook 

“facility space upgrades to correct [ ] years of underinvestment and deferred maintenance, 

and procurement of new processing equipment.” FY 2023 ACR at 49. The Postal Service 

also indicates that during the first 2 years of implementation of the DFA Plan, and in order 

“to move mail and packages more cost effectively and deliberately across the Nation,” it 

“aggregate[d] processing facilities into both RPDCs and newly designed Local Processing 

Centers (LPCs).” January 25 Response to CHIR No. 2, questions 62.a-62.b. While RPDCs 

“form the backbone of the future network,” “LPCs are designed to connect RPDCs to 

delivery operations with the primary mission of sorting letter and flat mail to carrier route 

or delivery walk sequence and serving as a transfer center to aggregate product on its way 

to delivery.” Id. The Postal Service explains that “[c]reating the LPC operation as a separate 

and distinct functional unit from the network RPDC function will allow the Postal Service to 

standardize operations across regions and provide specific management focus on local 
Docket No. ACR2023 - 109 -

letter and flat operations” and should result in “significant operational and logistics 

savings.” Id. The Postal Service also states that, in furtherance of “Delivery Unit Removal,” it 

is evaluating “space constrained facilities, facilities with expiring leases, or facilities that 

have experienced other operational impacts that may trigger them to be relocated to 

another facility” in order to determine their compatibility with the DFA Plan. Id. Despite the 

Postal Service’s avowed reliance on these facility-related initiatives, the Postal Service is 

unable to determine how these changes impacted FY 2023 service performance. See id.

question 62.d.

The Postal Service also reports “extensive preparation and planning for the peak holiday 

season at all levels of the organization, including hiring efforts, investments, and 

operational precision improvements.” FY 2023 ACR at 50. Specifically, these efforts 

included “acquiring long-term Package Support Annexes (PSAs), continuing to purchase 

additional package sorting machines in sites with capacity shortfalls in order to process 

more volume by machine and less manually, and creating a larger standing career

workforce by converting non-career employees to career in Mail Processing.” FY 2023 

Division Report at 1. The Postal Service explained that, while these strategies were driven 

by the influx of packages, they have benefited service performance for all mail products. Id.

The Postal Service also emphasizes its efforts to “right-size” its mail processing equipment 

to fit current and projected mail volumes. See FY 2023 ACR at 49. Specifically, this involved

removing excess Flats Sequencing System machines that were not needed for the current 

Flats volume. Id. However, the Postal Service is again unable to determine whether this 

effort resulted in improved service performance, other than noting that service 

performance has generally improved since it intensified its efforts to right-size mail 

processing in FY 2021. February 2 Response to CHIR No. 7, question 1.

The Postal Service also states that it continued to work with facilities to create site-specific 

operating plans (SSOPs) “to streamline operations and set predictable, service-responsive, 

achievable goals for operational clearance times.” See FY 2023 ACR at 50. According to the 

Postal Service, this represented a change from its previous adherence to network-wide 

operating plans and clearance goals. FY 2023 Division Report at 1. The Postal Service notes 

that in FY 2023, it exceeded its nationwide target for OPP, which it associates with an 

increase in service performance.189 It explains that the SSOPs “are expected to continue to 

improve service performance in each Division by providing more precision and 

predictability in mail processing operations.” Id. at 2.

In the materials provided by the Postal Service along with its FY 2023 ACR, it generally 

describes several other initiatives aimed at improving service performance. See, e.g., 

FY 2023 Service Performance Report at 7-21; FY 2023 Division Report at 2-4. The Postal 

189 Id. at 1-2. OPP “is the percentage of achieved operating plan based on site-specific designed operating plans” and “is measured as the pass 

or fail of the major operational groupings that are run within a facility (i.e., cancellations, outgoing primary, outgoing secondary, incoming 

primary, Delivery Point Sequencing, etc.)” Id. at 2. Each facility has one OPP score, which is the aggregate of the daily scores for each of the 

facility’s operational groupings. Id.
Docket No. ACR2023 - 110 -

Service reports that it generally cannot quantify the impact that any individual initiative 

has on service performance. January 12 Response to CHIR No. 1, question 11.a. It states that 

attempting to make such an assessment would require developing the appropriate 

analytical framework and the value of any results, in its estimation, “would not justify the 

effort and expense of attempting to” develop such a framework. Id. questions 11.b-11.d.

As in previous years, the Commission finds the Postal Service’s inability to quantify the 

impact of any of its improvement initiatives—particularly those related to nationwide 

changes in the nature of postal services—problematic. For an improvement initiative to be 

successful, it must be possible to identify its impact and determine if the initiative had the 

desired effect on service performance results. The Postal Service generally claims that 

there is no way to tell how any one individual improvement initiative contributed to overall 

service performance scores in internal service performance measurement (SPM).190 The 

Commission also continues to find that narrative reporting and quantifiable data regarding 

the Postal Service’s progress are imperative to ensure transparency and accountability of 

the Postal Service’s improvement initiatives. Consequently, the Commission directs the 

Postal Service to provide additional information, as described in Sections V.A.4.a.(6), b.(6), 

c.(6), d.(6), and e.(6), infra.

The Commission recommends that the Postal Service develop an independent method to 

enable it to isolate and measure the impact of specific improvement initiatives on service 

performance.

E. COMMENTS AND RELATED COMMISSION ANALYSIS

Comments specific to each class of mail are summarized and responded to in Section V.A.4., 

infra. The comments (and reply comments, if applicable) that pertain more generally to 

events affecting service performance for all Market Dominant products in FY 2023 are 

organized by topic, summarized, and responded to below.

FY 2023 Service Performance Targets and Service Standards. The Public Representative 

points out that the Postal Service has raised its service performance targets modestly from 

FY 2022 through FY 2024 but that, while many of the targets are not set at or near 95 

percent (as contemplated by the DFA Plan), “there remains considerable work to do to 

attain that level of service performance.” PR Comments at 48. He observes that “[t]he 

significance to be attached to an on-time service performance target depends upon its 

purpose and upon the adequacy of the basis for its selection.” Id. at 47. He asserts that if the 

purpose of the targets is to provide an incentive to improve service performance, a higher 

target is appropriate, while if the purpose is to give customers a reliable expectation of 

what service is to be expected, a more moderate, realistic target is in order; if the purpose 

is both, a balance must be struck. Id. He asserts that in any case, the Postal Service should 

identify the target’s purpose and supporting basis. Id.

190 See, e.g., Docket No. ACR2022, Response to CHIR No. 11, question 12.a.; see also Docket No. ACR2022, Response to CHIR No. 7, question 

30.a.
Docket No. ACR2023 - 111 -

The Public Representative contends that a similar balance must be struck in the case of 

service standards: where service standards are unattainable, they should be lowered, but 

“beyond a point, achieving their targets by lowering service standards is fruitless” and 

becomes a “race to the bottom.” Id. at 48.

In its comments, PostCom notes that, “despite the fact that the Postal Service has 

unconstrained freedom to set its own performance targets and measures its own 

performance,” it has never met its yearly service performance goals. PostCom Comments at 

11. It also states that, in FY 2023, the Postal Service “fell well short” of the 95 percent DFA 

goal for service performance, not to mention the Postal Service’s own self-imposed targets. 

Id. Additionally, it notes that the Postal Service has set targets after the beginning of the 

relevant fiscal years, allowing it “to account for all possible [impediments] to target 

attainment.” Id. PostCom concludes that “customers are not receiving the level of service 

for which they are being charged” and the Commission should therefore determine that the 

Postal Service is in violation of the requirements of chapter 36 of the United States Code 

and should withhold rate authority until compliance is demonstrated. Id.

NPPC commends the work of postal employees and “appreciates that the Postal Service is 

working to improve service performance.” NPPC Comments at 8. Nevertheless, NPPC 

reiterates its previously expressed sentiment that service performance targets should 

match service standards and that anything less “means that the Postal Service plans to 

provide service that is less good than advertised.” Id. at 9.

In response, the Postal Service rejects any contention that its service performance is not 

improving, pointing out that “although not every FY 2023 performance goal was achieved, 

service performance continued to improve year-over-year, with FY 2023 performance 

eclipsing FY 2022 results for nearly all products and categories.” Postal Service Reply 

Comments at 24, 27-28. The Postal Service also explains that it is required by statute to set 

“reasonable targets” for service performance and that these targets “sought to establish 

realistic goals for its market-dominant products based on its careful consideration of prior 

year performances and expected operational capabilities and anticipated improvements.” 

Id. at 26-27. The Postal Service also specifically disputed NPPC’s suggestion that targets 

should be set at the level of its service standards, stating that given “real-world 

circumstances,” a network could never achieve such a goal. Id.

The Commission recommends that the Postal Service provide greater clarity regarding the 

purpose and basis behind changed targets to help the Commission evaluate the 

reasonableness of such targets and promote public transparency.

Other subjects. The Public Representative states that he “believes that the Postal Service’s 

transportation initiatives should have a positive effect on service performance, particularly 

for products featuring three-day and longer service standards, but only if implemented 

zealously across the entire network, which will be quite challenging.” PR Comments at 79. 

He also states that it appears that these initiatives are already having a positive impact 
Docket No. ACR2023 - 112 -

given the “significant decrease” in CLTs in FY 2023. Id. Further, he notes, in relation to 

initiatives targeted at monitoring facilities and routes reporting delayed mail, that he is 

encouraged by the Postal Service’s focus on delayed mail, but cautions that it “may not be 

just a ‘blip’ in terms of service performance scores” and notes that it is clearly “of 

considerable concern to those areas where this occurs, many of which need the Postal 

Service the most.” Id. at 80.

The Commission reiterates its expectation that the Postal Service continue to consistently 

monitor and leverage CLTs and delayed inventory metrics to improve the efficacy of its 

transportation initiatives.

TPA states that the Postal Service suffered a “decline in on-time performance” and that this 

decline was “the direct result of hiring fewer part-time workers to facilitate holiday 

deliveries.” TPA Comments at 1. It notes that “[i]nstead of hiring a significant holiday 

workforce to adequately meet consumer demands, the agency limited itself to hiring just 

10,000 workers for the November-December 2023 (FY 2024 Quarter 1) while raising the 

salary cap for managers, supervisors, and postmasters, which it claims limited the Postal 

Service’s delivery capacity. Id.

The Commission recommends that the Postal Service continue to consider options to 

maximize peak season staffing for November-December 2024 (FY 2025 Quarter 1) to ensure 

that it is able to maintain consistent levels of service performance throughout this period.

F. COMMISSION ANALYSIS OF OVERALL FY 2023 IMPACTS 

AND FY 2024 OUTLOOK

Though service performance generally improved in FY 2023 compared to FY 2022, the 

Postal Service must continue to focus on improving service performance so that it meets 

the Postal Service’s ultimate goal of 95 percent on-time for all Market Dominant products 

as well as the expectations broadly held by the general public. See FY 2023 ACR at 50-51, 

54.

As discussed above, to improve service performance and meet the challenges of a changing 

postal environment, the Postal Service implemented several initiatives as part of its DFA 

Plan, including revising service standards and CETs and significantly altering its 

transportation network. The Postal Service repeatedly represents that these changes 

resulted in increased on-time service performance results in FY 2023. However, the 

Commission cannot specifically attribute the improved on-time results to any of the

initiatives instituted by the Postal Service (as opposed to outside factors) since the Postal 

Service remains unable to measure their impact.

The Commission recommends that the Postal Service develop an independent method to 

enable it to isolate and measure the impact of specific improvement initiatives on service 

performance. In particular, the Commission encourages the Postal Service to develop a 

method that would enable it to measure the impact of changes associated with requests for 
Docket No. ACR2023 - 113 -

advisory opinions under 39 U.S.C. § 3661, given that the Postal Service often justifies such 

changes with expectations about service performance effects made prior to implementation.

As part of the PSRA, Congress directed the Postal Service to develop and maintain a 

publicly available online “dashboard” that provides weekly service performance data for 

Market Dominant products. See 39 U.S.C. § 3692(c). In Docket No. RM2022-7, the 

Commission issued final regulations codifying the reporting requirements for this 

dashboard and the Postal Service has since posted this dashboard online.191

As explained above, the Postal Service states that it is committed, as part of its DFA Plan, to 

eventually achieving 95 percent on-time service performance across all product categories. 

FY 2023 ACR at 54. To this end, it asserts that it will “continue to implement the 

operational, technological, and employee training initiatives set forth in the Plan to 

improve the mail and package delivery process.” Id. It notes that it expects these initiatives 

to lead to increased service performance in FY 2024 and has generally increased its service 

performance targets accordingly. Id. at 57.

G. COMMISSION FINDINGS AND DIRECTIVES

Of the 27 Market Dominant products/categories measured, 15 products/categories (55 

percent) failed to meet their targets in FY 2023. See Figure V-2, supra. The 

products/categories that failed to meet their targets in FY 2023 represented 35.9 percent 

of Market Dominant mail volume.192 This is the 9th year in a row that more than 48 percent 

of products/categories have failed to meet their targets. The Commission will continue to 

monitor the Postal Service’s efforts to improve service performance through its class- and 

product-specific directives, as discussed in Sections V.A.4.a.(6), b.(6), c.(6), d.(6), and e.(6), 

infra.

The Commission directs the Postal Service to improve service performance results to achieve 

the applicable on-time percent target level for these non-compliant products in FY 2024. The 

Commission has specifically developed directives designed to increase transparency regarding 

service performance for non-compliant products. These directives elicit data from the Postal 

Service and information on the steps that the Postal Service will have to take to restore 

service performance for those products in FY 2024. These directives include continued Postal 

Service reporting of specific information developed from its internal metrics within 90 days of 

the issuance of this ACD and as part of the Postal Service’s FY 2024 ACR.

191 See Order No. 6439; United States Postal Service, Service Performance, available at https://about.usps.com/what/performance/serviceperformance/external-service-measurement.htm.

192 The Commission calculated this figure based on the targets, on-time performance information, and volumes for each product reported in 

Library Reference USPS-FY23-29, December 29, 2023, folder “MD Service Performance Results.”
Docket No. ACR2023 - 114 -

3. FY 2023 Service Performance Measurement 

Systems

The Postal Service began reporting service performance results for most Market Dominant 

products in the third quarter of FY 2011. Since then, the Postal Service’s measurement 

systems have evolved. Figure V-10 identifies the systems used by the Postal Service during 

FY 2023 to measure service performance for Market Dominant products. The Commission 

uses the following acronyms and abbreviations: IMb for “Intelligent Mail barcode,” PTR for 

“Product Tracking and Reporting System,” and Internal SPM for “Internal Service 

Performance Measurement System.”

Figure V-10

Service Performance Measurement Systems, FY 2023

Source: Library Reference USPS-FY23-29, PDF file "FY23-29 Methodologies Report.pdf" (FY 2023 Methodologies Report).
Docket No. ACR2023 - 115 -

A. INTERNAL SERVICE PERFORMANCE MEASUREMENT 

SYSTEM (INTERNAL SPM)

Effective in FY 2019 Quarter 1, the Postal Service began to use Internal SPM to generate 

data to report service performance results for products within domestic First-Class Mail, 

Periodicals, USPS Marketing Mail, and Package Services.

193 Accordingly, service 

performance results for these mailpieces are comparable for FY 2019 through FY 2023. 

Beginning in FY 2021, Outbound Single-Piece First-Class Mail International, Inbound Letter 

Post, and Return Receipt-Green Card (a component of Ancillary Services) have also been 

measured by Internal SPM.194

Internal SPM divides measurement into the following three independent segments. First 

Mile, which applies only to Single-Piece First-Class Mail, measures the time between 

collection and the first processing operation. FY 2023 Methodologies Report at 1; Order 

No. 4697 at 17-19. The Postal Service uses a sample of collection box mail as a component 

for the First Mile measurement. See Order No. 4697 at 58. Only mail with a unique 

identifier, such as an IMb deposited in collection boxes, office buildings, and retail facilities 

is eligible to be sampled. See id. at 17-18. During collection, a mail carrier receives a prompt 

to scan a set number of mailpieces, as randomly determined pursuant to the sample frame. 

See id. at 18. The scan data from the sampled mailpieces when the pieces reach the 

cancellation operation are used to start the clock of the first mile measurement. See id. at 

18-19. The Postal Service targets 200 collection box samples per week, per district.195 In FY 

2023, the Postal Service sampled 3.9 million Single-Piece First-Class Mail mailpieces. March 

12 Response to CHIR No. 17, question 4. Processing Duration measures the time between 

the first processing operation, captured by a mail processing equipment scan, and the last 

processing operation.196 Last Mile measures the time between the last processing 

operation and final delivery. FY 2023 Methodologies Report at 1; Order No. 4697 at 17-19. 

The Postal Service uses a sample of delivery mail for the Last Mile measurement. See Order 

No. 4697 at 19. Final delivery is recorded when a carrier is prompted to scan mailpieces 

upon arrival at a delivery point. See id. The Postal Service targets 500 delivery point 

samples per day, per district.197 The Postal Service sampled 11 million Single-Piece FirstClass Mail mailpieces in FY 2023. March 8 Response to CHIR No. 17, question 8. Overall 

193 See Docket No. PI2015-1, Order Approving Use of Internal Measurement Systems, July 5, 2018, at 17-19, 21, 66-67 (Order No. 4697); Docket 

No. PI2015-1, Errata to Order No. 4697, August 21, 2018 (Order No. 4771); Docket No. ACR2022, Library Reference USPS-FY22-29, December 

29, 2022, PDF file “FY22-29 Methodologies Report.pdf,” at 1 (FY 2022 Methodologies Report); see also Docket No. PI2018-2, Order 

Conditionally Approving Modifications to Market Dominant Service Performance Measurement Systems, November 5, 2018 (Order No. 4872). 

The measurement systems used prior to FY 2019 are discussed in the FY 2019 ACD. FY 2019 ACD at 92-93.

194 See Docket No. PI2019-1, Order Granting Request and Approving Use of Internal Service Performance Measurement System, July 1, 2020, at 

10-11 (Order No. 5576).

195 Docket No. PI2015-1, Library Reference USPS-LR-PI2015-1/1, October 29, 2015, PDF file “USPS.StatPlan.Tech.Conf.10.28.15.pdf,” at 10.

196 FY 2023 Methodologies Report at 1. Mailpieces for which the first processing scan is the same event as the last processing scan may be 

included in measurement of Processing Duration. Order No. 4697 at 19 n.40.

197 Docket No. PI2015-1, Library Reference USPS-LR-PI2015-1/1, October 29, 2015, PDF file “USPS.StatPlan.Tech.Conf.10.28.15.pdf,” at 24.
Docket No. ACR2023 - 116 -

service performance time is obtained by applying the first and last mile factors to the 

processing duration measurement.

The Commission requires the Postal Service to continue its external auditing program and 

file quarterly audit reports regarding Internal SPM.198 The Commission also recommends 

that the Postal Service build on its existing audit program so that the audit captures not 

simply process (whether the Internal SPM is being implemented according to its design) but 

also results (whether the measurement system is representative, reliable, and accurate).

B. PRODUCT TRACKING AND REPORTING SYSTEM (PTR)

The Postal Service measures service performance for parcels using PTR, a system that 

records all scan events captured from USPS Marketing Mail Parcels, Bounded Printed 

Matter (BPM) Parcels, and Media Mail/Library Mail with a trackable service feature. FY 

2023 Methodologies Report at 8. PTR is based on over-the-counter and delivery 

confirmation scans of retail products, as well as barcode scans of parcels that utilize the 

Postal Service’s tracking service.199 PTR uses the scan data to track a package from 

acceptance (start-the-clock) through delivery (stop-the-clock). See Docket No. ACR2016, 

February 17 Response to CHIR No. 16, question 3.

C. INTELLIGENT MAIL BARCODE (IMB) USED TO TRACK MAIL 

IN SPM

An IMb is a barcode applied to a mailpiece either by the mailer or by the Postal Service that 

generates Informed Visibility electronic scan data that can be used to track mailpieces as 

they pass through automated scan operations.200 These barcodes are also used to track the 

collection and delivery of mailpieces via the collection box and Last Mile samples. Mailers 

receive a discount for applying an IMb to mailpieces prior to entering them into the 

mailstream. However, for various reasons, the Postal Service is not able to include all IMb 

mailpieces in its performance measurement system. As discussed below, the leading causes 

for the exclusion of IMb pieces from service performance measurement involve a lack of 

scan data captured by the Postal Service.

198 See Order No. 4697 at 67. This requirement has been codified by regulation in 39 C.F.R. § 3055.31(i).

199 Docket No. ACR2016, Responses of the United States Postal Service to Questions 2-4 and 7-13 of Chairman’s Information Request No. 16, 

February 17, 2017, question 3 (Docket No. ACR2016, February Response to CHIR No. 16).

200 See United States Postal Service, Mailing Standards of the United States Postal Service, Domestic Mail Manual, January 21, 2024, 

§ 507.10.1.1 (DMM).
Docket No. ACR2023 - 117 -

Figure V-11 displays the percentage of total mailpieces entered into the mailstream that 

are measured by Full-Service IMb for FY 2021, FY 2022, and FY 2023.

Figure V-11

Nationwide Market Dominant Mail Measured by Full-Service IMb,

by Percentage, by Quarter, FY 2021–FY 2023

Note: BPM Flats is the only Package Services product measured using IMb; the remaining Package Services products are measuredusing PTR. FY 2023 Service 

Performance Report at 14-15.

Source: January 19 Response to CHIR No. 2, question 55; Docket No. ACR2022, Responses of the United States Postal Service to Questions 1-13 of Chairman’s 

Information Request No. 3, January 17, 2023, question 10.

Less than 70 percent of presort First-Class Mail was included in measurement each quarter 

of FY 2023. The Postal Service has not had a quarter where 70 percent of all presorted

First-Class Mail volume was included in service performance measurement since FY 2019 

Quarter 4, in which it measured 70.84 percent of presort First-Class Mail volume.201

Similarly, the FY 2023 volume in measurement for USPS Marketing Mail fluctuated 

between 65 and 71 percent, with 68 percent of volume included in measurement for the 

fiscal year. Approximately 50 percent of Periodicals were included in measurement in each 

quarter of FY 2023. For Package Services in FY 2023, the percentage of mailpieces 

measured by IMb peaked in the second and third quarters at 30 percent and slipped down 

to 25 percent in Quarter 4.

201 Docket No. ACR2019, Responses of the United States Postal Service to Questions 1-22 of Chairman’s Information Request No. 3, January 21, 

2020, question 21.
Docket No. ACR2023 - 118 -

The Commission has monitored trends in Full-Service IMb measurement since the Postal 

Service began using IMb to track service performance because the more mailpieces that are 

in measurement, the more representative, accurate, and reliable service performance 

results will be.202 The Postal Service has not meaningfully increased the percent of presort 

First-Class Mail, USPS Marketing Mail, or Periodicals in measurement since FY 2017. Since 

FY 2017, presort First-Class Mail and USPS Marketing Mail in measurement has stagnated 

near 65 percent and Periodicals has stagnated near 50 percent in measurement. When IMb 

was first introduced, one of the obstacles to increasing the volume in measurement was 

obtaining widespread adoption of the Full-Service IMb by presort First-Class Mail and USPS 

Marketing Mail users.203 However, as shown in Table V-1, the primary obstacle to 

increasing the volume in service performance measurement in FY 2023 is the limitations of 

the Postal Service’s operational data.

Among other things, the Postal Service must provide regular, detailed information 

concerning mailpieces included and excluded from measurement, as well as the reasons for 

exclusion. See 39 C.F.R. § 3055.2(n).

Table V-1 displays the percentage of mail that received the Full-Service IMb discount and 

was included in measurement, and the percentage of mail that received the Full-Service 

IMb discount but was excluded from measurement since FY 2021.

202 See, e.g., FY 2015 ACD at 99-102; FY 2016 ACD at 96-99; FY 2017 ACD at 103-06; FY 2018 ACD at 133-36; FY 2019 ACD at 98-101; FY 2020 ACD 

at 155-59; FY 2021 ACD at 131-34; FY 2022 ACD at 126-30.

203 Docket No. ACR2011, Annual Compliance Determination, March 28, 2012, at 64-66 (FY 2011 ACD).
Docket No. ACR2023 - 119 -

Table V-1

Mail in Measurement and Excluded from Measurement, by Percentage, FY 2021–FY 2023

Class Product(s)

Percent of Mail Entered at FullService IMb Prices and Included in 

Measurement

Percent of Mail Processed as FullService IMb, but Excluded from 

Measurement

FY 2021 FY 2022 FY 2023 FY 2021 FY 2022 FY 2023

First-Class 

Mail

Presorted 

Letters/Postcards 66.10 65.82 68.33 33.90 34.18 31.67

Flats 62.20 64.59 68.24 37.80 35.41 31.76

USPS 

Marketing 

Mail

High Density and 

Saturation 

Letters

79.63 79.95 78.20 20.37 20.05 21.80

High Density and 

Saturation 

Flats/Parcels

53.68 39.75 71.87 46.32 60.25 28.13

Carrier Route 72.62 76.77 76.42 27.38 23.23 23.58

Letters 80.47 82.24 84.01 19.53 17.76 15.99

Flats 71.49 76.51 77.67 28.51 23.49 22.33

Every Door Direct 

Mail–Retail Not Applicable

Parcels Data Not Available

Total USPS 

Marketing Mail 78.23 80.14 82.12 21.77 19.86 17.88

Periodicals

In-County

Data Not

Available

11.87a 9.40a

Data Not

Available

88.13a 90.60a

Outside County 79.46a 78.25a 20.54a 21.75a

Total Periodicals 70.73 67.92 29.27 32.08

Package 

Services

Bound Printed 

Matter Flats 26.39 33.47 43.25 73.61 66.53 56.75

a The proportions displayed are estimated by assigning undifferentiated Periodicals mailpieces to In-County Periodicals and Outside County Periodicals in the same 

proportions as their respective volumes. For In-County Periodicals, the Commission cautions that the estimates could be significantly distorted because, as a relatively low 

volume product, erroneously assigning Outside County Periodicals mailpieces to In-County Periodicals could have a significant impact on the resulting proportions of mail 

in and out of measurement. SeeFY 2022 ACD Report at 126-27.

Source: Library Reference USPS-FY23-29, Excel file “FY23 Incl-Excl Dir Resp.xlsx;” January 12 Response to CHIR No. 1, question 12; Docket No. ACR2022, Responses of the 

United States Postal Service to Questions 1-2 of Chairman’s Information Request No. 16, March 9, 2023, question 1.b. (Docket No. ACR2022, March Response to CHIR 

No. 16); Docket No. ACR2022, Responses of the United States Postal Service to Questions 1-13 of Chairman’s Information Request No. 3, January 17, 2023, question 11, 

Excel file “ChIR No 3 -Response to Questions 10 and 11.xlsx;” Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-29 of Chairman’s 

Information Request No. 1, January 18, 2022, question 23.; Docket No. ACR2020, Response to CHIR No. 1, question 35.
Docket No. ACR2023 - 120 -

After declining from FY 2020 to FY 2021, the percentage of mail entered at Full-Service IMb 

and included in measurement increased for the second year in a row for most categories 

measured. The most notable increase was for High Density and Saturation Flats/Parcels, 

with a 32.1 percentage point increase in mail in measurement compared with FY 2022. 

However, High Density and Saturation Flats/Parcels has historically tended to experience 

large fluctuations in mail in measurement. On the other hand, High Density and Saturation 

Letters, Carrier Route, and In-County Periodicals each experienced a slight decrease in 

measurement in FY 2023.

Given that the Commission has been closely monitoring mail included and excluded in 

measurement for several fiscal years, the Commission expects the Postal Service to again file 

this information in table form, including detailed descriptions for data that are not available 

or not applicable, for FY 2024 along with the FY 2024 ACR.

Figure V-12 displays the top two reasons that a mailpiece was excluded from measurement 

in FY 2023, and the corresponding percent for each class of mail. Not all reasons applied to 

all classes of mail, although “No Start-the-Clock” and “No Piece Scan” affected multiple mail 

classes.
Docket No. ACR2023 - 121 -

Figure V-12

Reasons for Mailpiece Exclusions, by Percentage, by Quarter, FY 2023

Source: Library Reference USPS-FY23-29, Excel file “AttachA_ExclusionReasonBreakdoown_FY23.”

The most common reason for mailpiece exclusion for First-Class Mail and USPS Marketing 

Mail in FY 2023 was reported to be “No Start-the-Clock,” which occurs when the Postal 

Service lacks a container unload scan or is unable to identify the Facility Access and 

Shipment Tracking (FAST) appointment associated with the container. The Postal Service 

excludes these mailpieces from measurement because the Postal Service cannot determine 

when the measuring process should begin without an initial scan or an identified FAST 

appointment. See FY 2020 ACD at 159.
Docket No. ACR2023 - 122 -

For First-Class Mail, “Long Haul” was also a significant cause of exclusion throughout FY 

2023. A “Long Haul” exclusion occurs when a mailpiece verified at a Detached Mail Unit 

(DMU) is transported by the Postal Service to a mail processing facility in a different 

District than the DMU. Id. The Postal Service excludes these mailpieces from measurement 

because this type of operational failure results in a loss of visibility of the mailpiece. See FY 

2015 ACD at 101-02.

Consistent with previous years, “No Piece Scan,” which occurs when no automation scan is 

observed for the mailpiece, was the top reason for exclusion for both Periodicals and 

Package Services in FY 2023. The Postal Service excludes these mailpieces from 

measurement due to incomplete data. See FY 2019 ACD at 101. For Periodicals, “No Startthe-Clock” and for Package Services, “Invalid Entry Point for the Discount Claimed” also 

contributed to the exclusion of mailpieces from measurement.

Comments and Related Commission Analysis. NPPC notes that it “is concerned that the Postal 

Service’s reported service performance does not match the performance its members 

believe that they in fact are experiencing.” NPPC Comments at 9. It states that one potential 

reason for this disconnect is a “lack of clarity” on the Postal Service’s “Start the Clock” time. 

Id. Specifically, NPPC states that, although measurement is said to begin when the mail 

enters the Postal Service’s possession, “it is generally unclear whether in actual practice the 

Postal Service starts the clock with possession or waits until a first scan, which might occur 

later.” Id. NPPC states that another potential reason may be that a large portion of 

First-Class Presorted Letters/Postcards are not being measured. Id. It explains that “[i]t is 

conceivable that pieces not in measurement have received poorer service than those in 

measurement, which mailers may be able to track but the Postal Service cannot.” Id. at 

9-10.

In response, the Postal Service states that:

While the Postal Service greatly appreciates the input of NPPC’s 

members and is disappointed to hear that some members’ 

perception of market-dominant mail service performance 

differs from the published results, the Postal Service is unable to 

meaningfully address those unsupported, unspecific, and vague 

assertions, let alone NPPC’s speculations about why those 

members might have a different perception of service 

performance than what the Postal Service reports.

Postal Service Reply Comments at 31. Instead, the Postal Service expresses confidence in 

the accuracy of its results. Id.

The Commission is concerned that the operational and sample data used for the internal 

service performance measurement system may not match the performance that mailers 

may be experiencing and/or fully capture the current nationwide service issues. Recent 
Docket No. ACR2023 - 123 -

network and operational changes for collection mail implemented by the Postal Service in 

FY 2024 such as Optimized Collections204 may negatively impact the quality of collection 

box samples used to measure First Mile delays for Single-Piece First-Class Mail, which is a

critical component of the service performance measurement system.

In terms of NPPC’s observation as to the “Start the Clock” time, the Commission notes that 

the Postal Service, in response to an information request, states that, prior to the 

implementation of its ILE, its “primary source for on-time arrivals and departures were 

manual scans by Postal Service dock employees” which “record the time of the scan rather 

than actual truck transportation performance.” February 2 Response to CHIR No. 7, 

question 7.b. On the other hand, the ILE will leverage GPS systems to allow for “improved 

accuracy for on-time performance tracking.” Id. The Commission is concerned that, based 

on this response, the “Start the Clock” time may not adequately reflect delays related to 

long waits in line for transportation.

The primary regulatory purpose for the service performance measurement systems is to 

produce data for use in the annual compliance review process. The PAEA directed the 

Postal Service, in consultation with the Commission, to establish these standards “by 

regulation” and permitted revision “from time to time thereafter by regulation.” 39 U.S.C. § 

3691(a). The service standards must be designed to achieve four objectives appearing in 39 

U.S.C. § 3691(b)(1)(A)-(D), taking into account eight factors appearing in 39 U.S.C. § 

3691(c)(1)-(8)). The service standard objectives encompass both objectives for the service 

standards themselves, and include an objective: “[t]o provide a system of objective external 

performance measurements for each market-dominant product as a basis for measurement 

of Postal Service performance.” 39 U.S.C. § 3691(b)(1)(D). However, “with the approval of 

the Postal Regulatory Commission an internal measurement system may be implemented 

instead of an external measurement system.” 39 U.S.C. § 3691(b)(2). Finding the internal 

SPM capable of reporting accurate, reliable, and representative service performance data, 

the Commission previously provided such approval to allow the Postal Service to transition 

to internal SPM, conditioned upon the Postal Service continuing its external auditing

program and filing quarterly audit reports with the Commission.

205

The Commission recommends that the Postal Service prioritize pursuing the full 

implementation of its ILE as soon as possible. The Commission also reminds the Postal Service 

that, pursuant to 39 C.F.R. § 3055.5, “all changes to measurement systems” are required to be 

filed with the “30 days prior to planned implementation.” Further, the Commission intends to 

evaluate if the quality of service data has become significantly inaccurate pursuant to 39 

U.S.C. § 3652(e)(2)(B) and to determine if any planned Postal Service changes to the 

“measurement systems, service standards, service goal or reporting methodologies [will] have 

204 See Docket No. PI2023-4, Responses of the United States Postal Service to Chairman’s Information Request No. 5, December 4, 2023, 

questions 1-2.

205 See Order No. 4697 at 3-4, 67; Order No. 5576 at 2, 9-11. The quarterly auditing requirements has been codified in 39 C.F.R. § 

3055.31(h)(4)(i).
Docket No. ACR2023 - 124 -

a material impact on the accuracy, reliability, or utility of the [service performance]

measurement" pursuant to 39 C.F.R. § 3055.5.

Moreover, as explained above, the Commission recognizes that the percentage of mail in 

measurement increased by several percentage points for some products and decreased

several percentage points for others. The Commission codified reporting requirements for 

mail included and excluded from measurement to allow for continued monitoring of trends 

in measurement and the reasons for exclusions. See Order No. 6439 at 17-21, Attachment 

at 3-5 and 11-13.

The Commission recommends that the Postal Service renew its focus on increasing the 

percentage of mail in measurement and analyzing and improving its mail in measurement 

program.

4. FY 2023 Service Performance Results by Class

A. FIRST-CLASS MAIL

(1) FY 2022 ACD Directives

Finding that four First-Class Mail products/categories did not meet their FY 2022 service 

performance targets (3-5-Day Single-Piece Letters/Postcards, Flats, Inbound Letter Post, 

and Outbound Single-Piece First-Class Mail International), the Commission directed the 

Postal Service to improve service performance for these categories and determined that 

the Single-Piece Letters/Postcards, Flats, Inbound Letter Post, and Outbound Single-Piece 

First-Class Mail International products were out of compliance in FY 2022. FY 2022 ACD at 

147. Therefore, the Commission issued a series of directives to monitor the progress and 

efficacy of the Postal Service’s service performance improvement initiatives in FY 2023. See 

id. at 147-50.

First, to evaluate the Postal Service’s nationwide initiatives to improve transit and Last Mile 

performance, the Commission directed the Postal Service to report on its progress and 

plans for remedying those issues. See id. at 147-48. Second, to evaluate the Postal Service’s 

Division-level initiatives to address the top root causes of failure to deliver First-Class Mail 

on time, the Commission directed the Postal Service to report on its Division-level progress 

and plans for remedying those issues. See id. at 148-49. Third, to facilitate the consistent 

monitoring of First-Class Mail service performance, the Commission directed the Postal 

Service to provide Area- and District-level data concerning air carrier capacity and the 

number of CLTs during FY 2022. See id. at 149-50. Fourth, to monitor the Postal Service’s 

initiatives to improve service performance results for Inbound Letter Post and Outbound 

Single-Piece First-Class Mail International, the Commission directed the Postal Service to 

report on its progress at addressing processing deficiencies at International Service 

Centers (ISCs) and plans for remedying those issues. See id. at 150.
Docket No. ACR2023 - 125 -

(2) FY 2023 Results

Figure V-13 shows the FY 2023 service performance results compared to the annual 

targets for all First-Class Mail products.

Figure V-13

First-Class Mail

Service Performance Results, by Percent, FY 2023

Notes: The Postal Service reports its targets for its domestic products and service standard categories to two decimal places, whereas results are 

reported to one decimal place. The difference between the target and the result is rounded to two decimal places.

Source: FY 2023 Service Performance Report at 4-5.
Docket No. ACR2023 - 126 -

Table V-2 summarizes service performance results compared to the annual targets for all 

First-Class Mail products for FY 2021 through FY 2023.

Table V-2

First-Class Mail

Service Performance Results, by Percent, FY 2021–FY 2023

Note: Red text indicates service performance was below target. Green text indicates service performance was above target.

Source: FY 2023 Service Performance Report at 4-5; FY 2022 Service Performance Report at 3-4; Docket No. ACR2021, Library Reference USPS-FY21-29, December 

29, 2021, PDF file “FY21-29 Report.pdf,” at 4 (FY 2021 Service Performance Report).
Docket No. ACR2023 - 127 -

(3) Postal Service Report

Only one category—3-5-Day Presorted Letters/Postcards—met its target in FY 2023. FY 

2023 Service Performance Report at 6. The Postal Service explains that eight of ten FirstClass Mail products/categories had improved service performance from FY 2022 to FY

2023: (1) 3-5-Day Single Piece Letters/Postcards; (2) 2-Day Presorted Letters/Postcards; 

(3) 3-5-Day Presorted Letters/Postcards; (4) Overnight Flats; (5) 2-Day Flats; (6) 3-5-Day 

Flats; (7) Outbound Single-Piece First-Class Mail International; and (8) Inbound Letter 

Post. Id. Additionally, it observes that “Flat mail continues to trail letter mail in service 

performance” and identifies the cause as “machine performance, multiple mail flows, and 

proportion of manual volume compared to letters.” Id. The Postal Service asserts that its 

operational changes “ensure a logical sequencing of processing, transportation, and crossdocking functions for all products” and will therefore improve Flats service performance. 

Id. at 7.

As directed in the FY 2022 ACD, the Postal Service provided a variety of information 

regarding the identity and causes of on-time service performance failures, its nationwide 

and Division-level initiatives in FY 2023 to improve service performance and address the 

top root causes of failure to deliver First-Class Mail on time and plans for further 

improvement in FY 2024.206

(4) Comments and Related Commission Analysis

Comments concerning First-Class Mail service performance are organized by topic, 

summarized, and responded to below.

Domestic products. The Public Representative notes that, based on the service standards in 

place prior to the changes made in FY 2022 pursuant to Docket No. N2021-1, no SinglePiece Letters/Postcards categories and only two Presorted Letters/Postcards categories 

would have met their FY 2023 targets, although more would have met the targets imposed 

in FY 2022. PR Comments at 51-52. Similarly, under these previous service standards, no 

Single-Piece Flats met their FY 2022 or FY 2023 targets, although Presorted Flats 

performed better. Id. at 52-53.

NPPC notes that the service performance targets for several First-Class Mail products will 

not change (or will change very slightly) for several service standards from FY 2023 to FY 

2024 and that these remain short of the service standards set for these products. NPPC 

Comments at 10. NPPC also continues to urge the Commission to modify service 

performance reporting requirements to include a report on the service quality accorded to 

remittance mail. Id. at 8.

As explained in more detail above, the Commission reiterates that greater clarity from the 

Postal Service regarding the purpose and basis behind changed targets would promote 

206 See, e.g., Library Reference USPS-FY23-29 Preface; FY 2023 Division Report; Library Reference USPS-FY23-29, Excel files “FY23 FCM Root 

Cause.xlsx;” “ACR2023 CLT Data.xlsx.”
Docket No. ACR2023 - 128 -

public transparency as to why targets are set at given levels. In terms of remittance mail, 

the Commission already modified service performance reporting requirements to require 

the Postal Service to report service performance for the related Reply Mail on its online 

dashboard. 39 C.F.R. § 3055.102(h).

International products. The Public Representative makes several observations about the 

service performance trends for international products and identifies opportunities for 

improvement. PR Comments at 54-66. Specifically, he suggests that the accuracy of the 

dispatch process between processing facilities should be improved to address the top 

known root cause (Origin Missent) for Outbound Single-Piece First-Class Mail 

International. Id. at 60-61. He also recommends that the Postal Service address the 

underlying data insufficiencies apparent in the large proportion of 2-Day Outbound SinglePiece First-Class Mail International for which the Postal Service is unable to assign a root 

cause of failure. Id. at 62. In response, the Postal Service states that the Public 

Representative:

Does not sufficiently acknowledge that on-time performance for 

the combined volumes for [Outbound Single-Piece First-Class 

Mail International], as well as for [Inbound Letter Post], 

increased in two subsequent fiscal years by 22.8 points (19.5 

points and then 3.3 points), and 8.3 points (7.4 points and then 

0.9 point), respectively, from FY 2021 to FY 2023.

Postal Service Reply Comments at 34. In terms of root cause point impacts, the Postal 

Service states that it will take under consideration the Public Representative’s 

recommendation to improve the accuracy of mail dispatches between processing facilities 

but suggests that what is actually needed is for it “to work with domestic facilities 

concerning highest opportunity domestic origins to improve processing and dispatch for 

mailstreams that include [First-Class Mail International] items bound for International 

Service Centers.” Id. at 34-35.

The Commission agrees that the Postal Service should focus on improving processing and 

dispatch for mailstreams that include First-Class Mail International items bound for 

International Service Centers.

Single-Piece Letters/Postcards. GCA states generally that 3-5-Day Single-Piece 

Letters/Postcards have markedly poorer service performance than 2-Day Single-Piece 

Letters/Postcards or any service standard of Presorted Letters/Postcards. GCA Comments 

at 1-2. It asserts that [t]his disparity raises significant questions of fairness – especially in 

light of recent, frequent, and substantial increases in the price of a stamp.” Id. at 2. GCA also 

notes a decrease in on-time service performance results for 3-5-Day Single-Piece 

Letters/Postcards from FY 2022 to FY 2023 in relation to its target. Id. at 3.
Docket No. ACR2023 - 129 -

With this in mind, GCA suggests that the Commission “investigate and, so far as its 

authority extends, [ ] remedy this disparity in service performance” between the categories 

of First-Class Mail. Id. at 4. It also states that this disparity raises material issues of 

compliance with governing statutes, particularly the Postal Service’s mandate to maintain 

high quality service standards. Id. at 6-8. Therefore, GCA “urges the Commission to take 

prompt and effective action to require the Postal Service to improve its service 

performance for [3-5-Day Single-Piece Letters/Postcards.]” Id. at 8.

The Postal Service acknowledges that 3-5-Day Single-Piece Letters/Postcards fell “well 

below” its service performance target but points out that it has improved since FY 2021 

and indeed, “during that time, the Postal Service has been actively implementing and 

evolving initiatives intended to produce just such improvement.” PR Comments at 32-33.

The Commission notes that mail that travels a longer distance is generally subject to a 

greater number of potential delays. This mail is often subject to a longer service standard 

than mail that travels shorter distances, but also appears prone to poorer service 

performance. This is generally confirmed by the root cause data discussed below.

207 The 

Commission will continue to monitor service performance for 3-5-Day Single-Piece 

Letters/Postcards closely in light of the Postal Service’s significant changes to its 

transportation and processing systems.

(5) Commission Analysis

(a) Overview

In FY 2023 only one First Class Mail product category met its annual service performance 

target. To discern whether Service Performance was improving or declining over FY 2023, 

the Commission compares quarterly service performance results to service performance 

targets.

(b) Domestic Products

Figure V-14 displays quarterly results for FY 2023, disaggregated by shape, service 

standard, and whether the mailpiece was presorted or single-piece, for Domestic FirstClass Mail products.

207 See Section V.A.4.a.iv., infra. For the Transit Late Destination Primary Scan root cause indicator, the 2-Day Single-Piece Letters/Postcards 

category experienced a point impact of only 0.35 percentage points whereas the 3-5-Day category experienced a point impact of 5.22 

percentage points. Library Reference USPS-FY23-29, Excel file “FY23 FCM Root Cause.xlsx. This indicator is assigned if the last outgoing scan of 

any type at an origin facility is on time and the First Incoming Primary Scan at the expected destination facility is late. Docket No. ACR2020, 

Response to CHIR No. 1, question 20.c., Excel file “FY20.ChIR.1.RootCauseDefintnsHierarchy.xlsx.”
Docket No. ACR2023 - 130 -

Figure V-14

Domestic First-Class Mail

Service Performance Results, by Quarter, FY 2023

Note: Except for Presorted Overnight and Flats Overnight, the Postal Service implemented service standard changes for all categories 

appearing in this Figure, effective October 1, 2021 (the beginning of FY 2022). 86 Fed. Reg. 43,941, 43,951 (Aug. 11, 2021)(codified at 39 C.F.R. 

part 121); seeDocket No. N2021-1, Advisory Opinion.

Source: Library Reference USPS-FY23-29, Excel file “FY23 ACR First-Class Mail.xlsx.”
Docket No. ACR2023 - 131 -

For most categories of First-Class Mail, service performance improved in the second and 

third quarters of FY 2023 compared to the same period last fiscal year but then declined 

again in the fourth quarter compared to the same period last fiscal year. The first quarter of 

FY 2023 had the lowest on-time performance for nearly all categories, with Presorted 3-5-

Day Letters and Postcards and 3-5-Day Flats being the only exceptions. Service 

performance was the strongest during the third quarter across all domestic First-Class Mail 

categories.

As mentioned above, in FY 2023, only one First-Class Mail category met its target. While 

Presorted 3-5-Day Letters and Cards only achieved its target in the third quarter, the 

proximity of its performance scores to its target in the other quarters allowed it to meet its 

target for FY 2023 as a whole. However, the majority of First-Class Mail categories fell short 

of annual service performance targets in FY 2023 and also struggled to attain target-level 

service performance on a quarterly basis.

In recent years, the Postal Service has reported that it planned to address service 

performance issues by driving local facilities’ adherence to the Postal Service’s existing 

multi-year, national, data-driven strategies. See FY 2019 ACD at 106, 118. The Commission 

has, therefore, obtained data and information at and below the national level to monitor 

the connection between the Postal Service’s national headquarters and the field. Id. These 

data were obtained to increase transparency about how the Postal Service sets operational 

targets for the local facilities, provides local facilities with resources and training to meet 

those targets, measures local facilities’ performance in a meaningful and consistent 

manner, and holds local facilities accountable for gaps between the target and actual 

performance. Id.

(i) Single-Piece Letters/Postcards

Single-Piece Letters/Postcards is a retail product made available to the general public and 

includes stamps and postage paid through meters. See MCS § 1105. In FY 2015, and every 

fiscal year since, the Commission determined that this product was out of compliance and 

issued directives to monitor the Postal Service’s remediation initiatives.

208

In FY 2023, there were two service standard categories for this product: 2-Day and 3-5-

Day.209 The 2-Day service standard applies to Single-Piece Letters/Postcards in the 

continental United States only if the drive time between the origin processing and 

distribution center/facility (P&DC/F), destination area distribution center (ADC), and 

destination SCF is 3 hours or less.210 From FY 2022 to FY 2023, there was minimal change 

in service performance for Single-Piece Letters/Postcards. Service performance results for 

208 See FY 2019 ACD at 101-02, 119; FY 2020 ACD at 180-85; FY 2021 ACD at 148-52; FY 2022 ACD at 147.

209 See FY 2023 Service Performance Report at 4; see also 39 C.F.R. § 121.1(c), (d), (e), (f). Effective October 1, 2022 (FY 2023 Quarter 1), the 

Postal Service implemented new service standards for First-Class Mail, revising the standard for some First-Class Mail to the 3-Day, 4-Day, or 5-

Day standard depending on the distance between origin and destination. See id.; see also Revised Service Standards for Market-Dominant Mail 

Products, 86 Fed. Reg. 43941, 43954 (August 11, 2021) (codified at 39 C.F.R. pt. 121); Docket No. N2021-1, Advisory Opinion at 12-13.

210 See 39 C.F.R. § 121.1(c)(1), (2); see also 86 Fed. Reg. 43952, 43954.
Docket No. ACR2023 - 132 -

2-Day Single-Piece Letters/Postcards decreased by 0.5 percentage points. Conversely, 

service performance for 3-5-Day Single-Piece Letters/Postcards increased by 0.3 

percentage points.211 The performance score for both categories fell below their 

corresponding FY 2023 targets.

(ii) Presorted Letters/Postcards

Presorted Letters/Postcards is a commercial product made available to mailers that adhere 

to volume, sortation, and/or drop-shipment requirements. See MCS § 1110. There are three 

service standard categories for this product: overnight, 2-Day, and 3-5-Day. See FY 2023 

Service Performance Report at 4; see also 39 C.F.R. § 121.1(c), (d), (e), (f).

Of the service standard categories for Presorted Letters/Postcards, only the 3-5-Day 

category met its service performance target. Despite missing its target, the performance for 

the 2-Day category increased from FY 2022 by 0.4 percentage points. Performance for the 

overnight category fell by 0.2 percentage points.

(iii) Flats

The Commission has previously observed the significant challenges the Postal Service has 

experienced in processing and delivering flat-shaped mailpieces across all Market 

Dominant classes. See, e.g., FY 2015 ACD at 160-82. Since the FY 2015 ACD, the Commission 

has separately evaluated the long-standing cost and service issues for flat-shaped 

mailpieces.

212 In FY 2019, the Commission finalized rules for the Postal Service to provide 

additional information to improve transparency into cost and service performance issues 

with respect to flats, as well as increase the accountability of the Postal Service with 

respect to operational initiatives directed at flats.213 The Commission noted that these 

challenges have persisted despite numerous operational initiatives to improve cost and 

service for flat-shaped mailpieces. See FY 2019 ACD at 155.

The Flats product includes both retail (single-piece) and commercial (presorted) 

mailpieces that are flat-shaped. See FY 2023 Service Performance Report at 4; see also MCS 

§ 1115.

Service performance across all First-Class Mail Flats categories fell short of their respective 

performance targets by double digits in FY 2023, despite an improvement in service 

performance compared to FY 2022.

211 Compare FY 2023 Service Performance Report at 4, with FY 2022 Service Performance Report at 3-4.

212 See FY 2015 ACD at 160-82; FY 2016 ACD at 158-70; FY 2017 ACD at 174-82; FY 2018 ACD at 213-23; FY 2019 ACD at 155-75; FY 2020 ACD at 

236-62; FY 2021 ACD at 228-77; see also Docket No. SS2022-1, Flats Operations Study Report, April 6, 2023.

213 See Docket No. RM2018-1, Order Adopting Final Rules on Reporting Requirements Related to Flats, May 8, 2019 (Order No. 5086).
Docket No. ACR2023 - 133 -

(iv) Root Causes and Point Impacts

While the Postal Service often cites external factors like weather events as causes of 

disruptions in postal operations,214 a deeper analysis often reveals systemic challenges that 

extend beyond singular events. In the FY 2015 ACD, the Commission observed that the 

Postal Service’s efforts using numerous data systems and diagnostic tools to improve 

service performance for multiple products and classes were ineffective; thus, the 

Commission analyzed and directed the Postal Service to report information that would 

describe the root causes of service performance failures.215 After the FY 2015 ACD, the 

Commission has developed root cause analysis in its ACD reports based on the data 

provided from the Postal Service and has directed the Postal Service to expand its 

reporting of root causes to the Commission.216

To monitor and quantify the impact of performance failures, the Postal Service uses root 

cause diagnostic tools. It assigns a root cause indicator to a mailpiece that is delivered after 

the applicable service standard. FY 2019 ACD at 103. The root cause indicator corresponds 

with the failure to clear a mailpiece through a specific processing action from First Mile to 

Last Mile. The Commission examines root cause data to gain a comprehensive 

understanding of the factors influencing the Postal Service’s performance. By scrutinizing 

root cause data, the Commission seeks to identify systemic inefficiencies in processes that 

contribute to performance fluctuations.

214 See, e.g., FY 2023 Annual Report at 42.

215 See FY 2015 ACD at 131-44 (discussing the ineffectiveness of the Postal Service’s efforts to improve service performance and directing the 

Postal Service to report specific information), 180-81 (directing the Postal Service to report regarding operational pinch points for flat-shaped 

mailpieces).

216 See, e.g., FY 2016 ACD at 100-29; FY 2017 ACD at 107-42; FY 2018 ACD at 138-63; FY 2019 ACD at 101-32; FY 2020 ACD at 163-202; FY 2021 

ACD at 138-96; FY 2022 ACD at 131-70.
Docket No. ACR2023 - 134 -
Docket No. ACR2023 - 135 -

Table V-3 displays the top five root causes for the failure of categories of First-Class Mail to 

be delivered on time in FY 2023, along with the corresponding point impact and difference 

from FY 2022.

Table V-3

First-Class Mail

FY 2023 National Top Five Root Causes and Point Impact

Note: The Single-Piece Letters/Postcards product no longer has an Overnight service standard.

Source: Library Reference USPS-FY23-29, Excel file “FY23 FCM Root Cause.xlsx;” Docket No. ACR2022, Library Reference USPS-FY22-29, Excel file “FY22 

FCM Root Cause.xlsx;” February 16 Response to CHIR No. 10, question 1, Excel file “FY22 FCM Flats Root Cause_ChIR10_Q1.xlsx.”
Docket No. ACR2023 - 136 -

The top root causes and their respective point impacts have seen minimal change 

compared to FY 2022 across all categories of First-Class Mail letter- and flat-shaped items. 

In fact, as shown in Table V-3, the point impact variation from FY 2022 remains less than 

one point for the top five root causes across all categories. As in FY 2022, Last Mile failures 

persist as the predominant root cause of service performance shortcomings across nearly 

all mail categories.

Every service standard of Single-Piece Letters/Postcards and Presorted Letters/Postcards

continues to be affected by Last Mile failures, with point impacts of approximately three

points. For Flats service standards, the point impacts of these failures exhibit a range, from 

4.7 for 3-5-Day Flats to 6.94 for 2-Day Flats. For each First-Class Mail product, the 2-Day 

classification bears the highest point impact attributed to Last Mile failures. Compared to 

FY 2022, the point impacts of Last Mile failures increased for every service standard for 

letters and cards and decreased across all Flats categories.

For each category of First-Class Mail, Figure V-15 compares the point impact of the top five

root causes with the points by which the Postal Service missed the target.
Docket No. ACR2023 - 137 -

Figure V-15

Comparison of the Point Impacts of the Top Five Root Causes with the Deviation from the 

Target Performance Score in Percentage Points

Source: Library Reference USPS-FY23-29, Excel file “FY23 FCM Root Cause.xlsx;” Docket No. ACR2022, Library Reference USPS-FY22-29, Excel file “FY22 FCM Root 

Cause.xlsx.”

While deficiencies in multiple areas caused the Postal Service to miss its targets in FY 2023, 

for a few categories, simply reducing Last Mile failures would have been enough to score 

above the target.

The on-time service performance results for First-Class Mail vary throughout the year. As 

described in Figure V-16, the service performance results for First-Class Mail Single-Piece 

Letters/Postcards were lower in the first half of FY 2023 and were at their highest levels in 

Quarter 3. Figure V-16 presents the service performance results by quarter for FY 2023. 

Figure V-16 displays the quarterly results for FY 2022 and FY 2023 disaggregated by 

service standard.
Docket No. ACR2023 - 138 -

Figure V-16

First-Class Mail Single-Piece Letters/Postcards

Nationwide On-Time Service Performance by Service Standard by Quarter, FY 2022–FY 2023

Source: Library Reference USPS-FY23-29, Excel file “FY23 ACR First-Class Mail.xlsx,” tab “Aggregation”; Docket No. ACR2022 Library Reference USPS-FY22-29, Excel file 

“FY22 ACR First-Class Mail.xlsx,” tab “Aggregation.”

The quarterly results over this period highlight several of the service-related issues for 

First-Class Mail Single-Piece Letters/Postcards. The service performance results for FirstClass Mail Single-Piece Letters/Postcards with a 2-Day service standard followed the same 

seasonal trend in FY 2023 that occurred in FY 2022, with lower on-time performance in the 

first half of the year and higher performance in the second half of the year. Single-Piece 

Letters/Postcards with a 2-Day service standard met the service performance target in 

FY 2022 but did not meet the target in FY 2023. With significant variability in service 

performance throughout the year, analyzing weekly service performance results 

disaggregated by service standard provides valuable information. Figure V-17 displays a 

comparison of the 2-Day service standard weekly service performance results for FY 2022 

and FY 2023.

7 5%

8 0%

8 5%

9 0%

9 5%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY 2022 FY 2023

 

2 Day Single Piece Le ers/Postcards 3 5 Day Single Piece Le ers/Postcards
Docket No. ACR2023 - 139 -

Figure V-17

2-Day Single-Piece Letters/Postcards

Nationwide On-Time Service Performance by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

As detailed in Figure V-17, the weekly service performance results for 2-Day Single-Piece 

Letters/Postcards were consistently lower in FY 2023 than in FY 2022. In 40 of the 52 

weeks in FY 2023 the results were lower than the corresponding week of FY 2022. Weeks 

14 to 21, which correspond to the months of January and February, exhibited significantly 

higher service performance in FY 2023 than in FY 2022. The Postal Service did not sustain 

this level of service performance through the rest of the year, and, as a result, the FY 2023 

target for 2-Day Single-Piece Letters/Postcards was not met. As discussed above, the top 

root causes for service performance failures for 2-Day Single-Piece Letters/Postcards in 

FY 2023 were First Mile and Last Mile failures. The point impact of both First Mile and Last 

Mile failure increased in FY 2023 compared to FY 2022.

8 4%

8 6%

8 8%

9 0%

9 2%

9 4%

1 4 7 1 0 1 3 1 6 1 9 2 2 2 5 2 8 3 1 3 4 3 7 4 0 4 3 4 6 4 9 5 2

% O n Time

Week

FY 2022 2 Day Single Piece Le ers/Postcards FY 2023 2 Day Single Piece Le ers/Postcards
Docket No. ACR2023 - 140 -

The volume of the 2-Day Single-Piece Letters/Postcards accounted for roughly 60 percent 

of the volume217 for Single-Piece Letters/Postcards, declining from 63 percent of the 

volume in Quarter 1 of FY 2022 to 58 percent in Quarter 4 of FY 2023.

The remaining 40 percent of Single-Piece Letters/Postcards volume was entered with a 3-

Day, 4-Day, or 5-Day service standard. For compliance purposes, the Postal Service 

aggregates the service performance results for these three categories into a 3-5 Day service 

standard. In Order No. 6439, the Commission modified its service performance reporting 

rules to include on-time service performance for each of the Single-Piece 

Letters/Postcards, Presorted Letters/Postcards, and Flats products within the First-Class 

Mail class disaggregated by mail subject to the overnight, 2-Day, 3-Day, 4-Day, and 5-Day 

service standards, as well as in the aggregate for the 3-to-5-Day service standards. See 39 

C.F.R. § 3055.20. In FY 2022 and FY 2023, the Postal Service established separate service 

performance targets and publicly reported weekly results via its service performance 

dashboard for each of these categories.218 Of the volume within the 3-5 Day service 

standards, the majority is 3-Day. Only 5 percent of Single-Piece Letters/Postcards is mailed 

with a 5-Day service standard.

The Postal Service also established a target for each of the service standards individually in 

FY 2022 and 2023. In FY 2022, the target for the aggregated 3-5 Day service standard was 

90.5 percent and 90 percent for each individual service standard (3-Day, 4-Day, and 5-

Day). In FY 2023, the aggregated 3-5 Day target was 90.28 percent and 90 percent for 3-

Day and 4-Day service standards but 92 percent for the 5-Day service standard.219 The 

Postal Service did not meet the target for any category within 3-5 Day Single-Piece 

Letters/Postcards in FY 2023.

Examining the results for each of the service standards reveals distinct differences between 

3-Day, 4-Day, and 5-Day Single-Piece Letters/Postcards. Figure V-18 displays the weekly 

service performance results for FY 2022 and FY 2023 for the 3-Day, 4-Day, and 5-Day 

service standards.

217 Library Reference USPS-LR-FY23-29, Excel file “FY23 ACR FCM_by_SVC_STD_Split.xlsx,” tab “Aggregation.” The pieces included in this file are 

the volumes that are included in service performance measurement. Not all volume is included in measurement, which may impact the 

precision of these figures.

218 An aggregated 3-5 Day weekly service performance result is not available.

219 Library Reference USPS-FY23-29, Excel file “FY23 ACR FCM_by_SVC_STD_Split.xlsx,” tab “Aggregation.”
Docket No. ACR2023 - 141 -

Figure V-18

3-Day, 4-Day, and 5-Day Single-Piece Letters/Postcards

Nationwide On-Time Service Performance by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

The weekly service performance results show two notable trends. Throughout FY 2022, the 

5-Day Single-Piece/Letters Postcard service standard achieved higher results than both the 

corresponding 3-Day and 4-Day service standards. The 5-Day service standard consistently 

recorded weekly results above 92 percent for most weeks in FY 2022, which led to a yearend result of over 91 percent. However, in the week of December 23-30, 2022, service 

performance for each of these three service standards declined significantly, to 50 percent 

on-time for the 3-Day service standard, 59 percent on-time for the 4-Day service standard, 

and 62 percent on-time for the 5-Day service standard. Starting in the first week of 

calendar year 2023, the results for the 3-Day and 4-Day service standards began to exceed 

the result for the 5-Day service standard.

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

 

    

  

 

  

 

  

 

  

 

 

  

 

 

 

 

  

 

  

 

   

 

 

 

 

% O n Time

3 Da y Single Piece Le ers/Postcards

4 Da y Single Piece Le ers/Postcards

5 Da y Single Piece Le ers/Postcards
Docket No. ACR2023 - 142 -

The yearly results for 3-Day and 4-Day Single-Piece Letters/Postcards improved in 

FY 2023 due to improved performance in the first two quarters of the year. As shown in 

Figure V-19, the weekly results for these service standards in the second half of FY 2023 

were lower than the weekly results for the second half of FY 2022 but were offset by the 

higher results in the first half of the year. The 5-Day service standard exhibited a 5.6 

percentage point decline in results in FY 2023. The FY 2023 service performance result for 

5-Day Single-Piece Letters/Postcards was lower in 47 of the 52 weeks compared to those 

same weeks in FY 2022. Figure V-19 displays the year-over-year change in the weekly 

service performance results for FY 2022 and FY 2023 for the 3-Day, 4-Day, and 5-Day 

service standards.

Figure V-19

3-Day, 4-Day, and 5-Day Single-Piece Letters/Postcards

Year-Over-Year Change in Service Performance Result, by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

Figure V-19 shows that the on-time performance of 3-Day Single-Piece Letters/Postcards 

improved compared to the FY 2022 levels in nearly every week for the first half of the year. 

Starting in week 39 of FY 2023 (the first week of the fourth quarter), the year-over-year 

service performance trend reversed. In the fourth quarter the FY 2023, results for the 3-

Day service standard were roughly 4 percentage points lower than in FY 2022. Figure V-19 

also shows that the on-time performance of 5-Day Single-Piece Letters/Postcards 

decreased compared to the FY 2022 levels in nearly every week for the entire year. The 

 2 5%

 2 0%

 1 5%

 1 0%

 5%

0%

5%

1 0%

1 5%

2 0%

 

% On Time

Week

3 Day Single Piece Le ers/Postcards

4 Day Single Piece Le ers/Postcards

5 Day Single Piece Le ers/Postcards
Docket No. ACR2023 - 143 -

decline in service performance for this category of Single-Piece Letters/Postcards lowered 

the average on-time performance for all Single-Piece Letters/Postcards in FY 2023.

The same analysis for First-Class Mail Presorted Letters/Postcards shows similar results 

although, in general, service performance results are better than they are for First-Class 

Mail Single-Piece Letters/Postcards. Overnight and 2-Day Presorted Letters/Postcards 

accounted for roughly 20 percent of the total volume for the product in both FY 2022 and 

FY 2023. The remaining 80 percent of Presorted Letters/Cards volume was entered with a 

3-Day, 4-Day or 5-Day service standard, the majority of which is split roughly evenly 

between 3-Day and 4-Day. Less than 15 percent of the volume is in the 5-Day service 

standard category. Figures V-20 through V-21 display the weekly results for FY 2022 and 

FY 2023 disaggregated by service standard.

Figure V-20

Overnight Presorted Letters/Postcards 

Nationwide On-Time Service Performance by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

90%

92%

94%

96%

98%

100%

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

% On Time

Week

FY 2022 Overnight Presorted Le ers/Postcards FY 2023 Overnight Presorted Le ers/Postcards
Docket No. ACR2023 - 144 -

Figure V-21

2-Day Presorted Letters/Postcards

Nationwide On-Time Service Performance by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

The top root cause for service performance failures for Overnight and 2-Day Presorted 

Letters/Postcards in FY 2023 was Last Mile failure. The point impact of the Last Mile failure 

increased in FY 2023 Quarters 3 and 4 compared to FY 2022 for these categories.

Table V-2 details that the on-time service performance target for FY 2023 for 3-5-Day 

Presorted Letters/Postcards was 92.20 percent and the on-time service performance 

results increased from 91.40 percent in FY 2022 to 92.23 percent in FY 2023. Thus, the 

Postal Service achieved the target for 3-5-Day Presorted Letters/Postcards. The Postal 

Service also established a target for each of the service standards individually in FY 2022 

and 2023. Table V-4 details the service performance results and targets for 3-Day, 4-Day, 

and 5-Day Presorted Letters/Postcards for FY 2022 and FY 2023.

86%

88%

90%

92%

94%

96%

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

% On Time

Week

FY 2022 2 Day Presorted Le ers/Postcards FY 2023 2 Day Presorted Le ers/Postcards
Docket No. ACR2023 - 145 -

Table V-4

3-Day, 4-Day, and 5-Day Presorted Letters/Postcards

Service Performance Results and Targets, FY 2022–FY 2023

Source: Library Reference USPS-FY23-29, Excel file “FY23 ACR FCM_by_SVC_STD_Split.xlsx,” tab 

“Aggregation;” Docket No. ACR2022 Library Reference USPS-FY22-29, Excel file “FY22 ACR 

FCM_by_SVC_STD_Split.xlsx,” tab “Aggregation.”

As shown in Table V-4, results for these service standards fluctuated more than the 

Overnight and 2-Day service standards. Examining the results for each of the service 

standards reveals distinct differences between 3-Day, 4-Day, and 5-Day Presorted 

Letters/Postcards. Figure V-22 displays the weekly service performance results for 

FY 2022 and FY 2023 for the 3-Day, 4-Day, and 5-Day service standards.
Docket No. ACR2023 - 146 -

Figure V-22

3-Day, 4-Day, and 5-Day Presorted Letters/Postcards

Nationwide On-Time Service Performance by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

The weekly service performance results show the same two trends for First-Class Mail 

Single-Piece Letters/Postcards. Throughout FY 2022, 5-Day Presorted Letters/Postcards 

achieved higher results than both the 3-Day and 4-Day service standards. The 5-Day 

service standard consistently recorded weekly results above 95 percent for most weeks in 

FY 2022, which led to a yearend result of over 95 percent. However, in the week of 

December 23-30, 2022, service performance for each of these three service standards 

declined significantly, 86 percent on-time for 3-Day, 84 percent on-time for 4-Day, and 80 

percent on-time for 5-Day. Although service performance rebounded the following week, 

starting in the first week of calendar year 2023 the results for the 3-Day and 4-Day service 

standards began to exceed the result for the 5-Day service standard.

The yearly results for 3-Day and 4-Day Presorted Letters/Postcards improved in FY 2023 

due to improved performance in the first two quarters of the year. As shown in Figure V-22, 

the weekly results for these service standards in the second half of FY 2023 declined 

compared to the second half of FY 2022. However, these declines were offset by the 

increases in the first half of the year. The 5-Day service standard exhibited a 4.4 percentage 

point decline in results in FY 2023. The service performance result for 5-Day Presorted 

Letters/Postcards in FY 2023 decreased in 48 of the 52 weeks compared to the 

7 6%

8 1%

8 6%

9 1%

9 6%

 

    

  

 

  

 

  

 

 

 

 

 

  

 

 

 

 

  

 

  

 

   

 

 

 

 

% O n Time

3 Day Presorted Le ers/Postcards 4 Day Presorted Le ers/Postcards 5 Day Presorted Le ers/Postcards
Docket No. ACR2023 - 147 -

corresponding weeks in FY 2022. Figure V-23 displays the year-over-year change in the 

weekly service performance results for FY 2022 and FY 2023 for the 3-Day, 4-Day, and 5-

Day service standards.

Figure V-23

3-Day, 4-Day, and 5-Day Presorted Letters/Postcards

Year-Over-Year Change in Service Performance Result, by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

Figure V-23 shows that the on-time performance of 3-Day Presorted Letters/Postcards 

improved compared to the FY 2022 levels in nearly every week for the first half of the year. 

Starting in week 26 of FY 2023 (the first week of the third quarter), the year-over-year 

service performance improvement leveled off and the Postal Service did not improve from 

its FY 2022 scores. Figure V-23 also shows that the on-time performance of 5-Day 

Presorted Letters/Postcards decreased compared to the FY 2022 levels in nearly every 

week for the entire year. The decline in service performance for this category of Presorted 

Letters/Postcards lowered the average on-time performance for all Presorted 

Letters/Postcards in FY 2023.

The service performance results for First-Class Mail Flats are similar to those of First-Class 

Mail Single Piece Letters/Postcards and First-Class Mail Presorted Letters/Postcards with 

lower on-time performance in the first half of the year and higher performance in the 

second half of the year. However, the results differ from First-Class Mail Single Piece 

Letters/Postcards and First-Class Mail Presorted Letters/Postcards in that there are more 

weeks where the results are higher in FY 2023 than in FY 2022. Although the service 

performance results for Overnight First-Class Mail Flats improved throughout the year, 

they remained roughly 12 percentage points below target. Figure V-24 displays a 

 20%

 15%

 10%

 5%

0%

5%

10%

15%

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

% On Time

Week

3 Day Presorted Le ers/Postcards 4 Day Presorted Le ers/Postcards 5 Day Presorted Le ers/Postcards
Docket No. ACR2023 - 148 -

comparison of the Overnight First-Class Mail Flats weekly service performance results for 

FY 2022 and FY 2023.

Figure V-24

Overnight First-Class Mail Flats

Nationwide On-Time Service Performance by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

The weekly results for Overnight First-Class Mail Flats were consistently higher in FY 2023 

than in FY 2022. In 35 of the 52 weeks in FY 2023, the service performance results were 

higher than the corresponding week of FY 2022. The top root causes for service 

performance failures for Overnight First-Class Mail Flats in FY 2023 were Last Mile and 

Transit failures. The top 5 root causes accounted for roughly 14 percent of mail that was 

not delivered on time. The point impacts decreased slightly in FY 2023 compared to FY 

2022.

The service performance results for First-Class Mail Flats with a 2-Day standard followed 

the same seasonal trend in FY 2023 that occurred in FY 2022, with lower on-time 

performance in the first half of the year and higher performance in the second half of the 

year. The service results for 2-Day First-Class Mail Flats improved throughout the year but 

remained roughly 13 percentage points below target. Figure V-25 displays a comparison of 

the 2-Day First-Class Mail Flats weekly service performance results for FY 2022 and FY 

2023.
Docket No. ACR2023 - 149 -

Figure V-25

2-Day Flats

Nationwide On-Time Service Performance by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

As detailed in Figure V-25, the weekly results for 2-Day First-Class Mail Flats were 

consistently higher in FY 2023 than in FY 2022. In 32 of the 52 weeks in FY 2023, the 

service performance results were higher than the corresponding week of FY 2022. The 

results declined in Quarter 4 of FY 2023 compared to FY 2022, negating some of the 

improvement in the earlier portion of the year. The top root causes for service performance 

failures for 2-Day First-Class Mail Flats in FY 2023 were Last Mile and Transit failures.

Overnight and 2-Day First-Class Mail Flats accounted for roughly 30 percent of the volume 

for the product in FY 2022 and FY 2023.220

The remaining 70 percent of First-Class Mail Flats volume was entered with a 3-Day, 4-Day, 

or 5-Day service standard. Of the volume within the 3-5 Day service standard, the majority 

is 3-Day. In FY 2022 and FY 2023 the Postal Service established separate service 

performance targets for each of these service standards and publicly reported weekly 

results via its service performance dashboard.

220 Library Reference USPS-LR-FY23-29, Excel file “FY23 ACR FCM_by_SVC_STD_Split.xlsx,” tab “FCF Aggregation-1.” The pieces included in this 

file are the volumes that are included in service performance measurement. Not all volume is included in measurement, which may impact the 

precision of these figures.
Docket No. ACR2023 - 150 -

Table V-5 details that the on-time service performance result for 3-5-Day Flats was 79.23 in 

FY 2023. The Postal Service did not meet the target for any service standards within 3-5 

Day First-Class Mail in FY 2023. The Postal Service also established a target for each of the 

service standards individually in FY 2022 and 2023. Table V-5 details the service 

performance results and targets for 3-Day, 4-Day, and 5-Day Flats for FY 2022 and FY 2023.

Table V-5

3-Day, 4-Day, and 5-Day Flats

Service Performance Results and Targets, FY 2022–FY 2023

Source: Library Reference USPS-FY23-29, Excel file “FY23 ACR 

FCM_by_SVC_STD_Split.xlsx,” tab “FCF Aggregation-1.” Docket No. ACR2022 Library 

Reference USPS-FY22-29, Excel file “FY22 ACR FCM_by_SVC_STD_Split.xlsx,” tab “FCF 

Aggregation-1.”

As with First-Class Mail Single-Piece Letters/Postcards there are distinct differences 

between 3-Day, 4-Day, and 5-Day First-Class Mail Flats. Figure V-26 displays the weekly 

service performance results for FY 2022 and FY 2023 for the 3-Day, 4-Day, and 5-Day 

service standards.
Docket No. ACR2023 - 151 -

Figure V-26

3-Day, 4-Day, and 5-Day Flats

Nationwide On-Time Service Performance by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

Throughout FY 2022, 5-Day Flats achieved higher results than both 3-Day and 4-Day Flats. 

The 5-Day service standard consistently recorded weekly results above 90 percent for 

most weeks in FY 2022, which led to a year-end result of over 89 percent. However, in the 

week of December 23- 30, 2022, service performance for each of these three service 

standards declined significantly, 67 percent on-time for 3-Day Flats, 64 percent on-time for 

4-Day Flats, and 71 percent on-time for 5-Day Flats. Starting in the first week of calendar 

year 2023, the results for 3-Day and 4-Day Flats were much closer to the results for 5-Day 

Flats.

The yearly results for 3-Day Flats improved in FY 2023 due to improved performance in 

the first two quarters of the year. The 5-Day service standard exhibited a 6.3 percentage 

point decline in results in FY 2023. The FY 2023 service performance result for 5-Day Flats 

decreased in 46 of the 52 weeks as compared to the same week in FY 2022. Figure V-27 
Docket No. ACR2023 - 152 -

displays the year-over-year change in the weekly service performance results for FY 2022 

and FY 2023 for the 3-Day, 4-Day, and 5-Day service standards.

Figure V-27

3-Day, 4-Day, and 5-Day Flats

Year-Over-Year Change in Service Performance Result, by Week, FY 2022–FY 2023

Source: USPS Service Performance Dashboard Source Data Extract File.

Figure V-27 shows that similar to First-Class Mail Single-Piece Letters/Postcards and 

Presorted Letters/Postcards, the on-time performance of 3-Day First-Class Mail Flats 

improved compared to the FY 2022 levels in nearly every week for the first half of the year. 

Starting in week 40 of FY 2023 (the beginning of the fourth quarter), the year-over-year 

service performance trend reversed. In the fourth quarter the results for 3-Day declined 

roughly 4 percentage points from FY 2022 to FY 2023. Figure V-27 also shows that the ontime performance of 5-Day First-Class Mail Flats decreased compared to the FY 2022 levels 

in nearly every week for the entire year. The decline in service performance for this 

category of First-Class Mail Flats lowered the average on-time performance for all FirstClass Mail Flats in FY 2023.

(c) International Products

Outbound Single-Piece First-Class Mail International is a retail product made available to 

the general public to send postcard-, letter-, and flat-shaped mailpieces to addressees 

outside of the United States. See MCS § 1125. Inbound Letter Post includes postcards, 
Docket No. ACR2023 - 153 -

aerograms, and letter-shaped mailpieces, which originate outside of the United States, 

contain only documents, and are intended for delivery inside of the United States.221

Annual results for Inbound Letter Post and Outbound Single-Piece First-Class Mail 

International have remained below their applicable service performance targets since FY 

2009.222However, the on-time service performance score for Inbound Letter Post 

increased by 0.9 percentage points from FY 2022 to FY 2023. Outbound Single-Piece FirstClass Mail International experienced an even larger improvement in service performance 

in FY 2023, with an increase of 3.3 percentage points. In FY 2023, the on-time service 

performance scores for Outbound Single-Piece First-Class Mail International and Inbound 

Letter Post were 80.8 percent and 82.1 percent, respectively, the highest scores both 

categories achieved in the last 5 years.

(d) Division-Level Performance and DFA Plan 

Impact on First-Class Mail

The Commission has conducted a division-level analysis of the Postal Service’s 

performance to gain a nuanced understanding of how service quality varies across 

different regions or divisions within the postal sector. By examining performance metrics 

at this level of granularity, the Commission can identify disparities, trends, and patterns 

that may not be apparent when looking at aggregate data. In its Response to CIR No. 1, the 

Postal Service states, “[t]he monitoring of service performance results indicates to the 

Postal Service that the DFA Plan is having a positive impact on our nationwide service 

performance, but that much more work remains to be done in order to achieve the goals of 

the Plan.” Response to CIR No. 1, question 1.a.iii. The Postal Service also identified the 

locations where the DFA initiatives that include the opening of sorting and delivery centers 

(S&DCs) or RPDCs/LPCs have been implemented. January 25 Response to CHIR No. 2, 

question 62.e. Although it is too early in the DFA implementation to definitively assess the 

results of the plan on service performance, the Commission grouped service performance 

results at the division level by divisions where DFA has been implemented and divisions 

where it has not been implemented.

Table V-6 shows performance scores by division for the First-Class Mail Single-Piece 

Letters/Postcards and Presorted Letters/Postcards categories, with colors denoting the 

deviation from the category average.223 The six cities where the DFA plan implementation 

took place during FY 2023 Quarter 1 or 2 are: (1) Woburn, MA (New England Division); (2) 

Utica, NY (New York Metro Division); (3) Athens, GA (Southeast Division); (4) Gainesville, 

FL (Gulf Atlantic Division); (5) Panama City, FL (Gulf Atlantic Division); and (6) Bryan, TX 

221 See MCS § 1130. This definition took effect January 1, 2020, which occurred at the beginning of FY 2020 Quarter 3. See Docket Nos. MC2019-

17 and CP2019-155, Order Granting Postal Service’s Motion and Approving Prices for Inbound Letter Post Small Packets and Bulky Letters, 

December 19, 2019, at 2, 18 (Order No. 5372).

222 See FY 2022 ACD at 147 n.236 for a detailed background.

223 The average performance scores represent simple averages of the division performance scores.
Docket No. ACR2023 - 154 -

(Southwest Division).224 In Table V-6, the top grouping of five divisions represents those 

with DFA implementation in FY 2023. The bottom grouping of eight divisions represents 

the remaining divisions, those without the DFA Plan implementation in FY 2023. In this 

color scheme, the lighter green indicates a deviation of 0-5 percentage points above the 

average, while the darker green represents a deviation above 5-10 percentage points above 

the average. Conversely, shades of orange signify deviations below the average, with the 

lighter orange indicating a deviation of 0-5 percentage points below average, and the 

darker orange representing deviations below 5-10 percentage points below average.225

There were no deviations that exceeded 10 percentage points.

Table V-6

First-Class Mail Letters/Postcards

Service Performance by Division, FY 2022–FY 2023

Source: See generallyFY 2023 Division Report; see alsoUnited States Postal Service, Delivering for America Second Year Progress Report, April 2023, at 18, 

(Delivering for America 2-Year Report), available at https://about.usps.com/what/strategic-plans/delivering-for-america/assets/usps-dfa-two-year-report.pdf.

224 In Athens, GA, the Postal Service opened a S&DC on November 19, 2022 (FY 2023 Quarter 1). For each of the remaining five cities listed, the 

Postal Service opened the S&DC on February 25, 2023 (FY 2023 Quarter 2). February 9 Response to CHIR No. 9, question 8. The Postal Service 

states that “[i]n FY2023, the Postal Service activated 29 S&DCs and [they] plan to open many more in the coming years.” FY 2023 ACR at 56. 

Each S&DC created by the Postal Service involves repurposing and consolidating delivery units in a nearby area into a single S&DC. Id.

225 For example, the 2-Day Presorted Letters/Postcards category has an average performance score of 94.02 percent in FY 2023. Surpassing this 

average, the Western Division achieves a score of 96.20 percent, exceeding the category average by 2.18 percentage points. Consequently, 

when applying the color-coding system to represent the Western Division's score, it falls within the green spectrum to denote its above-average 

performance. More precisely, it falls within the lighter shade of green, indicating a deviation range of 0 to 5 percentage points from the 

average.
Docket No. ACR2023 - 155 -

There is little difference in the distribution of scores between the DFA divisions and the 

non-DFA divisions or between FY 2022 and FY 2023.

Table V-7 displays the performance scores by division for First-Class Mail Flats categories, 

with colors again serving as visual indicators of the deviation from the category average. 

Shades of green denote deviations above the average, with specific thresholds delineating 

the magnitude of these deviations. Conversely, shades of orange represent deviations 

below the average. In this color scheme, the lightest color indicates a deviation of 0-5 

percentage points from the average, a slightly darker shade represents a deviation above 5-

10 percentage points from the average, and the darkest color signifies a deviation above 10 

percentage points from the average.

Table V-7

First-Class Mail Flats

Service Performance by Division, FY 2022–FY 2023

Source: See generally FY 2023 Division Report; see also Delivering for America 2-Year Report at 18.

The analysis of First-Class Mail Flats performance scores for FY 2023 reveals a notable 

trend compared to FY 2022: there is less deviation from the average category score across 

the different divisions. This observation suggests a greater level of consistency in 

performance across divisions. One possible interpretation is that divisions have 

implemented more standardized processes or have improved their operational efficiencies, 

leading to narrower performance variations.
Docket No. ACR2023 - 156 -

Table V-8 presents the difference in on-time service performance scores between FY 2022 

and FY 2023 for First-Class Mail categories (i.e., the FY 2023 score minus the FY 2022 

score) in 13 divisions. The values in the table are color-coded. Shades of green denote 

improvements in performance compared to FY 2022, with darker shades indicating higher 

values. Conversely, shades of red represent decreases in performance scores, with darker 

shades indicating more substantial drops in performance.

Table V-8

First-Class Mail

Change in Service Performance Score Between FY 2022–FY 2023

for Divisions with and without DFA Implementation

Source: See generallyFY 2023 Division Report; see alsoDelivering for America 2-Year Report at 18.

In FY 2023, the Gulf Atlantic Division, encompassing plants across Alabama, Mississippi, 

Florida, and Puerto Rico, demonstrated the most significant improvement in performance 

across all but one First-Class Mail category. Notably, the Flat categories exhibited the most 

progress, with a 7.9 percentage point increase for Overnight Presorted Flats and a 10.10 

percentage point increase for 2-Day Presorted Flats, marking the highest percentage point 

improvement among all divisions and First-Class Mail category combinations. On the 

contrary, the Pacific Northwest Division, spanning plants across Alaska, Washington, 

Oregon, Montana, Idaho, and Northern California, witnessed the largest decline in service 

performance compared to FY 2022, with decreases evident in every category except 

Overnight Flats.

Overall, there was a more pronounced improvement in service performance observed for 

the Flats categories compared to the Letters/Postcards categories. However, despite this 
Docket No. ACR2023 - 157 -

improvement, the service performance for Flats categories trails behind that of the 

Letters/Postcards categories in every division.

The Commission notes that disparities observed in performance changes from FY 2022 to 

FY 2023 between DFA and non-DFA divisions across various First-Class Mail service 

categories may also stem from discrepancies in data collection methodologies between 

these divisions. The internal SPM system integrates data from diverse sources, including 

real-time scans of mailpieces at different processing and delivery stages. However, there is 

ambiguity regarding potential systematic differences in data collection practices between 

DFA and non-DFA divisions.

This lack of clarity presents challenges in accurately evaluating the impact of DFA on 

service performance. For example, if there are differences in how the start-the-clock is 

determined (i.e., when the “clock is started” for purposes of measurement) between DFA 

and non-DFA divisions, those differences could impact the observed performance metric 

disparities. Consequently, the Commission refrains from drawing definitive conclusions 

regarding the effects of DFA in FY 2023. The Commission is aware that service performance 

began declining after the end of FY 2023 (FY 2023 ended on September 30, 2023) and will 

continue to monitor the situation. Furthermore, the Commission urges the Postal Service to 

be forthcoming with the data necessary to allow for a thorough evaluation of DFA's impact 

on service performance in Docket No. PI2023-4 and subsequent annual compliance 

determinations.

(6) Commission Findings and Directives

The following First-Class Mail products/categories did not achieve their service performance 

targets in FY 2023: Single-Piece Letters/Postcards, Overnight and 2-Day Presorted 

Letters/Postcards, Flats, Inbound Letter Post, and Outbound Single-Piece First-Class Mail 

International. Considering this, the Commission finds Single-Piece Letters/Postcards, 

Presorted Letters/Postcards, Flats, Inbound Letter Post, and Outbound Single-Piece First-Class 

Mail International were each out of compliance in FY 2023. Specifically for Presorted 

Letters/Postcards, the Commission notes that the 3-5-Day service standard category did 

exceed its target whereas the Overnight and 2-Day service standard category did not achieve 

its target in FY 2023. The Commission directs the Postal Service to improve service 

performance results to achieve the applicable on-time percent target level for these FirstClass Mail products in FY 2023. The Commission directs the Postal Service to refine and apply 

its data leveraging techniques to improve service performance for its First-Class Mail 

products.

The Commission directs the Postal Service to provide information on the following five 

matters. If the Postal Service cannot provide responsive information at the requested level of 

granularity, then responsive information should be provided at the most practicable level of 

granularity, along with a narrative explaining the level of granularity provided in the 

response and detailing why the requested level of granularity could not be reached. The Postal 

Service should file a motion for clarification in Docket No. ACR2023, if necessary. Where 
Docket No. ACR2023 - 158 -

appropriate, the Postal Service shall explain the reasons for any differences in the calculation 

of data in FY 2024 versus FY 2023 and shall propose a method for comparing the data.

(a) Nationwide Transit and Last Mile Improvement 

Initiatives

First, the Commission directs the Postal Service to evaluate the efficacy of its FY 2024 

nationwide initiatives to improve transit and Last Mile and to provide specific detailed plans 

to improve service performance results for First-Class Mail, as described in items 1 and 2.

1. The transit evaluation shall explain how the progress made in FY 2024 (or lack 

thereof) toward ensuring on-time departures, ensuring timely tender to transit 

suppliers, and minimizing en route delays affected on-time service performance 

results for First-Class Mail in FY 2024. The transit plan shall explain how the 

Postal Service will improve results for First-Class Mail by describing: each 

planned initiative, the problem that the planned initiative is expected to 

remediate, the estimated timeframe for implementation and completion of 

each planned initiative, and the key performance indicators (KPIs) used to 

measure and evaluate progress toward completion.

2. The Last Mile evaluation shall explain how the progress made in FY 2024 (or 

lack thereof) toward ensuring that facilities have proper education and are 

held accountable affected on-time service performance results for First-Class 

Mail in FY 2024. The Last Mile plan shall explain how the Postal Service will 

improve results for First-Class Mail by describing: each planned initiative, the 

problem that the planned initiative is expected to remediate, the estimated 

timeframe for implementation and completion of each planned initiative, and 

the KPI(s) used to measure and evaluate progress toward completion.

The evaluations shall include quantitative comparisons of the same period last year (e.g., 

compare FY 2024 Quarter 1 to FY 2023 Quarter 1) and provide a narrative explaining the 

practices employed to remediate the underlying problem(s) in FY 2024. Because the Postal 

Service has indicated that its progress and plans related to transit and the Last Mile apply to 

all categories of First-Class Mail generally,

226 the Commission will allow the Postal Service to 

describe its progress and plans at a class level. However, where appropriate, the evaluation 

shall indicate if the reported progress and effect on results apply only to particular categories 

of First-Class Mail (e.g., shape, product, or service standard). The evaluation and plan shall 

identify a responsible Postal Service representative, with knowledge of these matters, who will 

be available to provide prompt responses to requests for clarification from the Commission. 

The evaluation and plan shall be filed within 90 days of the issuance of this ACD (by June 26, 

2024). An updated evaluation and plan shall be filed at the time of the FY 2023 ACR (by 

December 30, 2024).

226 See, e.g., Docket No. ACR2018, Responses of the United States Postal Service to Questions 1-15, 17-50 of Chairman’s Information Request 

No. 1, January 11, 2019, question 22.
Docket No. ACR2023 - 159 -

(b) Division Improvement Initiatives

Second, the Commission directs the Postal Service to provide information for each of the 

geographic Postal Service Divisions on the following matters, described in items 1 and 2. 

Because the Postal Service has indicated that these service performance improvement 

initiatives are led by personnel in the Logistics and Processing Operations unit, and the 

Commission continues to have concerns regarding whether local actions are adhering to 

national strategies, the Commission directs the Postal Service to provide narrative reports 

from each Division to ensure a sufficiently wide set of narrative responses of geographic 

breadth.

1. For each Division, the Postal Service shall evaluate the efficacy of its FY 2024 

initiatives to improve on-time service performance results for First-Class Mail 

by describing the Division’s progress made toward addressing the top root 

causes of failure to deliver First-Class Mail on time and explaining how the 

Division’s progress (or lack thereof) toward addressing each root cause 

affected on-time results for First-Class Mail in FY 2024. This evaluation shall 

include quantitative comparisons of the same period last year (e.g., compare 

FY 2024 Quarter 1 to FY 2023 Quarter 1) and provide a narrative explaining 

the practices employed to remediate the underlying problem(s) in FY 2024.

2. For each Division, the Postal Service shall provide a detailed plan to improve 

on-time service performance results for First-Class Mail that describes each 

planned initiative, the problem that the planned initiative is expected to 

remediate, the estimated timeframe for implementation and completion of 

each planned initiative, and the KPI(s) used to measure and evaluate progress 

toward completion.

Because the Postal Service has indicated that its progress and plans apply to all categories of 

First-Class Mail generally, the Commission will allow the Postal Service to describe its 

progress and plans at a class level.227 However, where appropriate, the report shall indicate if 

the information applies only to particular categories of First-Class Mail (e.g., shape, product, 

presort/single-piece, or service standard). The report for each Division shall identify a 

responsible Postal Service representative, with knowledge of these matters specific to the 

Division, who will be available to provide prompt responses to requests for clarification from 

the Commission. Each Division’s narrative report shall specify its area of geographic oversight 

as compared to the legacy geographic organization. The report for each Division shall be filed 

within 90 days of the issuance of this ACD (by June 26, 2024). An updated report from each 

Division shall be filed at the time of the FY 2023 ACR (by December 30, 2024).

(c) Consistent Data

Third, to facilitate the consistent monitoring of First-Class Mail service performance, the 

Commission directs the Postal Service to provide the number of CLTs (any HCR that is late by 

227 See generally FY 2023 Division Report; FY 2023 Division Report - Attachment A.
Docket No. ACR2023 - 160 -

more than 4 hours), presented for the nation, each Area, and each District.228 Data shall be 

provided for FY 2024 Quarter 1, Quarter 2, and “mid-year”229 within 90 days of the issuance of 

this ACD (by June 26, 2024). Data shall be provided for FY 2024 Quarter 3, Quarter 4, “secondhalf”230 and annualized for the fiscal year, in the FY 2024 ACR (by December 30, 2024). The 

Commission continues to direct the Postal Service to provide Area- and District-level data to 

allow comparability to prior fiscal years.

(d) ISC Improvement Initiatives

To monitor the Postal Service’s initiatives to improve on-time service performance results for 

Inbound Letter Post and Outbound Single-Piece First-Class Mail International, the 

Commission directs the Postal Service to provide information from each ISC (and the 

Honolulu, Hawaii facility responsible for processing Outbound Single-Piece First-Class Mail 

International) on the following matters, described in items 1 and 2.

1. For each facility, the Postal Service shall evaluate the efficacy of its FY 2024 

initiatives to improve on-time service performance results for Inbound Letter 

Post and Outbound Single-Piece First-Class Mail International by describing the 

facility’s progress made toward addressing the identified deficiencies related to 

each facility’s adherence to processing requirements and explaining how the 

facility’s progress (or lack thereof) toward addressing each identified 

deficiency affected results for these products in FY 2024.

2. For each facility, the Postal Service shall provide a detailed plan to improve 

on-time service performance results for Inbound Letter Post and Outbound 

Single-Piece First-Class Mail International that describes each planned 

initiative, the problem that the planned initiative is expected to remediate, the 

estimated timeframe for implementation and completion of each planned 

initiative, and the KPI(s) used to measure and evaluate progress toward 

completion.

The evaluations described in items 1 and 2 above shall include quantitative analysis that 

identifies the KPI(s) used in support thereof, and if quantitative support is unavailable, the 

facility shall explain why it is unavailable and provide qualitative analysis in support of the 

evaluation. The report for each facility shall identify a responsible Postal Service 

representative, with knowledge of these two matters specific to the facility, who will be 

available to provide prompt responses to requests for clarification from the Commission. Each 

facility shall quantify the Inbound Letter Post and Outbound Single-Piece First-Class Mail 

International volume that it processed each Quarter and provide corresponding 

quantification for the same period during FY 2024. The report for each facility shall be filed 

within 90 days of the issuance of this ACD (by June 26, 2024). An updated report from each 

facility shall be filed at the time of the FY 2023 ACR (by December 30, 2024).

228 See, e.g., Library Reference USPS-FY23-29, Excel file “ACR2023 CLT Data.xlsx.”

229 Mid-year refers to the aggregation of the data for Quarters 1 and 2 of FY 2024.

230 Second-half refers to the aggregation of the data for Quarters 3 and 4 of FY 2024. Annualized refers to the aggregation of the data for all four 

quarters of FY 2024.
Docket No. ACR2023 - 161 -

B. USPS MARKETING MAIL

(1) FY 2022 ACD Directives

Finding that three USPS Marketing Mail products did not meet their FY 2022 service 

performance targets (High Density and Saturation Flats/Parcels, Flats, and Every Door 

Direct Mail—Retail (EDDM-R)), the Commission found that these products were out of 

compliance. FY 2022 ACD at 158. The Commission required the Postal Service to evaluate 

the efficacy of its FY 2023 initiatives to improve service performance and provide a 

detailed plan to improve performance. See id. at 158-59.

(2) FY 2023 Results

Figure V-28 shows the service performance results compared to the FY 2023 targets for 

USPS Marketing Mail products for FY 2023.

Figure V-28

USPS Marketing Mail

Service Performance Results, by Percent, FY 2023

Note: The Postal Service reports its targets to two decimal places, whereas results are reported to one decimal place. The difference between the target and the 

result is rounded to two places past the decimal point on this figure.

Source: FY 2023 Service Performance Report at 9.

Table V-9 summarizes service performance results compared to the annual targets for 

USPS Marketing Mail products for FY 2021, FY 2022, and FY 2023.

 

 

 

 

 

 

 

 

 

 
Docket No. ACR2023 - 162 -

Table V-9

USPS Marketing Mail

Service Performance Results, by Percent, FY 2021–FY 2023

Product FY 

2021 Target FY 2022 Target FY 2023 Target

High Density and Saturation Letters (HDSL) 92.69 86.62 96.6 91.84 97.0 93.64

High Density and Saturation Flats (HDSF) 85.33 86.62 87.6 91.84 89.8 93.64

Carrier Route 85.1 86.62 93.3 91.84 94.4 93.64

Letters 89.53 86.62 94.4 91.84 96.0 93.64

Flats 72.45 86.62 84.3 91.84 88.4 93.64

Parcels 52.73 86.62 96.8 91.84 99.2 93.64

Every Door Direct Mail (EDDM) 75.67 86.62 78.0 91.84 81.3 93.64

Note: Redtext indicates service performance was below target. Greentext indicates service performance was above target.

The Postal Service explains that a source system error in its measurement of service performance for USPS Marketing Mail Parcels resulted in the drastic decrease in that 

product’s score from FY 2020 to FY 2021. See, e.g., Library Reference USPS-FY22-29 Preface at 6. As directed by the Commission, the Postal Service reports that it resolved 

this issue prior to Quarter 3 of FY 2022. Id.

Source: FY 2023 Service Performance Report at 9; FY 2022 Service Performance Report at 9; FY 2021 Service Performance Report at 10.

(3) Postal Service Report

The Postal Service notes that the service performance scores for all USPS Marketing Mail 

products increased from FY 2022 to FY 2023 and that four products exceeded their targets: 

(1) High Density and Saturation Letters; (2) Carrier Route; (3) Letters; and (4) Parcels. FY 

2023 Service Performance Report at 11. As directed in the FY 2022 ACD, for USPS 

Marketing Mail products that failed to achieve their on-time service performance targets in 

FY 2023, the Postal Service provided explanations of its progress at improving service 

performance in FY 2023. See Library Reference USPS-FY22-29 Preface at 23-27. These 

initiatives are described in greater detail in Section A.2.d., supra.

(4) Comments and Related Commission Analysis

The Public Representative observes generally that, for USPS Marketing Mail, “despite 

having raised the targets for all service standards, FY 2023’s results mirrored last year’s 

results.” PR Comments at 67. He also recounts the initiatives implemented by the Postal 

Service to improve service performance for USPS Marketing Flats, noting that most are 

targeted at Flats. Id. at 69-73.

The Commission has taken these comments into account in formulating its directives, 

which are aimed to elicit information and data regarding the efficacy of the Postal Service’s 

service performance initiatives and the steps that the Postal Service will take to improve 

service performance for its USPS Marketing Mail products, as detailed below in Section 

V.A.4.b.(6), infra.
Docket No. ACR2023 - 163 -

(5) Commission Analysis

USPS Marketing Mail is designed for bulk mailings of items that are not required to be 

mailed as First-Class Mail or authorized for mailing as Periodicals. See MCS § 1200.1; see 

also DMM §§ 243.1.1, 243.2.1. In FY 2023, despite improved performance from FY 2022, 

three USPS Marketing Mail products failed to meet their targets in FY 2022: (1) High 

Density and Saturation Flats; (2) Flats; and (3) EDDM-R. All of these products include flatshaped mailpieces, which have historically trailed letter mail in terms of service 

performance. The Postal Service attributes this lag in performance to factors such as 

“bundle breakage, multiple mail flows, and proportion of manual volume compared to 

letters.” FY 2023 Service Performance Report at 11. Conversely, performance results for 

four USPS Marketing Mail products (Letters, Carrier Route, Parcels, and High Density and 

Saturation Letters) exceeded the applicable FY 2023 performance targets. Parcels had the 

best performance in FY 2023, scoring 5.6 percentage points above its target. The remaining 

products exceeded their FY 2023 targets by more modest amounts.

The Postal Service submitted point impact data representing the amount (number of 

percentage points) by which on-time results for this class decreased due to each specific 

root cause of failure.

231 The Commission uses these data to promote transparency and 

accountability for USPS Marketing Mail service performance and to evaluate the relative 

significance of the Postal Service’s improvement initiatives. The point impact data provided 

by the Postal Service for USPS Marketing Mail are differentiated by shape (letter-shaped 

and flat-shaped mailpieces) and origin- versus destination-entry, rather than product. 

Library Reference USPS-FY22-29 Preface at 3.

The Commission focuses its analysis on those letter-shaped and flat-shaped USPS 

Marketing Mail products that were entered at the origin due to the increased likelihood of 

more processing and greater transit duration compared to destination-entered mailpieces.

Table V-10 shows the FY 2023 and FY 2022 top root causes and corresponding point 

impacts for USPS Marketing Mail Flats and USPS Marketing Mail High Density and 

Saturation Flats entered at origin.

231 Library Reference USPS-FY22-29, Excel file “FY22 Marketing Mail Root Cause.xlsx.”
Docket No. ACR2023 - 164 -

Table V-10

USPS Marketing Mail

National Top Five Root Causes and Point Impact FY 2022–FY 2023

Note: This data is not available. The Commission generally receives root cause point impact data for products that did not reach their target in the previous 

fiscal year and High Density and Saturation Flats met their target in FY 2022.

Source: Library Reference USPS-FY23-29, Excel file “FY23 Marketing Mail Root Cause.xlsx.”

In FY 2023, similar to First-Class Mail, the majority of the top five root causes for originentered USPS Marketing Mail categories were related to transportation and Last Mile. 

However, for High Density and Saturation Flats, First Mile failures were also prominent. In 

general, the point impacts of the top five root causes decreased or increased only minimally 

compared with FY 2022. With one exception, the point impacts of the top five root causes 
Docket No. ACR2023 - 165 -

for USPS Marketing Mail were in the single digits in FY 2023. That one exception was 6-10-

Day USPS Marketing Mail Flats, with the FY 2023 point impact for the Transit Missing 

Outgoing Scan indicator at 11.28 percent, an increase of 7.5 percent compared to FY 2022 

point impact.

Figure V-29 shows the top five root causes of failure for service categories of USPS 

Marketing Mail Flats and High Density and Saturation Flats, alongside the points by which 

the Postal Service fell short of the applicable target.

Figure V-29

Comparison of the Point Impacts of the Top Five Root Causes with the Deviation from the 

Target Performance Score in Percentage Points for USPS Marketing Mail Categories

Source: Library Reference USPS-FY23-29, Excel file “FY23 Marketing Mail Root Cause.xlsx;” Library Reference USPS-FY22-29, Excel file “FY22 Marketing Mail Root 

Cause.xlsx.”

Within both USPS Marketing Mail Flats and High Density and Saturation Flats, the 3-5-Day 

category has the most volume, thus exerting the greatest impact on product performance. 

As shown in Figure V-29, the point impact of the Transit Missing Outgoing Scan failure for 

the 3-5-Day categories exceeds the points by which the product missed the applicable

target. Therefore, mitigating transit impacts appears to be the Postal Service’s most 

effective approach for achieving its performance target.
Docket No. ACR2023 - 166 -

(6) Commission Findings and Directives

Although on-time service performance scores increased for each USPS Marketing Mail 

product from FY 2022 to FY 2023, three products did not achieve their service performance 

targets in FY 2023: (1) High Density and Saturation Flats/Parcels; (2) Flats; and (3) EDDM-R. 

Considering this, the Commission finds that High Density and Saturation Flats/Parcels, Flats, 

and EDDM-R were each out of compliance in FY 2023. The Commission directs the Postal 

Service to improve service performance results to achieve the applicable on-time percent 

target level for these products in FY 2024. The Commission directs the Postal Service to refine 

and apply its data leveraging techniques to improve service performance for USPS Marketing 

Mail products that did not achieve their targets.

To monitor the Postal Service’s initiatives to remediate service performance issues with 

respect to these non-compliant products, the Commission directs the Postal Service to provide 

information concerning the following matters for High Density and Saturation Flats/Parcels, 

Flats, and EDDM-R (as well as any other USPS Marketing Mail product that fails to meet its 

applicable service performance target in FY 2024).

The Commission directs the Postal Service to evaluate the efficacy of its FY 2024 nationwide 

initiatives to improve service performance for High Density and Saturation Flats/Parcels, 

Flats, and EDDM-R (as well as any other USPS Marketing Mail product that fails to meet its 

applicable service performance target in FY 2024), and to provide specific detailed plans to 

improve these products’ service performance, as described in items 1 and 2.

1. The Postal Service shall evaluate the efficacy of its FY 2024 initiatives to 

improve on-time results for these products by describing the progress made 

(the status of initiatives identified in Docket Nos. ACR2021, ACR2022, and 

ACR2023) and explaining how the Postal Service’s progress (or lack thereof) 

affected on-time results for these products in FY 2024. The evaluations shall 

include quantitative comparisons of the same period last year (e.g., compare 

FY 2024 Quarter 1 to FY 2023 Quarter 1) and provide a narrative explaining 

the practices observed to remediate the underlying problem(s) in FY 2024.

2. The Postal Service shall provide a detailed plan to improve on-time results for 

these products that describes each planned initiative, the problem that the 

planned initiative is expected to remediate, the estimated timeframe for 

implementation and completion of each planned initiative, and the KPI(s) used 

to measure and evaluate progress toward completion.

The report shall identify a responsible Postal Service representative, with knowledge of these 

two matters specific to these products, who will be available to provide prompt responses to 

requests for clarification from the Commission. This report shall be filed within 90 days of the 

issuance of this ACD (by June 26, 2024). An updated report shall be filed at the time of the 

FY 2024 ACR (by December 30, 2024).
Docket No. ACR2023 - 167 -

C. PERIODICALS

(1) FY 2022 ACD Directives

In FY 2022, the Commission explained that although both Periodicals products met their 

on-time service performance targets in FY 2022, because these products’ targets remained 

below the targets set for other products (as well as those set historically) and because the 

Periodicals products performed below target from FY 2009 through FY 2021, the 

Commission directed the Postal Service to evaluate, for Periodicals falling below target, the 

efficacy of its FY 2023 initiatives to improve service performance and provide a detailed 

plan to improve performance. FY 2022 ACD at 164-65.

(2) FY 2023 Results

Figure V-30 shows the service performance results compared to the annual targets for both 

Periodicals products for FY 2023.

Figure V-30

Periodicals

Service Performance Results, by Percent, FY 2023

Note: The Postal Service reports its targets to two decimal places,whereas results are reported to one decimal place. The difference between the 

target and the result is rounded to two places past the decimal point on this figure.

Source: FY 2023 Service Performance Report at 13.

Table V-11 summarizes service performance results compared to the annual targets for 

both Periodicals products for FY 2021, FY 2022, and FY 2023.

 

 

 

 

 

 
Docket No. ACR2023 - 168 -

Table V-11

Periodicals

Service Performance Results, by Percent, FY 2021–FY 2023

Note: Redtext indicates service performance was below target. Greentext indicates service performance was above target.

Source: FY 2023 Service Performance Report at 13; FY 2022 Service Performance Report at 17; FY 2021 Service Performance Report at 14.

(3) Postal Service Report

The Postal Service explains that both Periodicals products exceeded their service 

performance targets in FY 2023. FY 2023 Service Performance Report at 14. As directed in 

the FY 2022 ACD, the Postal Service provided evaluations of the efficacy of its FY 2023 

initiatives to improve service performance for both Periodicals products, as well as its 

plans to further remedy service performance for those products in FY 2024.232

(4) Comments and Related Commission Analysis

The Public Representative notes that in FY 2023, both In-County and Outside County 

Periodicals met their service performance targets, “despite the fact that performance 

targets were raised[;]” however, he asserts that targets remain significantly below the 95

percent long-term goal. PR Comments at 73. In terms of quarterly performance, he notes 

that “[t]he primary difference between FY 2022 and FY 2023 is that performance targets 

were met for all but Quarter 1 in FY 2023. For FY 2022, targets were met in only Quarters 3 

and 4.” Id. at 74. While Quarter 1 performance in FY 2023 remained below other quarters, 

he notes that scores were noticeably higher than for the same period in FY 2022. Id.

N/MA asserts generally that “[t]he service provided to Periodicals mail, while facially 

improved by a marginal degree...[remains] unacceptable.” N/MA Comments at 7. 

Specifically, N/MA also notes that: (1) the FY 2024 target is merely 87.29 percent on-time 

delivery, far below the 95 percent target conveyed in the DFA Plan; (2) the Postal Service 

only measured about half of all Periodicals mail; (3) the Periodicals service performance in 

FY 2023 is not comparable to that in FY 2022 due to the CET changes deriving from Docket 

No. N2022-2; and (4) the Postal Service’s position that it cannot isolate and quantify the 

impact of service performance improvement initiatives means that the Commission will be 

unable to determine whether service has truly improved. Id. at 8-10.

In its reply, the Postal Service points out that service performance scores for both 

categories of Periodicals actually improved from FY 2022 and both met their respective 

232 See Library Reference USPS-FY23-29 Preface at 28-31.
Docket No. ACR2023 - 169 -

targets. Postal Service Reply Comments at 28-29. The Postal Service also explains that a 

larger portion of unmeasured mail does not necessarily mean that the service performance 

score for Periodicals is necessarily inaccurate; indeed, “because the Postal Service’s 

measurement system is, by design, ‘representative,’ such volumes that cannot be measured 

would be expected to have achieved the same performance as the volume that is 

measured.” Id. at 29. Additionally, the Postal Service rejects N/MA’s assertion that the CET 

changes slowed down Periodical service performance, stating that the evidence in the 

docket considering CET changes suggested that performance would actually improve after 

they were implemented. Id. at 29-31.

The Commission notes the improvement in the service performance scores for Periodicals 

from FY 2022 to FY 2023. The Commission recommends that the Postal Service renew its 

focus on increasing the percentage of mail in measurement for Periodicals specifically.

(5) Commission Analysis

The Periodicals class includes newspapers or other publications that meet applicable 

criteria for regular issuance, editorial and advertising content, circulation levels, and 

sortation/preparation requirements. See MCS § 1300.1. Both Periodicals products achieved 

their on-time target of 85.75 percent during FY 2023. In-County Periodicals exceeded the 

target by 0.75 percentage points, while Outside County Periodicals surpassed it by 0.55 

percentage points. This marks an improvement in on-time performance compared to FY 

2022, with In-County Periodicals and Outside County Periodicals increasing by 2.9 and 3.0 

percentage points, respectively. However, the Commission notes that similar to previous 

years, the FY 2023 targets set by the Postal Service for Periodicals are the lowest among 

Market Dominant product targets and far below the 95 percent target conveyed in the DFA 

Plan. Nonetheless, FY 2023 represents the second consecutive year of meeting targets for 

Periodicals products, following more than a decade of falling short. Moreover, despite 

challenges posed by the COVID-19 pandemic, service performance for both Periodicals 

products surpassed FY 2019 levels for the first time since the outbreak. Additionally, the 

average delivery time decreased from 1.8 days in FY 2022 to 1.7 days in FY 2023 for both 

Periodicals products.

Table V-12 presents the top five root causes for failure of In-County and Outside County 

Periodicals to be delivered on time in FY 2023, along with the corresponding point impact 

for FY 2022, and the change from FY 2022.
Docket No. ACR2023 - 170 -

Table V-12

Periodicals

National Top Five Root Causes and Point Impact FY 2022–FY 2023

Source: Library Reference USPS-FY23-29, Excel file “FY23 Periodicals Root Cause.xlsx;” Docket No. ACR2022, Library Reference USPS-FY22-29, 

Excel file “FY22 Periodicals Root Cause.xlsx.”

In FY 2023, three of the top five root causes for Periodicals service failures remained 

consistent with those observed in FY 2022. However, the point impact associated with all 

three of these root causes decreased in FY 2023. Similar to FY 2022, Last Mile failures 

continued to stand out as the most prominent root cause of service failures, decreasing 

from 5.56 in FY 2022 to 4.80 in FY 2023, reflecting a decline of 0.76 percentage points. 

Conversely, for the second highest root cause category, Transit Missing Outgoing Scan, the 

point impact experienced a marginal decrease, dropping from 2.56 in FY 2022 to 2.26 in 

FY 2023.

The top five root causes collectively exert a negative impact of approximately 10 

percentage points on the performance score for Periodicals. Given that the FY 2023 

performance score stands at approximately 86 percent, it appears that achieving the longterm goal of 95 percent on-time performance would necessitate nearly complete 

elimination of these top five root causes.

(6) Commission Findings and Directives

The Commission recognizes that both Periodicals products met their on-time service 

performance targets in FY 2023 and notes that the Postal Service has raised these targets for 

FY 2023. However, the targets set by the Postal Service for Periodicals remain below targets 

set for other Market Dominant products as well as below historic targets set for both 

Periodicals products. With this in mind, and because both Periodicals products performed 

below target from FY 2009 through FY 2021, the Commission directs the Postal Service to 

provide, for Periodicals products that do not meet their targets in FY 2024, specific detailed 

plans to improve service performance as described in items 1 and 2.

1. The Postal Service shall evaluate the efficacy of its FY 2024 initiatives to 

improve on-time results for Periodicals by describing the progress made 

(including the status of initiatives identified in Docket Nos. ACR2021, ACR2022, 

and ACR2023) and explaining how the Postal Service’s progress (or lack 

thereof) affected on-time results for Periodicals in FY 2024. The evaluations 
Docket No. ACR2023 - 171 -

shall include quantitative comparisons of the same period last year (e.g., 

compare FY 2024 Quarter 1 to FY 2023 Quarter 1) and provide a narrative 

explaining the practices employed to remediate the underlying problem(s) in 

FY 2024.

2. The Postal Service shall provide a detailed plan to improve on-time results for 

Periodicals that describes each planned initiative, the problem that the planned 

initiative is expected to remediate, the estimated timeframe for implementation 

and completion of each planned initiative, and the KPI(s) used to measure and 

evaluate progress toward completion.

The report shall identify a responsible Postal Service representative, with knowledge of these 

two matters specific to Periodicals, who will be available to provide prompt responses to 

requests for clarification from the Commission. This report shall be filed at the time of the 

FY 2024 ACR (by December 30, 2024).

D. PACKAGE SERVICES

(1) FY 2022 ACD Directives

The Commission found that FY 2022 was the eleventh consecutive year that the service 

performance result for BPM Flats was below its target. FY 2022 ACD at 170. The 

Commission also found that service performance results for Media Mail/Library Mail 

remained below target. Id. Thus, the Commission found both products to be out of 

compliance in FY 2022. Id. For these two products, the Commission directed the Postal 

Service to evaluate the efficacy of its FY 2023 initiatives to improve service performance 

and provide a detailed plan to improve performance in FY 2024. Id.

(2) FY 2023 Results

Figure V-31 shows the FY 2023 service performance results compared to the annual target 

of 90.0 percent on-time for Package Services products.
Docket No. ACR2023 - 172 -

Figure V-31

Package Services

Service Performance Results, by Percent, FY 2023

Notes: The Postal Service reports its targets and results to one place past the decimal point. The Commission approved a semi-permanent exception for service 

measurement of Alaska Bypass Service. Docket No. RM2015-1, Order Concerning Semi-Permanent Exception from Periodic Reporting of Service Performance 

Measurement for Alaska Bypass Service, December 23, 2014 (Order No. 2303).

Source: FY 2023 Service Performance Report at 16.

Table V-13 summarizes service performance results compared to the annual targets for 

Package Services products for FY 2021, FY 2022, and FY 2023.

Table V-13

Package Services

Service Performance Results, by Percent, FY 2021–FY 2023

Note: Redtext indicates service performance was below target. Greentext indicates service performance was above target.

Source: FY 2023 Service Performance Report at 16; FY 2022 Service Performance Report at 24; FY 2021 Service Performance Report at 21.

 

 

 

 

 

 

 

 

 
Docket No. ACR2023 - 173 -

(3) Postal Service Report

The Postal Service reports that service performance for BPM Parcels and Media 

Mail/Library Mail exceeded their target in FY 2023. FY 2023 Service Performance Report at

17. It also notes that, while service performance for BPM Flats did not meet its target, it did 

improve compared to FY 2022. Id. It explains that because Package Services are “relatively 

low-volume products that are currently processed together with Priority and Ground 

Advantage packages,” it is more difficult to achieve efficiencies of scale and thus improved 

service performance. Id. As directed in the FY 2022 ACD, the Postal Service provided 

evaluations of the efficacy of its FY 2023 initiatives to improve service performance for 

Package Services products, as well as its plans to further remedy service performance for 

those products in FY 2024. See Library Reference USPS-FY22-29 Preface at 32-33.

(4) Comments and Related Commission Analysis

The Public Representative summarizes the primary Postal Service initiatives aimed at 

improving service performance for BPM Flats. PR Comments at 76.

The Commission has taken these comments into account in formulating its directives, 

which are aimed to elicit information and data regarding the efficacy of the Postal Service’s 

service performance initiatives and the steps that the Postal Service will take to improve 

service performance for BPM Flats, as are detailed below in Section V.A.4.d.(6), infra.

(5) Commission Analysis

Package Services are advertised as a cost-effective option, which may receive deferred 

service, for items that are not required to be mailed as First-Class Mail or Periodicals. See 

MCS § 1400.1. Service performance results for BPM Parcels and Media Mail/Library Mail 

exceeded the applicable service performance target in FY 2023. Before FY 2023, Media 

Mail/Library Mail was below target for 5 consecutive years. BPM Flats did not meet its 

service performance target for FY 2023. The BPM Flats product has experienced service 

performance challenges for many years, falling below target for over a decade.

Table V-14 presents the top five root causes for the failure of the BPM Flats product to be 

delivered on time in FY 2023, with the corresponding change from FY 2022.
Docket No. ACR2023 - 174 -

Table V-14

Bound Printed Matter Flats 

National Top Five Root Causes and Point Impact FY 2022–FY 2023

Source: Library Reference USPS-FY23-29, Excel file “FY 23 BPM Flats Root Cause.xlsx;” Library Reference USPS-FY22-29, Excel file “FY22 BPM Flats Root 

Cause.xlsx.”

In FY 2023, while BPM Flats exhibited an improvement in service performance compared 

to FY 2022, it still fell short of meeting its FY 2023 target. As illustrated in Table V-14, the 

point impact increased for the two transit-related root causes are among the top five 

contributors to service failures. Notably, the point impact for the foremost root cause, 

Transit Late Secondary Scan, increased from 3.82 in FY 2022 to 9.15 in FY 2023. Transit 

Missing Outgoing Scan also experienced a slight increase in FY 2023. In contrast, there was 

a notable decrease in the point impact for Unable to Assign, a category applied to 

mailpieces lacking sufficient information to ascertain the root cause.

Figure V-32 compares the point impact of the top five root causes of performance failure 

for BPM Flats with the points by which the Postal Service missed the target for BPM Flats in 

FY 2023.
Docket No. ACR2023 - 175 -

Figure V-32

Bound Printed Matter Flats

Point Impact of Top Five Root Causes compared with Points from Target

Source: Library Reference USPS-FY23-29, Excel file “FY 23 BPM Flats Root Cause.xlsx.”

As Figure V-32 illustrates, failure to meet the performance target stemmed from a 

combination of factors rather than a singular cause. The Commission notes that a 

substantial improvement could be made by addressing transit and Last Mile root causes 

which, taken together, exceed the points by which BPM Flats missed their target in 

FY 2023. The Postal Service must address a multitude of issues to improve performance 

enough to meet the target in FY 2024. Nevertheless, the Commission acknowledges the 

unique characteristics of BPM Flats, which are offered as a cost-effective option for 

business mailers233 and advertised as potentially receiving deferred service. See DMM § 

263.3.1.

(6) Commission Findings and Directives

Although on-time service performance scores increased for each Package Services product 

from FY 2022 to FY 2023, BPM Flats did not achieve its service performance targets in 

FY 2023. While the on-time performance result for BPM Flats increased from FY 2022 to 

FY 2023 by approximately 2 percentage points, the Commission remains concerned that this 

product is substantially below its target. Moreover, FY 2023 marks the twelfth consecutive 

year that BPM Flats has remained below its target. The Commission acknowledges that the 

Postal Service has repeatedly asserted that this product has significant volumes that are 

incompatible with existing equipment and therefore undergo manual processing, which is 

233 See United States Postal Service, What is Bound Printed Matter Service?, September 6. 2019, available at 

https://faq.usps.com/s/article/What-is-Bound-Printed-Matter-Service; see also MCS § 1415.1(c); DMM § 604.5.1.11. This product is not 

available at the retail counter; instead, business mailers must follow the preparation, deposit, and permit requirements to use this product. See

United States Postal Service, What is Bound Printed Matter Service?; see also DMM § 604.5.1.11.
Docket No. ACR2023 - 176 -

slower and costlier. Considering this, the Commission finds that BPM Flats was out of 

compliance in FY 2023. The Commission directs the Postal Service to improve service 

performance results to achieve the applicable on-time percent target level for this product in 

FY 2024. The Commission directs the Postal Service to refine and apply its data leveraging 

techniques to improve service performance for BPM Flats.

To monitor the Postal Service’s initiatives to remediate these ongoing issues related to this 

non-compliant product, the Commission directs the Postal Service to evaluate the efficacy of 

the Postal Service’s FY 2024 initiatives (including the status of initiatives identified in Docket 

Nos. ACR2021, ACR2022, and ACR2023) to improve on-time service performance for BPM 

Flats. The Postal Service shall also provide a detailed plan for how each product’s results will 

be improved, describing: each planned initiative, the problem that the planned initiative is 

expected to remediate, the estimated timeframe for implementation and completion of each 

planned initiative, and the KPI(s) used to measure and evaluate progress toward completion.

The report shall identify a responsible Postal Service representative, with knowledge of these 

two matters specific to BPM Flats, who will be available to provide prompt responses to 

requests for clarification from the Commission. This report shall be filed within 90 days of the 

issuance of this ACD (by June 26, 2024). An updated report shall be filed at the time of the 

FY 2023 ACR (by December 30, 2024).

E. SPECIAL SERVICES

(1) FY 2022 ACD Directives

Finding that two Special Services products (Post Office Box Service and Ancillary Services) 

failed to meet their service performance targets for FY 2022, the Commission deemed both 

to be out of compliance. FY 2022 ACD at 173. The Commission directed the Postal Service 

to evaluate the efficacy of its FY 2023 initiatives to improve service performance and 

provide a detailed plan to improve performance in FY 2024. Id.

(2) FY 2023 Results

Table V-15 shows the service performance results compared to the annual target of 90.0 

percent on-time for Special Services products for FY 2021, FY 2022, and FY 2023.234

234 The Commission approved a semi-permanent exception for service measurement of the following Special Services: hard-copy Address 

Correction Service, Applications and Mailing Permits, Business Reply Mail, Bulk Parcel Return Service, Certificate of Mailing, Merchandise 

Return Service, Parcel Airlift, Restricted Delivery, Shipper-Paid Forwarding, Special Handling, Stamped Envelopes, Stamped Cards, Premium 

Stamped Stationery, Premium Stamped Cards, International Certificate of Mailing, outbound International Registered Mail, International Return 

Receipt, International Restricted Delivery, International Insurance in conjunction with Inbound Surface Parcel Post (at UPU Rates), Customs 

Clearance and Delivery Fee, Caller Service, Change of Address Credit Card Authorization, International Reply Coupon Service, International 

Business Reply Mail, and Money Orders (sales aspect of this service only, not inquiries). Docket No. RM2010-11, Order Concerning Postal 

Service Request for Semi-Permanent Exceptions from Periodic Reporting of Service Performance Measurement, September 3, 2010 (Order No. 

531); Docket No. RM2010-14, Order Approving Semi-Permanent Exception from Periodic Reporting of Service Performance Measurement for 

Applications and Mailing Permits, October 27, 2010 (Order No. 570).
Docket No. ACR2023 - 177 -

Table V-15

Special Services

Service Performance Results, by Percent, FY 2021–FY 2023

Notes: The Postal Service reports its targets and results to one place past the decimal point. Red text indicates service performance was below target. Greentext 

indicates service performance was above target.

Source: FY 2023 Service Performance Report at 19-20; FY 2022 Service Performance Report at 30; FY 2021 Service Performance Report at 25.

(3) Postal Service Report

The Postal Service notes that Post Office Box Service and Ancillary Services again failed to 

meet their service performance targets in FY 2023. FY 2023 Service Performance Report at 

21. As directed in the FY 2022 ACD, the Postal Service provided evaluations of the efficacy 

of its FY 2023 initiatives to improve service performance for Post Office Box Service and 

Ancillary Services, as well as its plans to further remedy service performance for those 

products in FY 2023. Library Reference USPS-FY23-29 Preface at 34-35.

(4) Comments and Related Commission Analysis

No commenters addressed the Special Services class specifically.

(5) Commission Analysis

Special Services are offerings related to the delivery of mailpieces, including acceptance, 

collection, sorting, transportation, or other functions. See MCS § 1500.1. Many of these 

offerings are coupled with underlying mail matter (such as the services within the Ancillary 

Services and the International Ancillary Services products), whereas others are stand-alone 

services (such as Post Office Box Service, Money Orders, and Stamp Fulfillment Services). 

See id.

Service performance results for International Ancillary Services, Money Orders, and Stamp 

Fulfillment Services exceeded the applicable targets for FY 2023. Two products did not 

achieve their respective FY 2023 targets: Post Office Box Service and Ancillary Services.
Docket No. ACR2023 - 178 -

Service performance for Post Office Box Service has remained slightly below the target 

since FY 2015. For FY 2023, service performance for Post Office Box Service was 3.7 

percentage points below the target and has been declining for the past several fiscal years. 

Service performance for Ancillary Services first fell below target in FY 2020 and has 

remained below target since then. In FY 2023, Ancillary Services missed its performance 

target by 8.3 percentage points, a notable increase from the 5.5 percentage point shortfall 

observed in FY 2022, indicating a decline in performance between the two fiscal years.

(6) Commission Findings and Directives

Two Special Services products did not achieve their service performance targets in FY 2023: 

Post Office Box Service and Ancillary Services. Considering this, the Commission finds that Post 

Office Box Service and Ancillary Services were out of compliance in FY 2023. The Commission 

directs the Postal Service to improve service performance results to achieve the applicable ontime percent target level for these products in FY 2024.

To monitor the Postal Service’s initiatives to remediate these ongoing issues with respect to 

these non-compliant products, the Commission directs the Postal Service to provide the 

following information in the FY 2024 ACR for Post Office Box Service and Ancillary Services: 

(1) an evaluation of the efficacy of the Postal Service’s FY 2024 initiatives (including the 

status of initiatives identified in Docket Nos. ACR2021, ACR2022, and ACR2023) to improve 

on-time service performance for each product; and (2) a detailed plan explaining how each 

product’s results will be improved.

5. Nonpostal Services

The PSRA authorizes the Postal Service to provide certain nonpostal services to the public 

and other Governmental agencies and requires the Postal Service to periodically report the 

quality of service for these nonpostal services. See 39 U.S.C. §§ 3703-3705. As a result, in 

Docket No. RM2022-7, the Commission established certain reporting requirements for 

nonpostal services, including that the Postal Service shall provide quantitative measures of 

service performance for nonpostal services annually (or, where unavailable, qualitative 

descriptions). See 39 C.F.R. § 3055.25. Specifically for interagency agreements (IAAs) under 

39 U.S.C. § 3704, the Commission mandated that the Postal Service report the quality of 

service for the IAA program as a whole. See id. § 3055.25(c). The Commission also specified 

that the reporting requirements shall not go into effect until the beginning of FY 2024 to 

allow the Postal Service to set service standards and (if needed) file a petition for an 

exception from reporting pursuant to 39 C.F.R. § 3005.103. Order No. 6439 at 16-17. As a 

result, the Postal Service has not yet provided any service performance information for 

nonpostal services, and the Commission will therefore not evaluate these services in 

FY 2023.235

235 See, e.g., FY 2023 ACR at 109-10 (noting that there were no agreements with state, local, or tribal governments in FY 2022 and that the 

Postal Service does not currently have a method to measure the service performance for IAAs); Docket No. RM2022-7, Comments of the United 

States Postal Service and Notice of Filing of Materials Under Seal, October 31, 2022, at 15 (“Certain nonpostal services may also lend 

themselves to quality-of-service reporting beyond the calculation of revenue; such reporting, however, would need to be tailored to the 

individual service in question, and should as such be developed on a case-by-case basis.”).
Docket No. ACR2023 - 179 -

B. Customer Access

1. Introduction

A. KEY FINDINGS

Key findings and corresponding Commission directives/recommendations regarding 

customer access include:

• Accurate and Consistent Information from the Postal Service

o The Commission finds that the information filed by the Postal Service 

regarding retail facilities and suspended Post Offices contained numerous 

inconsistencies and inaccuracies that require the Postal Service’s attention to 

provide proper transparency to the public.

o Accordingly, the Commission requires the Postal Service to include accurate 

and consistent information in the FY 2024 ACR.

• Post Office Suspensions Remaining from FY 2016

o 78 Post Offices have remained suspended since at least FY 2016. Of the 78 

suspensions remaining from FY 2016, 50 have been suspended for more than 

10 years; 8 have been suspended for more than 20 years; and 3 have been 

suspended for almost 30 years. The Postal Service should resolve all 

suspensions as soon as possible and the Postal Service would benefit from 

resolving the oldest suspensions first because resolving them becomes more 

difficult as time passes.

o Due to the Postal Service’s lack of prioritization and progress on resolving the 

backlog of suspensions in FY 2023, the Commission will incorporate 

requirements for the Postal Service to update the status of action items related 

to resolving this backlog via quarterly reports and in the FY 2024 ACR.

• Post Offices Suspended Between FY 2017 and FY 2023

o Besides the 78 suspended Post Offices remaining from FY 2016, an additional 

318 Post Offices suspended between FY 2017 and FY 2023 remained 

unresolved at the end of FY 2023.

o The Commission requires the FY 2024 ACR to include a detailed plan and 

timeline for resolving Post Offices suspended from FY 2017 through FY 2024.

• Wait Time in Line

o Wait time in line increased by 2 seconds in FY 2023 but improved over the 

FY 2020 and FY 2021 results. The Postal Service’s plans to deploy new selfservice kiosks (SSKs) and Rapid Dropoff Stations appear likely to address the 

issue of insufficient counter stations by diverting transactions from the 

window to these machines. However, it is unclear how continued 
Docket No. ACR2023 - 180 -

assessments and training strategies will address the issue of staffing 

concerns and gaps in District duties and responsibilities.

o The Commission will monitor wait time in line in Docket No. ACR2024 to ensure 

continued improvement. The Commission encourages the Postal Service to 

continue implementing strategies for improving wait time in line. Accordingly, 

the Commission requires the Postal Service to include in the FY 2024 ACR 

information aimed at creating effective improvement plans.

• Alternative Access

o Retail revenue has declined across all channels. However, it appears that 

customers had sufficient access to postal services in FY 2023 because the 

Postal Service continued to make postal services available at retail facilities 

and through alternative access channels. The Commission will continue to 

monitor alternative access channels to ensure that customers have regular 

and effective access to postal services in all communities.

o The Commission recommends that the Postal Service continue to offer and 

expand alternative access channels to ensure customers have continued access 

to essential postal services. If revenue from retail channels continues to decline 

across the board in FY 2024, the Postal Service must identify the root causes for 

these declines and describe plans (if any) to address them in the FY 2024 ACR.

B. BACKGROUND

The PAEA requires the Postal Service to report in the ACR “measures of the quality of 

service afforded by the Postal Service in connection with [each Market Dominant] product, 

including...the degree of customer satisfaction with the service provided.”236 39 C.F.R. 

§ 3055.91 requires the Postal Service to provide information pertaining to four aspects of 

customer access: Post Offices (including closings and emergency suspensions), residential 

and business delivery points, collection boxes, and wait time in line. The FY 2023 ACR and 

Library Reference USPS-FY23-33 contain customer access information responsive to the 

requirements of Title 39 and the Commission’s regulations.237 The Postal Service provided 

additional information in a CHIR response.

238

C. INCONSISTENCIES AND INACCURACIES IN POSTAL 

SERVICE REPORTING

The Commission finds that the information filed by the Postal Service regarding retail 

facilities and suspended Post Offices contained numerous inconsistencies and inaccuracies 

that require the Postal Service’s attention to provide proper transparency to the public. 

First, the number of retail facilities was not consistent between the Postal Service’s 

FY 2023 Annual Report to Congress (FY 2023 Annual Report) and FY 2023 ACR. Second, the 

236 39 U.S.C. § 3652(a)(2)(B)(ii); see 39 C.F.R. § 3055.90.

237 FY 2023 ACR at 88; Library Reference USPS-FY23-33, December 29, 2023.

238 See January 19 Response to CHIR No. 2, questions 42-50.
Docket No. ACR2023 - 181 -

spreadsheet in Library Reference USPS-FY23-33 reporting the number of Post Offices and 

suspensions had several data entry and calculation errors.

The Postal Service also provides the number of retail facilities and delivery points in its 

Annual Report to Congress (Annual Report).239 The number of delivery points is consistent 

between the FY 2023 Annual Report and the FY 2023 ACR.240 By contrast, during the past 

few years, there have been discrepancies in the number of retail facilities between the 

Annual Report and ACRs that were reconciled in CHIR responses. See FY 2022 ACD at 174-

75. In the FY 2022 ACD, to promote consistency between reports, the Commission directed 

the Postal Service to report the number of retail facilities in the FY 2023 Annual Report and 

FY 2023 ACR using the same system, as well as reconcile any discrepancies in the FY 2023 

ACR. Id. at 175.

Contractor-operated retail facilities consist of community Postal Offices (CPOs), contract 

postal units (CPUs), and Village Post Offices (VPOs). For FY 2023, the Postal Service 

reported the number of contractor-operated retail facilities in the FY 2023 Annual Report

and FY 2023 ACR using only the Contract Postal Unit Technology (CPUT) system. FY 2023 

ACR at 88 n.36. The number of retail facilities at the end of FY 2023 is consistent between 

the FY 2023 Annual Report and FY 2023 ACR except for the total number of stations, 

branches, and carrier annexes, which the Postal Service addressed in the FY 2023 ACR.241

However, in a CHIR response, the Postal Service stated that in the FY 2023 Annual Report, 

the number of contractor-operated retail facilities at the end of FY 2022 is not correct. 

January 19 Response to CHIR No. 2, questions 43.e.-45.e. It explains that in the FY 2023 

Annual Report, the numbers reported for FY 2022 were copied from the FY 2022 Annual 

Report to Congress, which listed the wrong number of retail facilities.242 The Postal Service 

filed the correct number of retail facilities in the January 19 Response to CHIR No. 2, 

question 46 and states “[t]hese numbers represent the most accurate accounting currently 

available” as of January 19, 2024.

The Commission reiterates the importance of providing accurate and consistent information 

among the Annual Report, ACR, and CHIR responses. To promote consistency, the Postal 

Service must continue reporting the number of contractor-operated retail facilities using the 

CPUT system. The FY 2024 Annual Report, FY 2024 ACR, and Library Reference USPS-FY24-33 

must report the number of retail facilities for FY 2022 and FY 2023 using data from the

January 19 Response to CHIR No. 2, question 46. If there are any discrepancies, the Postal 

Service must identify and reconcile them in the FY 2024 ACR.

239 FY 2023 Annual Report at 33. Retail facilities are physical locations where the Postal Service offers products and services such as stamps and 

Post Office (PO) Boxes. They include Post Offices and contractor-operated retail facilities, which are discussed in Section V.B.2., infra.

240 Compare FY 2023 Annual Report at 33, with Library Reference USPS-FY23-33, folder “FY23-33,” Excel file “Annual Report Delivery Points 

FY23.xlsx,” tabs “Beginning FY” and “End FY.”

241 Compare FY 2023 Annual Report at 33, with FY 2023 ACR at 88.

242 See Library Reference USPS-FY22-17, December 29, 2022, file “FY2022 Annual Report to Congress.pdf,” at 28. At the Commission’s request, 

the Postal Service filed corrected numbers in a CHIR response. Docket No. ACR2022, Responses of the United States Postal Service to Questions 

1-30 of Chairman's Information Request No. 7, February 3, 2023, questions 22-26.
Docket No. ACR2023 - 182 -

The spreadsheet in Library Reference USPS-FY23-33 reporting the number of Post Offices 

and suspensions had several data entry and calculation errors. The Public Representative 

points out that the number of suspensions reported in the spreadsheet is inconsistent with 

the number reported in the FY 2023 ACR. PR Comments at 81. CHIR No. 2 was issued to 

reconcile these discrepancies, and the Postal Service filed a revised spreadsheet.243 The 

Postal Service explains that the revised spreadsheet “corrects a number of data entry and 

calculation errors, some of which were carried over from the FY 2022 Annual Compliance 

Report.” January 19 Response to CHIR No. 2, question 42.

In the FY 2024 ACR, Library Reference USPS-FY24-33 must correct data entry and calculation 

errors and report accurate, consistent information.

2. Retail Facilities

The Postal Service offers products and services such as stamps and PO Boxes at retail 

facilities. Retail facilities are operated either by the Postal Service (Postal Service-operated 

retail facilities) or third-party contractors (contractor-operated retail facilities). See 39 

C.F.R. § 241.3(a)(2)(i), (ii). Postal Service-operated retail facilities consist of Post Offices, 

classified stations and branches, and carrier annexes. A classified station is located within 

the corporate limits or city carrier delivery area of the city or town where a Post Office is 

located.244 In general, the name of the classified station does not contain the city name used 

in delivery addresses. Id. By contrast, a classified branch is located outside the corporate 

limits or city carrier delivery area of the city or town where a Post Office is located.245 In 

general, the name of the classified branch contains the city name used in delivery 

addresses. Id. A carrier annex is a facility that in general provides only carrier operations 

and not retail services.246

Contractor-operated retail facilities consist of CPUs, CPOs, and VPOs. CPUs are located at 

supplier-owned or supplier-leased facilities that provide postal services to the public at 

Postal Service prices.247 CPOs are CPUs that provide postal services in small communities, 

generally in areas where Post Offices have been discontinued, and usually bear their 

community’s name and ZIP Code. Id. VPOs are similar to CPUs and CPOs but offer limited 

services such as Forever Stamps and Priority Mail Flat Rate packages. Id. Although VPOs 

243 January 19 Response to CHIR No. 2, question 42, file “ChIR+2+Public+Response+Attachments.zip,” folder “Q.42,” file 

“ChIR2_Q42_PostOfficesFY2023.xlsb” (Post Offices Spreadsheet).

244 “Classified Station,” United States Postal Service, Postal Service-Operated Retail Facilities Discontinuance Guide, Handbook PO-101, October 

2012, Appendix A at 53 (Handbook PO-101), provided in a CHIR response: Docket No. ACR2022, Responses of the United States Postal Service 

to Questions 1-26 of Chairman’s Information Request No. 10, February 10, 2023, PDF file “chir10_q25_po101.pdf” (Docket No. ACR2022, 

Response to CHIR No. 10). The Postal Service confirmed that Handbook PO-101 has not changed from this version filed in Docket No. ACR2022. 

January 19 Response to CHIR No. 2, question 47.

245 “Classified Branch,” Handbook PO-101, Appendix A at 53.

246 “Carrier annex,” Postal Service Glossary of Postal Terms.

247 Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-38 of Chairman's Information Request No. 1, January 19, 

2021, question 4.
Docket No. ACR2023 - 183 -

may contain PO Boxes, the Postal Service is required to provide carrier service to PO Box 

holders. Id.

For each fiscal year, the Postal Service must provide information on the number of retail 

facilities at the beginning and end of the fiscal year, as well as the number of retail facility 

closings during the fiscal year. 39 C.F.R. § 3055.91(a)(1)-(3). This information must be 

disaggregated by type of retail facility and provided at the national and area levels. 

39 C.F.R. § 3055.91(a). The Postal Service provided this information for FY 2023 in Library 

Reference USPS-FY23-33.248 As previously discussed, the Postal Service filed a revised 

spreadsheet with corrected information in a CHIR response. See Post Offices Spreadsheet. 

This information is shown in Table V-16.

Table V-16

Number of Retail Facilities, FY 2021–FY 2023

Source: January 19 Response to CHIR No. 2, question 46. These data, derived from the CPUT system, represent the most up-to-date information provided by the Postal 

Service.

The total number of retail facilities in FY 2023 was 33,490, which was 129 fewer than 

FY 2022. Between FY 2022 and FY 2023, the number of contractor-operated retail facilities 

declined for each facility type (CPU, VPO, and CPO). The largest decrease between FY 2022 

and FY 2023 was in the number of CPUs, which decreased by 81. The Commission will 

continue to monitor the number of retail facilities in the FY 2024 ACD to ensure customers 

have continued access to postal services.

Handbook PO-101 contains the policies and procedures for discontinuing Post Offices. The 

contents of Handbook PO-101 contain foundational information necessary for determining 

compliance with 39 C.F.R. § 3055.91(a). CHIR No. 2 asked the Postal Service to confirm that 

248 Library Reference USPS-FY23-33, folder “FY23-33” Excel file “PostOfficesFY2023.xlsb,” tab “Post Offices FY23.”
Docket No. ACR2023 - 184 -

the copy of Handbook PO-101 filed in Docket No. ACR2022 was the most up-to-date 

version. January 19 Response to CHIR No. 2, question 47. The Postal Service confirmed and 

stated that the revised Handbook PO-101 is pending management review.249 To ensure that 

the Commission and the public have the most up-to-date version of Handbook PO-101, 

future ACRs must either confirm that no changes were made or include a copy of or link to 

Handbook PO-101 that the public can access. This directive is consistent with the 

requirement in 39 C.F.R. § 3050.60(b) to keep the Commission apprised of updates to the 

Postal Service’s publications and handbooks.

In future ACRs, the Postal Service must include a statement confirming that no changes were 

made to the version of Handbook PO-101 filed in the previous ACR. If changes are made, the 

Postal Service must include a public copy of (or a working website link that is accessible to the 

general public rather than restricted to Postal Service employees) to Handbook PO-101.

3. Post Office Suspensions

A Post Office is suspended when the Postal Service stops operations at a Post Office 

because “an emergency or other condition requires such action.”250 Circumstances that 

may justify suspending a Post Office include natural disasters, termination of a lease or 

rental agreement when suitable alternate quarters are not available, lack of qualified 

personnel to operate the retail facility, irreparable or severe damage to the retail facility, 

challenge to the sanctity of the mail, and lack of adequate measures to safeguard the retail 

facility or its revenues. Handbook PO-101 at 39. The Postal Service tracks information on 

facilities throughout the Post Office suspension process using the Change Suspension 

Discontinuance Center (CSDC) system.251 A Post Office suspension is resolved (removed 

from suspension status) when it is reopened or officially discontinued according to the Post 

Office discontinuance process in Handbook PO-101.252

For each fiscal year, the Postal Service must provide information on the number of 

suspended Post Offices at the beginning and end of the fiscal year, as well as the number of 

Post Offices suspended during the fiscal year. 39 C.F.R. § 3055.91(a)(4)-(6). Section V.B.3.a. 

discusses Post Office suspension activity during FY 2023. Section V.B.3.b. discusses the 

status of the Post Offices suspended at the end of FY 2016, an issue the Commission has 

been concerned about and required quarterly reporting on for the past 7 years.

249 Id. Revisions to Handbook PO-101 are discussed below in Section V.3.b.

250 “Emergency Suspension,” Handbook PO-101, Appendix A at 54.

251 United States Postal Service, Office of Inspector General, Report No. 21-239-R23, U.S. Postal Service’s Plans to Resolve Post Office 

Suspensions, May 17, 2023, at 1, available at https://www.uspsoig.gov/reports/audit-reports/us-postal-services-plans-resolve-post-officesuspensions (OIG Report No. 21-239-R23).

252 Order No. 6101 describes the discontinuance process in detail. Docket No. PI2022-1, Notice and Order Providing an Opportunity to Comment 

on the Postal Service’s Process for Resolving Suspended Post Offices, February 3, 2022, at 7-18 (Order No. 6101).
Docket No. ACR2023 - 185 -

A. POST OFFICE SUSPENSION ACTIVITY DURING FY 2023

The Postal Service filed data on the number of suspended Post Offices in Library Reference 

USPS-FY23-33, which the Postal Service updated in a CHIR response.253 This library 

reference also includes data on Post Offices reopened and closed during FY 2023. Table 

V-16 shows Post Office suspension activity during FY 2023 by facility type. It lists the 

number of suspensions at the beginning and end of FY 2023, as well as the number of Post 

Offices suspended, reopened, and closed during FY 2023. The number of suspensions at the 

end of FY 2023 is calculated by adding the number of suspensions at the beginning of the 

fiscal year to the number of Post Offices suspended during the fiscal year, and then 

subtracting the number of suspensions reopened and closed during the fiscal year. Table 

V-17 shows that the total number of suspended Post Offices increased by 17 in FY 2023. At 

the end of FY 2023, there were a total of 396 suspended Post Offices.

Table V-17

Post Office Suspension Activity During FY 2023

Source: Post Offices Spreadsheet, tab “Suspension Summary.”

Note: The numbers in Table V-17 reflect the most up-to-date numbers reported by the Postal Service.

B. STATUS OF POST OFFICES SUSPENDED AT THE END OF 

FY 2016

(1) Background

Since FY 2017, the Commission has monitored the Postal Service’s progress in resolving the 

663 Post Offices suspended at the end of FY 2016.254 Beginning in FY 2017, the Postal 

Service has filed quarterly reports on the status of these suspended Post Offices and 

included year-end information in the ACR. These reports did not include the status of Post 

Offices suspended after FY 2016.

253 See Post Offices Spreadsheet, tab “Suspension Summary.”

254 Order No. 6101 describes in detail the history of the Commission's concerns regarding suspended Post Offices and Post Office suspension 

activity through FY 2021. See Order No. 6101 at 18-26.
Docket No. ACR2023 - 186 -

Figure V-33 shows the number of suspensions remaining from the end of FY 2016 for each 

fiscal year through the end of FY 2023.

Figure V-33

Suspended Post Offices Remaining from FY 2016

FY 2016–FY 2023

Source: Docket No. ACR2022, Tenth Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2022 Annual Compliance 

Determination, February 9, 2024, question 1 (FY 2024, Quarter 1 Report).

Figure V-33 shows that the Postal Service made significant progress resolving suspensions 

in FY 2017 and FY 2018, but progress slowed between FY 2019 and FY 2021. In the FY 

2019 ACD, the Commission directed the Postal Service to file more detailed quarterly 

reports “[g]iven the substantial number of remaining suspended Post Offices and the Postal 

Service’s failure to meet its timeline [for resolving suspensions].” FY 2019 ACD at 144. This 

information included the steps taken during the quarter to resolve the suspension and 

anticipated next steps. Id.

In FY 2022, responding to the Postal Service's continued lack of commitment to resolving 

the remaining suspensions, the Commission initiated Docket No. PI2022-1 to “identify and 

address issues impeding the Postal Service’s progress in resolving these suspended post 

offices in a timely manner.” Order No. 6101 at 3. It sought public input on suggested 

procedures or courses of action for how the Postal Service may expeditiously resolve 

suspended Post Offices and received three comments in response.255 The Postal Service’s 

255 Id. at 27; Docket No. PI2022-1, Public Representative Comments on the Postal Service's Process for Resolving Suspended Post Offices, May 

16, 2022; Docket No. PI2022-1, Initial Comments of Steve Hutkins, May 16, 2022; Docket No. PI2022-1, Initial Comments of the United States 

Postal Service, May 16, 2022 (Docket No. PI2022-1, Postal Service Comments).
Docket No. ACR2023 - 187 -

comments also included a list of suspensions that qualified for “swift official 

Discontinuance.”256 This proceeding remains pending until the Postal Service resolves all of 

the suspensions remaining from the end of FY 2016.

Between FY 2021 and FY 2022, the Postal Service reduced the number of suspensions from 

207 to 87 at the end of FY 2022. See Figure V-33. In the FY 2022 ACR, the Postal Service 

proposed a three-pronged approach to resolve all remaining suspensions: (1) resolve 

suspensions first identified in Docket No. PI2022-1; (2) assemble a team to review 

documentation for those suspensions with incomplete internal dockets; and (3) lift the 

pause on customer-facing activities to allow community meetings to resume.257 This 

approach is discussed in Section V.B.3.b.(3)(b), infra.

In the FY 2022 ACD, the Commission directed the Postal Service to continue filing quarterly 

reports on the status of the suspensions remaining from the end of FY 2016. FY 2022 ACD 

at 182-83. It stated that if the Postal Service does not resolve the remaining suspensions 

from the end of FY 2023, “it must explain why in the FY 2023 ACR, as well as how it plans to 

resolve them in FY 2024.” Id. at 183. It also directed that the FY 2023 ACR include “a 

detailed plan and timeline for resolving post offices suspended from FY 2017 through 

FY 2023.” Id.

(2) FY 2023 Postal Service Actions

In FY 2023, the Postal Service continued to file quarterly reports on the status of the 

remaining suspensions at the end of FY 2016.258 On May 17, 2023, the Postal Service Office 

of Inspector General (OIG) issued a report evaluating the effectiveness of the Postal 

Service’s plans to resolve suspensions.259 The Postal Service filed the FY 2023 ACR on 

December 29, 2023 and the quarterly report for FY 2024, Quarter 1 on February 9, 2024.260

The Postal Service resolved 9 suspensions in FY 2023, Quarter 1, but did not resolve any 

more suspensions during FY 2023. Thus, of the 663 suspensions at the end of FY 2016, 78 

remain suspended at the end of FY 2023. Figure V-34 shows a breakdown of the reasons 

these Post Offices were suspended. It shows that almost half were suspended because the 

landlord terminated the lease.

256 Docket No. PI2022-1, Postal Service Comments at 2, Excel file “PI2022-1+Listed+Sites.xlsx.”

257 Docket No. ACR2022, United States Postal Service Annual Compliance Report, December 29, 2022, at 89 (FY 2022 ACR).

258Docket No. ACR2021, Sixth Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2021 

Annual Compliance Determination, February 9, 2023, question 6; Docket No. ACR2022, Second Response of the United States Postal Service to 

Commission Requests for Additional Information in the FY 2022 Annual Compliance Determination, May 10, 2023, question 1; Docket No. 

ACR2022, Fifth Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2022 Annual 

Compliance Determination, August 9, 2023, question 1; Docket No. ACR2022, Eighth Response of the United States Postal Service to 

Commission Requests for Additional Information in the FY 2022 Annual Compliance Determination, November 9, 2023, question 1.

259 See OIG Report No. 21-239-R23. Findings and recommendations from the OIG Report are discussed in Section V.B.3.b.(3)(a), infra.

260 See FY 2023 ACR at 93-95; FY 2024, Quarter 1 Report.
Docket No. ACR2023 - 188 -

Figure V-34

Reasons for Suspending Post Office

For the 78 Suspensions Remaining from FY 2016

Source: FY 2024, Quarter 1 Report;Docket No. ACR2022, Excel file “FY24_Q1_Suspensions_Update.xlsx” tab “Remaining Suspended” column “J,” February 9, 2024 

(FY 2024, Quarter 1 Suspensions).

(3) OIG Report and FY 2022 ACR

The sections below describe the OIG’s report and recommendations (along with related 

information obtained by the Commission from the Postal Service), as well as the status of 

the Postal Service’s three-pronged approach to resolving suspensions described in the FY 

2022 ACR.

(a) Office of Inspector General (OIG) 

Recommendations

The OIG analyzed the Postal Service’s plans for resolving suspensions and made several 

findings. It found that the Postal Service lacked documentation supporting implementation 

of these plans before FY 2022 because of staffing changes resulting from the Postal 

Service’s organizational restructuring in FY 2020, which transferred assigned 

responsibilities for the suspension process to a different department. OIG Report No. 21-

239-R23 at 4. It attributed the lack of documentation to “the Postal Service’s lack of 

prioritization to resolve post office suspensions timely.” Id. The OIG also identified data 

reliability issues caused by “the Postal Service’s lack of quality assurance policies and 

procedures to monitor the accuracy and completeness of post office suspension data.” Id. at 

4-5. Based on these findings, the OIG made the following three recommendations, with 

which Postal Service management agreed. Id. at 6.
Docket No. ACR2023 - 189 -

Update Handbook PO-101. First, the OIG recommended that the Postal Service should 

“update policies and procedures applicable to the post office suspension process to reflect 

current organizational structure and assigned responsibilities.” Id. at 4. The Postal Service 

responded that “it is reviewing and identifying necessary updates to Handbook PO-101, 

Postal Service-Operated Retail Facilities Discontinuance Guide, to include current 

organizational structure and assigned responsibilities.” Id. at 6. The target implementation 

date was October 31, 2023. Id. In a CHIR response, the Postal Service stated that the revised 

Handbook PO-101 is pending management review, and it cannot provide a projected 

implementation date.261

Document and monitor plans. Second, the OIG recommended that the Postal Service 

“develop a process to formally document and monitor implementation of current and 

future plans to resolve post office suspensions as reported in the Annual Compliance 

Reports.” OIG Report No. 21-239-R23 at 4. The Postal Service responded that “it will 

continue to deploy current systems, including Handbook PO-101 and accompanying 

software, to effectively resolve suspensions that are pending discontinuance.” Id. The target 

implementation date was January 31, 2024. Id.

In a CHIR response, the Postal Service clarified that it will implement this recommendation 

by deploying the new Suspensions Dashboard, which is discussed below. February 9 

Response to CHIR No. 9, question 2.b.

Develop Suspensions Dashboard. Third, the OIG recommended that the Postal Service 

“develop and implement formally documented quality assurance processes over the data in 

the post office suspension tracking system.” OIG Report No. 21-239-R23 at 6. The Postal 

Service responded that “it is developing and implementing a dashboard using the data in 

the post office suspension tracking system to help inform other Postal Service 

Headquarters’ stakeholders of the status of suspended post offices.” Id.

In a CHIR response, the Postal Service provided a graphic of the suspension dashboard. 

Figure V-35 provides a snapshot of this graphic.

261 Docket No. ACR2022, Responses of the United States Postal Service to Questions 1-3 Of Chairman's Information Request No. 40, November 

29, 2023, question 1 (Docket No. ACR2022, Response to CHIR No. 40); January 19 Response to CHIR No. 2, question 47.
Docket No. ACR2023 - 190 -

Figure V-35

Graphic of Suspensions Dashboard

Source: Graphic provided by the Postal Service in Docket No. ACR2022, Responses of the United States Postal Service to Questions 1-5 of Chairman’s Information 

Request No. 32, June 14, 2023, question 5.b. (Docket No. ACR2022, Response to CHIR No. 32).

As Figure V-35 shows, for each suspension the Suspensions Dashboard includes the 

corresponding Area Name, Cluster Post Office name, and Facility ID, along with a linear 

display of docket items completed and outstanding. Docket No. ACR2022, Response to 

CHIR No. 32, question 5.b. This display enables users to determine which items to focus on 

to ensure all required discontinuance actions are completed. Id. question 5.a. The Facility 

ID is hyperlinked to allow end-users to view the docket contents for each suspension. Id.

question 5.b. Docket items are displayed horizontally with a checkmark to note completed 

items. Id. Pulldown lists and an export feature enables users to filter suspensions by area, 

district, or facility and download data analytics. Id.

Regarding access, all Headquarters and field employees with proper computer credentials 

may access and view the Suspensions Dashboard. Id. question 5.c.i. and 5.c.ii. The 

dashboard’s data tracks when docket items are completed in the CSDC system and thus is 
Docket No. ACR2023 - 191 -

not editable. Id. question 5.c.iii. The dashboard is updated as responsible parties complete 

the various docket items for each suspension. Id. The Suspension and Discontinuance team 

will maintain oversight for updating and monitoring the dashboard’s quality assurance, 

including accuracy and completeness. Id. question 5.c.iv.

The target implementation date for implementing the Suspension Dashboard was October 

31, 2023. OIG Report No. 21-239-R23 at 6. In a CHIR response, the Postal Service reported 

that the dashboard was not yet implemented as of February 9, 2024.262 It explains that the 

dashboard contains information from the CSDC system, which the Postal Service uses to 

track information on Post Offices through the suspension process.263 However, the CSDC 

system had a technical issue that discards docket items stored for Post Offices suspended 

more than once, and the Postal Service is reconfiguring the CSDC system to resolve this 

issue. Docket No. ACR2022, Response to CHIR No. 40, question 2. The Postal Service states 

that the Suspensions Dashboard will be available concurrently with the new CSDC system, 

which it aims to complete by the end of FY 2024, Quarter 2 (March 31, 2024). Id.

(b) FY 2022 ACR Three-Pronged Approach

In the FY 2022 ACR, the Postal Service proposed a three-pronged approach to resolve all 

remaining suspensions.

Resolve suspensions identified in Docket No. PI2022-1. First, the Postal Service stated it plans 

to continue resolving the 40 suspensions first identified in Docket No. PI2022-1 as 

candidates for official discontinuance awaiting Headquarters review, which it targeted 

completing in June 2023.264 The Postal Service reported that at the end of FY 2023, Quarter 

3, Headquarters completed its review of 18 of the 40 suspensions identified in Docket No. 

PI2022-1.265 For the rest of these suspensions, the Postal Service states that it will need to 

complete missing docket items before resolving them. Docket No. ACR2022, Response to 

CHIR No. 37, question 1. It explains that locating missing docket items requires 

collaborating with district coordinators, and tracking down relevant information may be 

difficult and time-consuming. Id.

In the FY 2024, Quarter 1 Report, the Postal Service states that for the 18 suspensions that 

have completed Headquarters review, nine will be published in the Postal Bulletin in March 

262 Docket No. ACR2022, Response to CHIR No. 40, question 2; February 9 Response to CHIR No. 9, question 2.b.

263 Docket No. ACR2022, Response to CHIR No. 40, question 2; see OIG Report No. 21-239-R23 at 1.

264 FY 2022 ACR at 89; see Docket No. PI2022-1, Postal Service Comments. The Postal Service filed an updated list in Docket No. ACR2023. Post 

Offices Spreadsheet, tab “HQ Review.”

265 Docket No. ACR2022, Responses of the United States Postal Service to Questions 1-6 of Chairman's Information Request No. 37, August 30, 

2023, question 1 (Docket No. ACR2022, Response to CHIR No. 37). Although the CHIR response mentions 17 suspensions, there are 18 

suspensions that have completed Headquarters review. See Docket No. ACR2022, Response to CHIR No. 37, Excel file 

“FY23_Q3_Suspensions_Update_CHIR 37.xlsx” tab “Remaining Suspended.”
Docket No. ACR2023 - 192 -

2024,266 and nine will be discontinued pending resolution of the technical issue in the CSDC 

system.267

Review suspensions with incomplete internal dockets. Second, the Postal Service stated that 

it plans to assemble a team to review documentation for those suspensions with 

incomplete internal dockets that lack certain steps necessary to successfully resolve them. 

FY 2022 ACR at 89. In a June 14, 2023 CHIR response, the Postal Service confirmed that it 

assembled this team. Docket No. ACR2022, Response to CHIR No. 32, question 2. Regarding 

the status of incomplete dockets, the Postal Service stated that “41 are currently at the 

Headquarters review stage of the process and a final review of the docket items is currently 

being conducted to ensure that all docket items are complete.” Id. question 2.a.ii.

On January 26, 2024, a follow-up CHIR was issued asking, among other questions, how long 

each of the 41 suspensions currently at the Headquarters review stage has been pending: 

(1) a final review of the docket items to ensure that all docket items are complete; and 

(2) the Headquarters review stage of the process. CHIR No. 7, question 18.b. In response, 

the Postal Service filed a motion to reconsider this question, asserting that the request was 

unduly burdensome “due to the substantial amount of time it would require its staff to 

retrieve, validate, and process this information[.]” Motion for Reconsideration, Question 18, 

at 1. However, it stated that “[s]hould the Commission believe that there is a regulatory 

need for this information, the Postal Service requests a 60-day extension to respond to this 

question.” Id. at 2 n.2.

No party commented on this issue or filed any response to the Motion for Reconsideration, 

Question 18. On February 13, 2024, the Commission denied the motion in part and granted 

it in part for several reasons. See generally Order No. 6971. First, it explained that there was 

a regulatory need for this information because the Postal Service did not adequately 

respond to the Commission’s directive to explain in the FY 2023 ACR why it did not resolve 

all of the suspensions remaining from the end of FY 2016. Order No. 6971 at 2. Second, it 

observed that the Postal Service provided the requested information for 18 of the 41 

suspensions in a separate CHIR response on February 6, 2024. February 6 Response to 

CHIR No. 7, question 20.b. For the remaining 23 suspensions, the Commission stated that 

the requested information should be available from the suspension quarterly reports. 

Order No. 6971 at 3. It directed the Postal Service to file the requested information for 

these 23 suspensions by March 8, 2024,268 which the Postal Service did. March 8 Response 

to CHIR No. 7.

266 These nine suspensions are in: (1) Wallpack Center, NJ; (2) West Harrison, NY; (3) Homewood, PA; (4) Mallard, IA; (5) Panther Burn, MS; 

(6) Mumford, TX; (7) Picacho, AZ; (8) Civic Center Post Office Box Unit, CA; and (9) South San Francisco, CA. See FY 2024, Quarter 1 Suspensions.

267 These nine suspensions are in: (1) Head Waters, VA; (2) Norristown, GA; (3) Twin Oaks, OK; (4) Boneville, GA; (5) Gateway, GA; (6) Manor, 

GA; (7) Millwood, GA; (8) Seville, GA; and (9) Danciger, TX. Id.

268 Id. at 4.
Docket No. ACR2023 - 193 -

Resume community meetings. Third, in FY 2023, Quarter 2, the Postal Service stated that it 

plans to lift the pause on customer-facing activities to allow community meetings to 

resume virtually or in person, which is necessary to complete the Post Office 

discontinuance process. FY 2022 ACR at 89. It noted that lifting the pause on customerfacing activities should allow the Postal Service to discontinue those suspended Post Offices 

that cannot be reopened or relocated. Id.

In a CHIR response, the Postal Service confirmed that it lifted the pause on customer-facing 

activities in FY 2023 Quarter 2, which would allow community meetings to resume. Docket 

No. ACR2022, Response to CHIR No. 32, question 3.a. It noted that it is finalizing a new 

overall strategy for gathering community input, which will be incorporated into the revised 

Handbook PO-101. Id.; February 2 Response to CHIR No. 7, question 19.b. It observed that 

per its regulations in 39 C.F.R. § 241.3(d)(3), authorization to forgo a community meeting 

may be granted “where exceptional circumstances make a community meeting infeasible, 

such as where the community no longer exists because of a natural disaster or because 

residents have moved elsewhere.” Docket No. ACR2022, Response to CHIR No. 32, question 

3.a. The Postal Service did not invoke its authorization to forgo a community meeting 

pursuant to 39 C.F.R. § 241.3(d)(3) in FY 2023. February 2 Response to CHIR No. 7, 

question 19.a. It stated that forgoing a community meeting may be appropriate for some 

Post Offices that have been suspended for a long time. Docket No. ACR2022, Response to 

CHIR No. 32, question 3.a. However, the Postal Service adds that it has not made a final 

decision regarding whether to invoke its authorization to forgo a community meeting 

pursuant to 39 C.F.R. §.241.3(d)(3) in FY 2024. February 2 Response to CHIR No. 7, 

question 19.b.

(4) Comments

TPA comments that although the Postal Service deserves praise for reducing the backlog of 

suspensions from FY 2016, “there are still far too many post offices that remain in 

administrative limbo.” TPA Comments at 2. It states that resolving the status of these 

remaining suspensions will help the Postal Service control costs and deliver the best 

possible service to consumers. Id.

The Public Representative comments that the Postal Service’s three-pronged approach 

appears to have been fairly effective in reducing the number of suspensions remaining 

from FY 2016. See PR Comments at 3. He points out that quarterly suspension reports are 

filed quarterly in past ACD dockets and are often difficult to locate. Id. at 81. He suggests 

that the Commission direct the Postal Service to provide data annually “to maximize 

transparency and make the data easier to locate.” Id. at 3. He comments that bifurcating 

suspensions between those suspended at the end of FY 2016 and those suspended after FY 

2017 appeared useful, but the distinction was now artificial because Post Offices 

suspended after FY 2017 have also been suspended for a long time. Id. at 81.

The Commission appreciates the commenters’ input and shares their concern with the lack 

of progress in FY 2023 at resolving suspensions. This input has been incorporated into the 
Docket No. ACR2023 - 194 -

directives described below, which aim to increase transparency and accountability 

regarding the Postal Service’s efforts to resolve suspensions in FY 2024.

Regarding the DFA Plan, the Public Representative expresses concerns about the Delivery 

Unit Removal initiative that “involves relocating letter carriers out of local post offices, 

stations, or branches, and consolidating them into larger, centralized delivery offices due to 

expirations of leases or safety concerns caused by space constraints.” Id. at 80. He asserts 

that this initiative “appears to validate the fears of those who claim the Postal Service is 

going to use the Delivering for America Plan as cover for closing small Post Offices.” Id.

In its reply comments, the Postal Service responds that suspensions occur during the 

normal course of operations and are typically caused by catastrophic events, lease 

terminations, and other interruptions in planned service. Postal Service Reply Comments at 

33. It asserts that “[t]here is no causal relationship between the Postal Service’s strategic 

plan and externally driven Post Office suspensions.” Id.

The Commission is separately monitoring the impact of the implementation of the DFA 

Plan via Docket No. PI2023-4 and urges the Postal Service to be more transparent to 

assuage public concerns regarding how the implementation of the DFA Plan may affect 

customer access.

(5) Commission Analysis

The total number of suspensions at the end of FY 2023, as reported by the Postal Service, is 

shown in Figure V-36. Besides the 78 suspended Post Offices remaining from FY 2016, an 

additional 318 Post Offices suspended between FY 2017 and FY 2023 remained unresolved 

at the end of FY 2023. See Section V.B.3.a., supra.
Docket No. ACR2023 - 195 -

Figure V-36

Remaining Suspended Post Offices

At the End of FY 2023

a FY 2024, Quarter 1 Report.

b This number was calculated as the number of suspensions the Postal Service reported at the end of FY 2023 (396) minus the 78 suspensions remaining 

from FY 2016. It does not include Post Offices that were suspended and subsequently reopened or closed during this timeperiod.

cPost Offices Spreadsheet, tab “Suspension Summary,” cell I17.

Note: The numbers in Figure V-36 reflect the most up-to-date numbers provided by the Postal Service.

The Commission acknowledges the Postal Service’s progress in reducing the suspensions at 

the end of FY 2016 from 663 to 78 at the end of FY 2023. However, the Commission is 

concerned that these suspensions remain unresolved 7 years after the Postal Service began 

reporting on them. Despite increased scrutiny from Docket No. PI2022-1 and the OIG’s 

suspensions report, the Postal Service only resolved 9 suspensions in FY 2023. Based on 

the quarterly reports and CHIR responses, the Commission identifies two main reasons for 

the lack of progress: staffing and data reliability issues, both of which require the Postal 

Service’s attention and focus to correct.

(a) Staffing Issues

The Postal Service attributed the lack of progress made in FY 2023 to shortages in staffing 

handling suspension matters. February 2 Response to CHIR No. 7, question 16.d. This is 

consistent with the OIG’s findings attributing the lack of documentation for resolving 

suspensions to staffing changes that resulted from the Postal Service organizational 

restructuring in FY 2020. OIG Report No. 21-239-R23 at 4. Before FY 2020, a team within 

the Delivery Operations business unit was responsible for the Post Office suspension 

process. Id. After the restructuring, the Postal Service transferred this responsibility to the 

Retail and Post Office Operations business unit, which did not assign a suspensions team 

until a year later in August 2021. Id. As a result, the new team could only provide 

documentation supporting the Postal Service’s implementation of its plans to resolve 

suspension from FY 2022 forward. Id.
Docket No. ACR2023 - 196 -

Initially, the Postal Service represented that during FY 2023, the Suspension and 

Discontinuance team responsible for resolving suspensions had three Postal Service 

employees: one full-time employee to work through pending cases and two employees to 

help with review and docket content verification. Docket No. ACR2022, Response to CHIR 

No. 32, question 2.a.i. It subsequently clarified that because of the organizational 

restructuring, staffing in FY 2023 only included one temporary full-time position. February 

16 Response to CHIR No. 10, question 13.a. The Postal Service states that it plans to create 

a full-time permanent employee, but “[a]dditional staffing has not yet been secured, and is 

not guaranteed to be approved at Human Resources.” Id. question 13.d.i.

The Commission is dismayed not only at the staff turnover, but the lack of staff available to 

resolve the suspensions. Consistent with the OIG’s observations, the Postal Service showed 

its lack of prioritization to resolve suspensions timely by waiting more than a year to assign 

a new suspensions team, reducing the team to one temporary full-time employee, and 

indicating that it may create a full-time position but that Human Resources may not even 

approve its creation. See OIG Report No. 21-239-R23 at 4. Resolving suspensions is an 

important public policy issue because suspensions deprive customers of access to local 

Post Offices and services. Suspending a Post Office indefinitely leaves communities in 

limbo, who deserve prompt resolution of these suspensions. Assigning only one temporary 

full-time employee shows that the Postal Service is not dedicating enough staff and 

resources to this important issue.

The staffing issues also demonstrate the importance of resolving suspensions in a timely 

manner. Resolving a suspended Post Office becomes more difficult as time passes because 

of lost knowledge from staff turnover and misplaced or missing documents. Indeed, the 

Postal Service states that “[s]ignificant time and resources are needed to review all the 

materials related to these older suspensions to ensure a complete and accurate docket is 

maintained.” February 2 Response to CHIR No. 7, question 16.d. When suspensions are not 

timely resolved, the number of suspensions accumulates quickly, and the backlog becomes 

more difficult to resolve. The Postal Service can prevent this issue by ensuring that the staff 

resolving the suspension is sufficient on a consistent basis.

(b) Data Reliability Issues

The lack of progress in resolving suspensions was also caused by accuracy and consistency 

issues with suspension data similar to those the OIG observed, such as inaccurate status 

information and forms with incomplete information. See OIG Report No. 21-239-R23 at 4-5. 

These issues are consistent with the Commission's review of suspension quarterly reports. 

In the FY 2021 ACD, the Commission expressed concern about the accuracies and 

discrepancies in suspension data reported by the Postal Service. FY 2021 ACD at 210-11. In 

FY 2023, several CHIRs were issued to reconcile discrepancies between quarterly reports. 

See, e.g., Docket No. ACR2022, Response to CHIR No. 37, question 6; Docket No. ACR2022, 

CHIR No. 40, question 3.
Docket No. ACR2023 - 197 -

Accurate and reliable data is essential for the Postal Service to resolve suspensions 

efficiently and effectively. The Commission and the public require accurate information to 

properly evaluate the suspensions and conduct related data analyses. The Postal Service 

does not always provide accurate consistent data because “it does not have formally 

documented quality assurance processes to monitor the data and timely respond to 

unanticipated deviations.” See OIG Report No. 21-239-R23 at 5.

Implementing the Suspensions Dashboard will likely improve the accuracy and reliability 

of suspension data. The dashboard is linked to the CSDC system and tracks the completion 

of steps in the Post Office discontinuance process. Docket No. ACR2022, Response to CHIR 

No. 32, question 5.c.iii. As responsible parties complete these steps, the dashboard is 

updated accordingly. Id. The dashboard’s data are not editable, which ensures consistency 

with the information in the CSDC system. Id.

The Suspensions Dashboard will also improve transparency in the Postal Service’s efforts 

to resolve suspensions. As the Public Representative observes, suspension data for each 

quarter are filed in separate spreadsheets in different ACR dockets. They are often revised 

in CHIR responses providing new spreadsheets with updated information. This process 

hinders transparency by making it difficult to find accurate and current suspension data 

and compare them across quarters. The Suspensions Dashboard will improve transparency 

by providing a centralized location for suspensions data that the Postal Service can monitor 

for quality assurance. In the meantime, to facilitate finding quarterly reports, the Postal 

Service must file future quarterly reports both in Docket No. PI2022-1 and the appropriate 

ACR docket so that the reports are easier to locate.

(c) FY 2024 Postal Service Plans and Commission 

Directives

Table V-18 summarizes the Postal Services plans for resolving the 78 suspensions 

remaining from FY 2016.
Docket No. ACR2023 - 198 -

Table V-18

FY 2024 Plans for Resolving Suspensions

Source: Docket No. ACR2022, Response to CHIR No. 40, question 2; January 19 Response to CHIR No. 2, question 47;FY 2024, Quarter 1 Suspensions.

aThe Postal Service must provide status updates on these plans in the suspension quarterly reports.

b These suspensions are: (1) Wallpack Center, NJ; (2) West Harrison, NY; (3) Homewood, PA; (4) Mallard, IA; (5) Panther Burn, MS; (6) Mumford, TX; (7) Picacho, AZ; (8) 

Civic Center Post Office Box Unit, CA; and (9) South San Francisco, CA.

b These suspensions are: (1) Head Waters, VA; (2) Norristown, GA; (3) Twin Oaks, OK; (4) Boneville, GA; (5) Gateway, GA; (6) Manor, GA; (7) Millwood, GA; (8) Seville, GA; 

and (9) Danciger, TX.

Due to the Postal Service’s lack of prioritization and progress on each of these items and on 

resolving the backlog of suspensions in FY 2023, the Commission will incorporate 

requirements for the Postal Service to update the status of these items in its quarterly 

reports as described below.

The Public Representative questions the utility of bifurcating the suspensions and 

monitoring the 78 suspensions remaining from the end of FY 2016 separately. When the 

Commission began closely monitoring suspensions in FY 2017, it did not expect that some 

suspensions remaining from the end of FY 2016 would remain unresolved 7 years later. 

The Commission continues to prioritize the 78 remaining suspensions because they have 

been suspended the longest. Of the 78 suspensions remaining from FY 2016, 50 have been 

suspended for more than 10 years; 8 have been suspended for more than 20 years; and 3 

have been suspended for almost 30 years. See FY 2024, Quarter 1 Suspensions. The Postal 

Service would benefit from resolving the oldest suspensions first because resolving them 

becomes more difficult as time passes.

The Postal Service must resolve the 78 suspensions remaining from the end of FY 2016. It 

has had more than 7 years to do so and resolving them becomes more difficult as time 

passes. Further, the number of Post Offices suspended after the end of FY 2016 continues 

to grow. Resolving the 78 suspensions is necessary for creating an effective strategy for 

timely resolving the rest of the suspensions and preventing another backlog.
Docket No. ACR2023 - 199 -

The following directives are intended to monitor the Postal Service’s progress and provide 

transparency into the Postal Service’s efforts to resolve suspensions. The directives are 

intended to hold Postal Service accountable for its plans in Table V-18, as well as 

representations made in the OIG suspensions report and CHIR responses.

The Postal Service must resolve all of the 78 suspended Post Offices remaining from the end of 

FY 2016. The Commission directs the Postal Service to continue filing quarterly reports on the 

status of these suspended Post Offices in both Docket No. ACR2023 and Docket No. PI2022-1. 

The Postal Service must file this information within 40 days after the end of each quarter in 

FY 2024 and in FY 2025 for Quarters 1 and 2. Quarterly reports must continue to include a 

spreadsheet containing, at a minimum, the same columns and information provided in the 

spreadsheet filed with the FY 2024, Quarter 1 Suspensions report on February 9, 2024.

Each quarterly report must reflect the most accurate data currently available and correct any 

discrepancies from the prior quarterly report. The Postal Service must identify and reconcile 

any discrepancies or differences in the body of the report and the accompanying Excel 

spreadsheet by highlighting information added or changed and striking through information 

removed.

Each quarterly report shall identify any changes to the staffing of the Suspension and 

Discontinuance team, including the relevant chain of command, the responsible managementlevel personnel, and the current staffing levels (including number of careers versus contractor 

support roles). Each quarterly report shall also include status updates on the Postal Service’s 

progress in addressing each of the following items (along with the projected implementation 

date for incomplete items or the actual implementation date for complete items):

• Revising Handbook PO-101

• Fixing the technical issue with the CSDC system

• Developing and implementing the Suspensions Dashboard

• Publishing nine suspensions in the Postal Bulletin

• Discontinuing nine suspensions pending resolution of the CSDC system technical issue

• Hiring one full-time employee to work on the suspension and discontinuance process

If the Postal Service does not resolve all 78 remaining suspended Post Offices by the end of 

FY 2024, it must explain why in the FY 2024 ACR, as well as how it plans to resolve them in 

FY 2025. The FY 2024 ACR must also include a detailed plan and timeline for resolving Post 

Offices suspended from FY 2017 through FY 2024.
Docket No. ACR2023 - 200 -

For each Post Office that is suspended at the end FY 2024, the FY 2024 ACR or Library 

Reference USPS-FY24-33 must contain a spreadsheet that includes the following information:

a. Post Office Name

b. Street Address

c. City, State, and ZIP

d. Suspension Date

e. Suspension Reason

f. Postal Area

g. Postal District

h. Finance Number

i. Facility ID

j. Facility Type

4. Delivery Points

The Postal Service is required to provide information on the number of residential and 

business delivery points at the beginning and end of the fiscal year. 39 C.F.R. § 3055.91(b). 

The Postal Service provided this information for FY 2023 in Library Reference USPS-FY23-

33 and in the FY 2023 Annual Report.

269 The total number of delivery points in FY 2023 was 

166,577,596, an increase of 1,673,504 from FY 2022. FY 2023 Annual Report at 33. Figure 

V-37 shows the volume per delivery point between FY 2019 and FY 2023.

269 Library Reference USPS-FY23-33, folder “FY23-33” Excel file “Annual Report Delivery Points FY23.xlsx;” FY 2023 Annual Report at 33.
Docket No. ACR2023 - 201 -

Figure V-37

Annual Volume per Delivery Point, FY 2019–FY 2023

aDensity is the Market Dominant and Competitive volumes divided by the number of delivery points.

Source: FY 2022 ACD at 183; Commission calculation is based on FY 2023 Annual Reportat 33.

The Commission has been tracking delivery point data since the enactment of the PAEA, 

when volume per delivery point was at its highest level of 1,458 mailpieces per delivery 

point in FY 2006. Volume per delivery point was 697 in FY 2023, a 52 percent decrease 

since FY 2006.

5. Collection Boxes

A collection box is a container dedicated to collecting mail deposited by customers.270 The 

Postal Service must report, at the national and area levels, the number of collection boxes 

at the beginning and end of the fiscal year, as well as the number of collection boxes added 

and removed during the fiscal year. 39 C.F.R. § 3055.91(c). In the FY 2022 ACD, the 

Commission reiterated this requirement by directing “[t]he FY 2023 ACR [to] include the 

number of collection boxes added to new locations and removed during FY 2023 as 

required by 39 C.F.R. § 3055.91(c)(3) and (4).” FY 2022 ACD at 186.

270 The Postal Service defines “collection box” as “[a] four-footed, free-standing blue-painted street box that is used by the public to deposit 

outgoing prepaid letters, flats, and lightweight parcels. It has a rounded top and a protective opening cut in near the top that pivots to open 

and close to receive and protect the items.” “Collection Box,” Postal Service Glossary of Postal Terms.

2019 2020 2021 2022 2023

Density 892 800 790 772 697

Delivery Points (Millions) 160 161 163 165 167

Mail Volume (Billions) 143 129 129 127 116

600

650

700

750

800

850

900

Volume Per Delivery Point

a
Docket No. ACR2023 - 202 -

The Postal Service filed the number of collection boxes at the beginning and end of FY 2023 

in Library Reference USPS-FY23-33.271However, it did not provide the number of collection 

boxes added and removed during FY 2023 in its initial FY 2023 ACR filing. CHIR No. 2 asked 

the Postal Service to provide the number of collection boxes removed, installed in new 

locations, and relocated during FY 2023. CHIR No. 2, question 48.a. In response, the Postal 

Service reported that during FY 2023, 623 collection boxes were removed; 146 collection 

boxes were installed in new locations, and 17 collection boxes were relocated. January 19 

Response to CHIR No. 2, question 48.a.

The Postal Service should have included the number of collection boxes added and 

removed in the FY 2023 ACR because this data is required by both the Commission’s rules 

and FY 2022 ACD. Future ACRs must comply with 39 C.F.R. § 3055.91(c) by including all of 

the required information, including the number of collection boxes added and removed.

Nationally, there were 139,010 collection boxes at the end of FY 2023, 477 fewer than in FY 

2022.272 Figure V-38 shows historical data on the number of collection boxes between FY 

2019 and FY 2023.

Figure V-38

Number of Collection Boxes, FY 2019–FY 2023

Source: Library Reference USPS-FY23-33, folder “FY23-33” Excel file “CollectionBoxesFY2023.xlsx;” FY 2022 ACD at 184.

271 Library Reference USPS-FY23-33, folder “FY23-33” Excel file “CollectionBoxesFY2023.xlsx.” The Postal Service also filed two spreadsheets 

containing data on the Collection Point Management System Blue Box Collection Schedule and Density. January26 Response to CHIR No. 6, 

question 16, folder “ChIR.6.Public+Response+Attachments.zip,” folder “Q.16,” files “ChIR6_Q16_CPMS Blue Box Collection Schedule 

FY2023.xlsx” and “ChIR6_Q16_CPMS Density FY2023.xlsx.”

272 Library Reference USPS-FY23-33, folder “FY23-33” Excel file “CollectionBoxesFY2023.xlsx,” cells C9 and G9.

142,300

140,845

140,062

139,487

139,010 

130

135

140

145

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Collection Boxes (Thousands)
Docket No. ACR2023 - 203 -

The Postal Service determines whether to add, remove, or relocate collection boxes by 

conducting annual volume density tests to measure the volume of mail moving through 

each collection point.273 During the density test, carriers estimate or count the number of 

mailpieces in each collection point they visit, including collection boxes, and record the 

data. OIG Report No. RISC-WP-22-007 at 3. The Postal Service uses this data to add, 

remove, or relocate collection boxes.

The Postal Operations Manual (POM) sets forth procedures for conducting volume density 

tests.274 The process involves using an actual count for letters or recording a linear 

measurement of letters contained in the collection box; converting the linear measurement 

to pieces at 227 pieces per foot (or current conversion figure); and adding actual piece

counts for flats and small parcels. POM § 314.3. Density tests should be conducted during a 

continuous 2-week period and must be performed at least annually. Id.

In a CHIR response, the Postal Service confirms that in FY 2023 it continued to follow 

procedures specified in the POM for conducting an annual volume density test to determine 

which collection boxes to remove. February 2 Response to CHIR No. 7, question 23.a. The 

POM states that “[c]ollection boxes averaging less than 25 pieces a day should be relocated 

within the neighborhood or community to a potentially higher volume location.” POM § 

315.3. If the Postal Service exhausts potential relocation options, a collection box may be 

removed if approved by the Area manager, Delivery Programs Support. Id. §§ 313.33, 

315.3. Before removing or relocating a collection box, the Postal Service must place a notice 

on the box 30 days before the removal or relocation showing the locations and collection 

schedules for other collection points in the area.275 The Postal Service states that when 

determining whether to remove a collection box, aside from density, it considers factors 

such as the appearance and condition of collection boxes, the security of its location due to 

vandalism and/or tampering, and “factors such as staffing, logistics, safety, security, 

volume declines or increases, operational limitations, or other circumstances that justify an 

exception.” February 2 Response to CHIR No. 7, question 23.b.; POM §§ 315.1, 315.4.

The Commission will continue to monitor the number of collection boxes in Docket 

No. ACR2024. The FY 2024 ACR must comply with 39 C.F.R. § 3055.91(c) by reporting, at the 

national and area levels, the number of collection boxes at the beginning and end of FY 2024, 

as well as the number of collection boxes added to new locations and removed during FY 

2024. If there are any discrepancies between the number of collection boxes at the beginning 

273 United States Postal Service, Office of Inspector General, Report No. RISC-WP-22-007, The Postal Service’s Collection Point Management 

System, May 18, 2022, at 3, available at https://www.oversight.gov/report/USPS/Postal-Service%E2%80%99s-Collection-Point-ManagementSystem (OIG Report No. RISC-WP-22-007).

274 United States Postal Service, Postal Operations Manual § 311.a., July 2002 (updated with revisions through April 30, 2022) (POM). The Postal 

Service filed a PDF of the most recent version of the POM with a CHIR response. February 2 Response to CHIR No. 7, question 22, PDF file 

“POM+Nov+2023.pdf.”

275 Id. § 315.3. A collection box that has been vandalized or tampered with may be removed immediately without notice if the Area manager, 

Delivery Programs Support, determines that the location is unsecure. Id. § 315.4.
Docket No. ACR2023 - 204 -

and end of FY 2024 and the number of collection boxes added and removed during FY 2024, 

the Postal Service must reconcile these discrepancies in the FY 2024 ACR.

In FY 2024, the Commission recommends that the Postal Service continue conducting annual 

volume density testings consistent with the procedures specified in the POM to ensure that the 

collection box network is cost-effective while meeting the needs of its customers. The 

Commission also recommends that the Postal Service describe in the FY 2024 ACR any plans 

or initiatives to remove collection boxes beyond the procedures specified in the POM.

6. Wait Time in Line

The Postal Service must report the average customer wait time in line for retail service at 

the beginning of the fiscal year and at the end of each successive fiscal quarter at the 

national and area levels. 39 C.F.R. § 3055.91(d). The Postal Service provided this 

information for FY 2023 in Library Reference USPS-FY23-33.276 The national average wait 

time in line increased slightly from 2 minutes 20 seconds in FY 2022 to 2 minutes 22 

seconds in FY 2023. FY 2023 ACR at 89. Table V-19 shows the national average customer 

wait time in line annually and by quarter for FY 2019 through FY 2023.

Table V-19

National Average Wait Time in Line (in Minutes) by Quarter,

FY 2019–FY 2023

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Quarter 1 2:25 1:57 3:14 2:30 2:31

Quarter 2 2:34 2:06 3:15 2:33 2:32

Quarter 3 1:54 2:59 2:38 2:17 2:12

Quarter 4 1:39 3:05 2:05 1:59 2:12

Annual 2:08 2:26 2:48 2:20 2:22

Source: Library Reference USPS-FY23-33, folder “FY23-33,” Excel file “WaitTimeInLine FY2023.xlsx,” tab “Nat’l Avg Wait Time by Qtr FY23;” FY 

2022 ACD at 186.

276 Library Reference USPS-FY23-33, folder “FY23-33” Excel file “WaitTimeInLineFY2023.xlsx.”
Docket No. ACR2023 - 205 -

Table V-19 shows that in FY 2023, the national average wait time in line increased slightly 

in Quarter 1 and significantly in Quarter 4 but improved during Quarters 2 and 3. The wait 

time in line results are still better for Quarters 1 through 3 relative to FY 2021, but the 

improvement observed in FY 2022 Quarter 4 proved unsustainable in FY 2023 Quarter 4. 

The Postal Service describes measures it has undertaken to continue to minimize wait time 

in line, which include:

• Daily and weekly Customer Experience (CX) Point of Sale (POS) reporting to retail 

leaders

• Distributing various communications to retail employees to train them on how to 

help customers in line to facilitate transactions

• Retail Gemba assessments during peak season and as needed277

• Relocating 9 SSKs and adding 6 new SSKs in FY 2023278

• Deploying 5 Rapid Dropoff Stations to expedite Label Broker® pre-paid parcel 

acceptance transactions, which the Postal Service plans to expand in FY 2023279

• Completing 2,103 national retail-specific assessments that include on-site training 

and coaching for both managers and clerks

• Launching a CX Assessment program to evaluate wait time in line 

• Conducted a Retail Madness Contest to increase overall satisfaction and customer 

response rates for the POS CX survey280

277 During a Retail Gemba Assessment, trained staff visit Post Offices to evaluate work practices at these locations, identify opportunities for 

improvement, and advise employees how to take advantage of these opportunities. Docket No. ACR2022, Responses of the United States 

Postal Service to Questions 1-28 of Chairman's Information Request No. 4, January 20, 2023, question 26.c. These assessments help inform and 

coach both employees and managers how to improve their performance to decrease wait time in line. Id.

278 There were 2,742 SSKs operating at the end of FY 2023. January 26 Response to CHIR No. 6, questions 17.a.

279 The Rapid Dropoff Station is a self-service, non-revenue retail lobby technology that allows customers to conduct prepaid mail acceptance 

transactions with receipts, helps with Label Broker® transactions, and features screen mirroring technology to provide a contactless option for 

customers. FY 2023 ACR at 89 n.40. The Label Broker® secure repository allows authorized merchants to store label data and images for 

deferred printing. Id. These merchants then provide a “Label Identifier” to their customers via a QR Code on their mobile phone that customers 

can use to retrieve the label via USPS.com and at Post Offices equipped with Retail Systems Software. Id.

280 FY 2023 ACR at 89-90.
Docket No. ACR2023 - 206 -

Although national average wait time in line increased in FY 2023, the increase was minor 

and better than FY 2020 and FY 2021 results. The Postal Service has taken appropriate 

steps to improve wait time in line, including employee and management training as well as 

applying technology to facilitate transactions. Specifically, adding and relocating SSKs 

appears to improve wait time in line. The Postal Service reports that the FY 2023 SSK 

transaction rate increased by 1.14 percent between FY 2022 and FY 2023, with a total of 

52,571,992 transactions diverted from the window. FY 2023 ACR at 91. The most common 

transaction conducted at SSKs in FY 2023 was prepaid acceptance, which was 52 percent of 

total SSK transactions. January 26 Response to CHIR No. 6, question 17.h. During FY 2023, 

customers completed approximately 26.2 million prepaid acceptance scans at SSKs, which 

was a 2.3 million increase from FY 2022. FY 2023 ACR at 62. This shift in transactions that 

would normally be made at the retail counter may have helped reduce wait time in line 

during FY 2023, Quarters 2 and 3.

Table V-20 compares the average wait time in line for each postal area with the number of 

SSKs operating in each area at the end of FY 2023. Table V-20 shows a reverse correlation 

because areas with longer wait time in line have more SSKs. These results show that some 

SSKs are underutilized, and Postal Service could improve utilization rates for these SSKs 

(especially those in the Western Pacific area) by either relocating them or letting customers 

know where the SSKs are located and how to use them.

Table V-20

FY 2023 Comparison of Average Wait Time in Line (in Minutes)

to the Number of Self-Service Kiosks

Postal Area Average Area Wait Time in Line Number of SSKs Operating at End of FY 2023

Atlantic 2:02 681

Central 1:54 548

Southern 2:39 665

Western Pacific 2:59 848

Source: Library Reference USPS-FY23-33, folder “FY23-33,” Excel file “WaitTimeInLineFY2023.xlsx,” tab “Area Avg. Wait Time FY23;” January 26 Response to CHIR No. 6, 

question 17.b.

The Postal Service attributes the increase in national average wait time in line to “staffing 

concerns, not enough available counter stations staffed to assist with the lines, and gaps in 

duties and responsibilities of certain District retail positions....” February 6 Response to 

CHIR No. 7, question 25.a. To improve wait time in line in FY 2024, the Postal Service plans 

to deploy 35 new SSKs to S&DCs, deploy approximately 100 Rapid Dropoff Stations, and 

continue assessments and training strategies conducted in FY 2023.281 It explains that the 

new SSKs and Rapid Dropoff Stations will help make more counter stations available. 

February 6 Response to CHIR No. 7, question 25.a. It states that the continued assessments 

281 Id. at 91. Response to CHIR No. 6, question 17.e.
Docket No. ACR2023 - 207 -

and training strategies will help address staffing concerns and gaps in District duties and 

responsibilities. Id. question 25.b.

The Postal Service’s plans to deploy new SSKs and Rapid Dropoff Stations that appear likely 

to address the issue of insufficient counter stations by diverting transactions from the 

window to these machines. However, it is unclear how continued assessments and training 

strategies will address the issue of staffing concerns and gaps in District duties and 

responsibilities. If wait time in line declines in FY 2024, the Postal Service should create 

plans specifically for adding new staff and filling gaps in District duties and responsibilities.

The Commission will monitor wait time in line in Docket No. ACR2024 to ensure continued 

improvement. The Commission encourages the Postal Service to continue implementing 

strategies for improving wait time in line. In the FY 2024 ACR, the Postal Service must:

• Describe actions taken and strategies implemented during FY 2024 to improve wait 

time in line

• Explain which actions and strategies were most and least effective in reducing wait 

time in line

• Identify the strategies and actions for addressing the issue of staffing concerns and 

gaps in District duties and responsibilities

• Explain whether these strategies and actions were effective in addressing staffing 

concerns and gaps in District duties and responsibilities

If wait time in line worsens during FY 2024, the FY 2024 ACR must:

• Explain why wait time in line increased, and identify causes and factors contributing 

to the increase

• Describe plans for improving wait time in line during FY 2025 that identify specific 

actions, strategies, and initiatives for addressing the causes of increased wait time in 

line
Docket No. ACR2023 - 208 -

7. Alternative Access

In addition to providing products and services at retail facilities, the Postal Service 

continues to provide customer access through alternative access channels, which allow 

customers to obtain postal products and services outside of traditional brick and mortar 

Post Offices. Alternative access channels include:

• Stamp Sales by Partners – stamps sold by key suppliers such as Costco, Walmart, 

and other retailers

• SSKs – transactions performed via SSKs in lobbies of retail facilities

• Stamps by Mail/Phone – online stamp ordering via usps.com

• Contractor-operated retail facilities – revenue from CPUs, CPOs, and VPOs

• Click-N-Ship – an online mail service allowing customers to create an account, buy 

postage for packages, and schedule pick up service

• Other alternative access points – online services, commemorative stamp sales and 

philatelic products, stamped envelope sales, Approved Shipper sales, Forever 

Stamps, and Stamps to Go282

In the FY 2023 ACR, the Postal Service provided a table containing information on retail 

revenue from Post Offices and alternative access channels for FY 2022 and FY 2023. FY 

2023 ACR at 91-92. Figure V-39 compares retail revenue by channel from FY 2019 through 

FY 2023 in three categories:

• Post Offices (walk-in revenue from Post Offices and contractor-operated retail 

facilities)283

• Internet Access (Click-N-Ship)

• Other (including Stamp Sales by Partners, SSKs, Stamps by Mail/Phone, and other 

alternative access points)

282 Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-18 of Chairman’s Information Request No. 13, February 

17, 2022, questions 2.b.i., 2.b.iv. (Docket No. ACR2021, Response to CHIR No. 13).

283 Post Office revenue consists of retail postage; retail services (insurance, certified mail, registered mail, signature confirmation, etc.); and 

retail product sales (stamps, greeting cards, packaging products, money orders, etc.). Docket No. ACR2021, Response to CHIR No. 13, question 

4.b.
Docket No. ACR2023 - 209 -

Figure V-39

Retail Revenue, by Channel, FY 2019–FY 2023

Source: FY 2023 ACR at 91-92; FY 2022 ACD at 189.

Figure V-39 shows that in FY 2023, revenue from all retail revenue channels declined 

substantially. Overall, the revenue decline between FY 2022 and FY 2023 was 

approximately $427 million, or 3.55 percent. Of the channels, Post Offices (walk-inrevenue) fared the best, decreasing by about 2.11 percent. Unfortunately, the Other and 

Internet Access channels decreased by approximately 9.52 percent and 12.53 percent, 

respectively. Since the Commission began actively tracking retail revenue by channel 

metrics in FY 2012, the Post Offices (walk-in-revenue) and Other channels have trended 

towards year-over-year revenue reductions. That trend continued in FY 2020 and FY 2021, 

but the effects were offset by the COVID-19 pandemic-induced change in consumer 

behavior that saw a surge in revenue for the Internet Access channel. The results observed 

in FY 2023 are a product of a continued revenue reduction for the Post Offices (walk-inrevenue) and Other channels while simultaneously seeing a return to “normal” consumer 

behavior with respect to the Internet Access channel. The FY 2023 retail revenue amount 

of approximately $11.60 billion represents the lowest level of retail revenue seen by the 

Commission since tracking this metric began.

In the FY 2022 ACD, the Commission stated, “[i]f revenue from retail channels continues to 

decline across the board in FY 2023, the Postal Service must identify the root causes for 

these declines and describe plans to address them in the FY 2023 ACR.” FY 2022 ACD at 

190. In the FY 2023 ACR, the Postal Service asserts that it cannot exhaustively catalog the 

$10,303 $10,413 $10,639 $9,886 $9,677

$1,918 $1,940 $1,980

$1,670 $1,511

$451 $529 $545

$474 $415

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

$15,000

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Revenue (in Millions)

Post Offices (walk-in revenue) Other Internet Access
Docket No. ACR2023 - 210 -

root causes for these declines with any degree of precision. FY 2023 ACR at 92. However, it 

observes that the number of customer visits to retail facilities declined in FY 2023, with 

correlative declines in transactions and revenue. Id.

In a CHIR response, the Postal Service asserts that “declines in mail volume, postage 

stamps, and other associated transactions reduced revenue generated by retail channels” 

likely contributed to the decline in revenue from alternative access channels. February 9 

Response to CHIR No. 9, question 3.a. Specifically, it states that Click-N-Ship revenue likely 

declined because competitive rates not of general applicability became available to 

business customers via the Business Rate Card. Id. As background, it explains that 

launching the Connect eCommerce Program in early 2022 allowed customers to buy Postal 

Service products from third parties at lower prices compared to Click-N-Ship. Id. It states 

that access to the Business Rate Card for competitive products diverted some revenue from 

other channels, such as Click-N-Ship in the short term. Id. It notes that Click-N-Ship revenue 

declines also reflect the availability of published commercial shipping rates on Click-N-Ship 

effective May 18, 2023. Id.

To address retail revenue declines, the Postal Service states that it plans to continue 

“mitigating wait times, raising [POS] customer satisfaction, and leveraging alternative 

access channels to make the retail experience more convenient overall.” FY 2023 ACR at 92. 

It asserts that “not all causes of decline in retail revenue lie within the Postal Service’s 

control, nor are they necessarily amenable to retail-focused solutions.” February 9 

Response to CHIR No. 9, question 3.b. It points out that its plans reflect strategies that the 

Postal Service can feasibly implement. Id. It acknowledges that making the retail experience 

more convenient overall may not reverse long-term trends in mail volume. Id. However, it 

posits that these efforts may encourage more frequent use of the Postal Service’s retail 

network. Id.

The decline in retail revenue for all channels is concerning. However, it appears that 

customers had sufficient access to postal services in FY 2023 because the Postal Service 

continued to make postal services available at retail facilities and alternative access 

channels. The Commission will continue to monitor alternative access channels to ensure 

that customers have regular and effective access to postal services in all communities.

The Commission recommends that the Postal Service continue to offer and expand alternative 

access channels to ensure customers have continued access to essential postal services. If 

revenue from retail channels continues to decline across the board in FY 2024, the Postal 

Service must identify the root causes for these declines and describe plans to address them in 

the FY 2024 ACR.
Docket No. ACR2023 - 211 -

C. Customer Satisfaction with Market 

Dominant Products

1. Introduction

A. KEY FINDINGS

Key findings and corresponding Commission directives/recommendations regarding 

customer satisfaction include:

• Overall, Market Dominant product satisfaction was positive in FY 2023. However, 

the Commission has some concerns about the actions taken in FY 2023 and plans in 

FY 2024 to improve satisfaction. To create effective improvement plans, the Postal 

Service must first understand the key drivers of Market Dominant product 

satisfaction and the root causes of lower satisfaction results.

• In FY 2024, the Postal Service should continue to take appropriate actions to 

maintain Market Dominant product satisfaction for residential, small/medium 

business, and large business customers. Accordingly, the Commission requires the 

Postal Service to include in the FY 2024 ACR information aimed at creating effective 

customer satisfaction improvement plans.

B. BACKGROUND

The PAEA requires the Postal Service to report “measures of the degree of customer 

satisfaction with the service provided” for each Market Dominant product. 39 U.S.C. 

§ 3652(a)(2)(B)(ii); 39 C.F.R. § 3055.90. The Postal Service measures customer satisfaction 

with Market Dominant products and CX generally using surveys. The ACR must include a 

copy of each type of customer survey and information obtained from each survey. 39 C.F.R. 

§ 3055.92. This information must include a description of the type of customer targeted by 

the survey, the number of surveys initiated and received, and the number of responses 

received for each multiple-choice question, disaggregated by each possible response. Id.

The Postal Service provided the surveys and other customer satisfaction information in the 

FY 2023 ACR, Library Reference USPS-FY23-38, and a CHIR response.284

In FY 2023, the Postal Service measured CX using eight surveys: (1) Business Service 

Network; (2) POS; (3) Delivery; (4) Customer Care Center; (5) Customer 360; (6) Large 

Business Panel; (7) Business Mail Entry Unit; and (8) USPS.com.285 Each survey measures a 

customer touchpoint or interaction between the customer and the Postal Service. For 

284 FY 2023 ACR at 57-88; Library Reference USPS-FY23-38, December 29, 2023, file “USPS-FY23-38 Preface.pdf” (Library Reference USPS-FY23-

38, Preface); Library Reference USPS-FY23-38, folder “FY23.38.Files,” PDF files “CX_Surveys_FY23.pdf” (CX Surveys) and 

"CX_Question_Response_Counts_FY23.xlsx." The Postal Service provided the number of surveys initiated and received in a CHIR response. 

January 19 Response to CHIR No. 2, question 50.

285 Library Reference USPS-FY23-38, Preface at 1-2.
Docket No. ACR2023 - 212 -

example, the POS survey measures CX at retail facilities with POS systems. Library 

Reference USPS-FY23-38, Preface at 3.

In this section, the Commission evaluates “the degree of customer satisfaction with the 

service provided” for Market Dominant products as required by 39 U.S.C. 

§ 3652(a)(2)(B)(ii). “Customer satisfaction” in this section refers specifically to customer 

satisfaction with Market Dominant products. Other topics related to CX—including the 

surveys, FY 2023 targets and results, and CX metrics—will be analyzed in detail in the 

Commission’s forthcoming Analysis of the FY 2023 Annual Performance Report and FY 2024 

Annual Performance Plan.

To measure customer satisfaction with Market Dominant products, the Postal Service uses 

data from the Delivery and Large Business Panel surveys for three types of customers: 

residential, small/medium business, and large business. FY 2023 ACR at 78. The Delivery 

survey measures residential and small/medium business customer satisfaction with 

receiving mail and packages. Library Reference USPS-FY23-38, Preface at 3. In FY 2023, 

residential and small/medium business customers were randomly selected and mailed a 

weekly invitation to take the Delivery survey, which they may complete online or by 

phone.286

The Large Business Panel survey measures customer satisfaction of large businesses with 

500 or more employees. Library Reference USPS-FY23-38, Preface at 5. A third-party 

vendor manages customers who sign up to participate in the survey panel. Id. The Large 

Business Panel survey is conducted monthly to account for seasonal variation in Market 

Dominant product satisfaction. Id. In this section, the Delivery and Large Business surveys 

are together referred to as the Customer Satisfaction surveys.

To measure customer satisfaction with Market Dominant products, the Customer 

Satisfaction surveys ask residential, small/medium business, and large business customers 

about their experience using several domestic and international mailing services, such as

First-Class Mail International and Media Mail.287 They group classes and products into 

mailing services. Customers were asked to rate their level of satisfaction with each mailing 

service using a six-point scale ranging from Very Satisfied to Very Dissatisfied.288 The 

customer satisfaction result for each mailing service is expressed as the percentage of 

customers who selected Very Satisfied or Mostly Satisfied. See FY 2023 ACR at 79-81.

286 Id. The Postal Service states that “[r]esidential and small/medium businesses were sufficiently sampled to ensure, at the District-level, a 

minimum precision level of +/- 5 percentage points, at the 90 percent level of confidence per postal quarter.” FY 2023 ACR at 78.

287 CX Surveys at 35-36, 64-66. Although the surveys also ask about customer satisfaction with Competitive products such as Priority Mail, the 

ACR is required to include “measures of the quality of service afforded by the Postal Service” for each Market Dominant product, including “the 

degree of customer satisfaction with the service provided.” 39 U.S.C. § 3652(a)(2)(B)(ii). For this reason, the ACD focuses on Market Dominant 

product satisfaction.

288 CX Surveys at 35-36, 64-66. The question asked is “Now thinking about your experience with these [domestic or international] products, 

what is your satisfaction with....”
Docket No. ACR2023 - 213 -

C. FY 2023 POSTAL SERVICE INITIATIVES

In the FY 2022 ACD, the Commission directed that the FY 2023 ACR must, for each 

customer type:

• Describe specific actions taken as well as plans, initiatives, and strategies 

implemented in FY 2023 to improve residential and small/medium business Market 

Dominant product satisfaction

• Explain how these actions, plans, initiatives, and strategies were targeted to 

improve Market Dominant product satisfaction for each customer type

FY 2022 ACD at 195. In the FY 2023 ACR, the Postal Service responds that in FY 2023, it 

continued to support all mailers, including residential and business customers, through 

education and continued engagement. FY 2023 ACR at 82. It states that it educates 

customers about products, product requirements, mailing standards, and operational 

processes by collaborating with industry associations, alliance partners, Postal Customer 

Councils, the Postmaster General’s Mailers Technical Advisory Committee (MTAC), and 

Areas Inspiring Mail (AIM). Id. It notes that it participated in the National Postal Forum and 

engaged with customers in meetings with AIM, Postal Customer Councils, and MTAC. Id. It 

asserts that “[t]hese efforts had a direct impact on the Postal Service’s business customers 

who attended these meetings and events.” Id. The Postal Service explains that it expanded 

engagement efforts to academia across colleges and universities “to showcase the value of 

mail as a marketing channel[,]” which will continue in FY 2024. Id. at 82-83.

The Postal Service describes several incentives designed to engage customers. First, it 

states that the Marriage Mail incentive implemented in July 2023 “alleviate[d] pricing 

pressures for marriage mailers who send mailpieces under 2 ounces.”289 It asserts that this 

incentive “allow mailers to remain competitive with other advertising channels, stabilize 

mail volume in at-risk markets, and potentially expand into markets where the cost of 

entry was previously too high.” Id. Second, the Postal Service asserts that the First-Class 

Mail and USPS Marketing Mail Growth incentives, which will run concurrently during CY 

2024, will drive increased mail volume into the network and provide customers with 

postage credit that they will be able to use on future mailings, which would allow them to 

maximize their total return on investment.290

Also, the Postal Service describes several promotions implemented in FY 2023, which it 

asserts improve Market Dominant product satisfaction by helping mailers incorporate 

techniques in their mailpieces that will help reach more customers. FY 2023 ACR at 83. It 

states that promotions drive significant changes in direct mail marketing and are valuable 

289 Id. at 83. To qualify for the incentive, mailpieces must contain inserts from at least 4 advertisers and be mailed at least 10 times every 12 

months. Id.

290 Id. Under both growth incentives, “for every qualifying piece mailed in calendar year 2024 after the first million pieces , mailers receive a 

credit equal to 30 percent of the average per-piece price paid for mailing all qualifying piece” unless they mailed more than 1 million qualifying 

pieces in in FY 2023. See Order No. 6713 at 4.
Docket No. ACR2023 - 214 -

because 92 percent of the top 100 marketing mailers use promotions. Id. Promotions 

implemented in FY 2023 include the Reply Mail Intelligent Mail barcode Accounting (IMbA)

Promotion, and Retargeting Promotion and Informed Delivery Promotion.291 It notes that it 

expanded the Informed Delivery Promotion to Saturation volume to improve visibility, as 

well as the Emerging and Advanced Technology Promotion to incorporate the Mobile 

Shopping Promotion. Id. at 84.

Other initiatives aimed at improving Market Dominant product satisfaction in FY 2023 

include rolling out the USPS Connect Local Mail experimental product to all 50 states and 

the District of Columbia.292 The Postal Service states it is also conducting market research 

on the catalog market to determine volume and usage, which “will inform the Postal 

Service’s future initiatives to improve the customer satisfaction of catalog mailers and 

increase their mail volume.” FY 2023 ACR at 84-85.

The FY 2023 ACR did not group the initiatives described above by customer type as the FY 

2022 ACD directed. See FY 2022 ACD at 195. CHIR No. 7 asked the Postal Service to explain 

how the actions, plans, initiatives, and strategies implemented in FY 2023 affected each 

customer type and identify the ones targeted to residential customers. CHIR No. 7, question 

26. The Postal Service responded “[t]here were no actions, plans, initiatives, and strategies 

targeted to improve Market Dominant product satisfaction specifically for residential 

customers.” February 2 Response to CHIR No. 7, question 26.a. It reiterated information 

from the FY 2023 ACR and asserted that the USPS Connect Local Mail service likely 

improved Market Dominant product satisfaction for residential and small/medium 

business customers. Id. question 26.b. It stated that the promotions likely improve Large 

Business product satisfaction, noting that the adoption rate of promotions increased by 

40.9 percent in FY 2023.293

291 Id. at 83-84. The Reply Mail IMbA Promotion encourages reply mail customers to adopt IMbA static or serialized barcodes. Id. The 

Retargeting Promotion incentives marketers to send postcards to recent website or mobile app visitors. Id. at 84.

292 Id. USPS Connect Local Mail that allows businesses to send documents locally the same day or next day using a fast, convenient service. See 

Docket No. MT2022-1, Order Authorizing Extension of USPS Connect Local Mail Market Test, December 13, 2023, at 2 (Order No. 6860).

293 Id. This is based on the volume of mail that participates in promotions versus the volume of eligible mail. Id.
Docket No. ACR2023 - 215 -

D. FY 2024 POSTAL SERVICE PLANS

In the FY 2022 ACD, the Commission directed that “[i]f customer satisfaction with Market 

Dominant products declines for any customer type between FY 2022 and FY 2023, the FY 

2023 ACR must explain why, as well as how the Postal Service will address these declines 

in FY 2024.” FY 2022 ACD at 195. The Postal Service acknowledges that between FY 2022 

and FY 2023, Market Dominant product satisfaction declined for several mailing services, 

which are discussed below. Id. at 85; see Section V.C.2., infra. However, it points out that 

these declines were “relatively modest,” and Market Dominant product satisfaction results 

for each customer type were overall better in FY 2023 compared to past years. FY 2023 

ACR at 85. It points out that the mailing industry as a whole has struggled with issues 

affecting Market Dominant product satisfaction, including ongoing diversion from mail to 

digital communications and the economic downturn. Id.

To improve Market Dominant product satisfaction in FY 2024, the Postal Service states that 

it will continue its efforts to educate customers and engage colleges and universities. Id. at 

83. It notes that the First-Class Mail and USPS Marketing Mail Growth Incentives will run 

concurrently during CY 2024, and the Emerging and Advanced Tech Promotion will expand 

to allow mailers to choose their own start date and let the promotion run for 6 months 

from that date. Id. at 83-84. It states it will also continue offering the USPS Connect Local 

Mail service and conduct market research on the catalog market to determine volume and 

usage. Id. at 84.

Also, in FY 2024 the Postal Service states that it will continue to “leverage its network 

realignment to simplify and improve its product offerings” by improving usage, 

profitability, and customer satisfaction through new, enhanced, or simplified products. Id.

at 85. It notes that for the USPS Connect Local Mail service, it will process improvements 

through the SCF Pallet discount. Id. It states it will continue network improvements under 

the DFA Plan to improve service performance for all products. Id.; see Section V.A., supra.

2. Commission Analysis

For each customer type, Table V-21 compares customer satisfaction results for select 

Market Dominant mailing services between FY 2022 and FY 2023. Results are expressed as 

the percentage of customers who were Very Satisfied or Mostly Satisfied with a Market 

Dominant mail class or category.
Docket No. ACR2023 - 216 -

Table V-21

Customer Satisfaction with Market Dominant Mailing Services, by Percentage

FY 2022–FY 2023

Market Dominant Products 

(Mailing Services)

Residential 

Customers

Small/Medium 

Business Customers

Large Business 

Customers

FY 2022 FY 2023 FY 2022 FY 2023 FY 2022 FY 2023

First-Class Mail Domestic 77.07% 76.42% 77.92% 78.90% 85.06% 85.91%

First-Class Mail International 77.79% 79.89% 75.30% 79.18% 87.89% 88.75%

USPS Marketing Mail

N/A

73.56% 73.36% 83.43% 84.12%

Periodicals 81.84% 82.33% 82.84% 83.14%

Media Mail 80.37% 83.06% 80.69% 81.90% 83.48% 82.04%

Library Mail 76.03% 79.16% 76.78% 76.33% 83.70% 83.42%

N/A –Residential customers were not asked about their satisfaction with this mailing service.

Redindicates the score was worse than the FY prior.

Source: FY 2023 ACR at 80-81.

Table V-21 shows that in FY 2023, Market Dominant product satisfaction improved or 

remained the same for each mailing service except for domestic First-Class Mail 

(Residential), USPS Marketing Mail (Small/Medium Business), Media Mail (Large Business), 

and Library Mail (Small/Medium and Large Businesses). However, results for the mailing 

services that declined in FY 2023 remained within 1 percentage point the FY 2022 result.

Overall, Market Dominant product satisfaction for most Market Dominant mailing services 

improved from FY 2022 to FY 2023. However, the Commission has some concerns about 

the actions taken in FY 2023 and plans in FY 2024 to improve satisfaction. First, the mailing 

incentives did not significantly affect customer satisfaction in FY 2023. The Marriage Mail 

incentive began in July 2023, and the First-Class Mail and USPS Marketing Mail Growth 

incentives were not implemented until CY 2024.

Second, the FY 2023 ACR describes general initiatives designed to improve satisfaction for 

all mailers instead of grouping by customer type as the FY 2022 ACD directed. See FY 2022 

ACD at 195. Residential, small/medium business, and large business customers may have 

different drivers of customer satisfaction. Grouping actions taken and plans for 

improvement by customer type will help identify these drivers to allow the Postal Service 

to target Market Dominant products with lower levels of customer satisfaction.

Third, the Postal Service is not prioritizing satisfaction for residential customers. It stated 

that in FY 2023 “[t]here were no actions, plans, initiatives, and strategies targeted to 

improve Market Dominant product satisfaction specifically for residential customers.” 

February 2 Response to CHIR No. 7, question 26.a. Indeed, the incentives, promotions, and 

education initiatives are geared toward business customers. Similarly, USPS Connect Local 
Docket No. ACR2023 - 217 -

Mail is an experimental product targeted at addressing “the needs of businesses that send 

important documents locally with regular frequency.”294 Moreover, USPS Connect Local 

Mail volume was extremely low in FY 2023, which indicates that this service had minimal 

impact on customer satisfaction.295

The Postal Service asserts that “residential customers were likely positively impacted as a 

result of the Postal Service’s other actions, plans, initiatives and strategies” described in the 

FY 2023 ACR. February 2 Response to CHIR No. 7, question 26.a. Because residential 

customers may have different drivers of customer satisfaction compared to business 

customers, a “one-size-fits-all” approach for improving satisfaction will not target specific 

customers or products with lower customer satisfaction scores, such as domestic FirstClass Mail for residential customers.

Fourth, it is unclear how the Postal Service’s plans will improve Market Dominant product 

satisfaction. TPA comments that the Postal Service plans to improve satisfaction “by 

increased public relations and outreach.” TPA Comments at 2. The Commission observes 

that educating customers and engaging colleges and universities “to showcase the value of 

mail as a marketing channel” may increase product usage but not satisfaction with the 

product itself. February 2 Response to CHIR No. 7, question 26.b. Although the growth 

incentives and promotions may increase mail volume and customer outreach, they do not 

directly affect the level of satisfaction with using a product.

To create effective improvement plans, the Postal Service must first understand the key 

drivers of Market Dominant product satisfaction and the root causes of lower satisfaction 

results. TPA comments that the Postal Service “fails to grasp the causes and consequences 

of declining customer satisfaction.” TPA Comments at 1. The Commission observes that the 

Customer Satisfaction surveys ask respondents to rate their satisfaction level with Market 

Dominant products but does not ask why they chose that rating. Understanding the reasons 

for low satisfaction is essential for creating effective improvement plans. For example, if 

residential customer satisfaction with domestic First-Class Mail declined due to on-time 

delivery issues, the Postal Service could improve results by addressing service 

performance for this product.

To identify the causes of low satisfaction, the Customer Surveys could include more specific 

questions about Market Dominant product satisfaction. Drafting survey questions as 

specific as possible decreases respondent confusion and makes the survey results more 

consistent and reliable. For example, the surveys could include a comment box asking 

customers to explain the reason for their rating. Also, in the FY 2020 ACD, the Commission 

recommended that the surveys ask customers to rate their satisfaction level with service 

performance for each mailing service “to allow the Postal Service to assess how service 

294 Docket No. MT2022-1, United States Postal Service Notice of Market Test of Experimental Product – USPS Connect Local Mail, November 10, 

2021, at 1.

295 See Docket No. MT2022-1, FY23 Q4 Cover Letter and Data Collection Report for Connect Local Mail Q4 FY23, November 9, 2023.
Docket No. ACR2023 - 218 -

performance results affect customer satisfaction with those mailing services.” FY 2020 ACD 

at 234.

In the FY 2021 ACR, the Postal Service stated that it considered this recommendation, but 

did not adopt it because increasing the survey length could lead to possible negative 

consequences, such as higher abandonment rate.296 The Commission recommends that the 

Postal Service reconsider adding questions to the Customer Satisfaction surveys or find 

another way to determine key drivers and root causes of Market Dominant product 

satisfaction. For example, the Postal Service states that “[i]n FY 2023, the Customer 

Experience Department conducted driver analyses to determine the factors that drive 

overall satisfaction for each [CX] survey.” FY 2023 ACR at 59. The Postal Service could 

conduct a similar analysis to identify the factors that drive Market Dominant product 

satisfaction for each customer type.

Without understanding the “why” behind customer satisfaction ratings, the Postal Service 

cannot create effective improvement plans that target customers and products with low 

satisfaction levels.

In FY 2024, the Postal Service should continue to take appropriate actions to maintain Market 

Dominant product satisfaction for residential, small/medium business, and large business 

customers. In the FY 2024 ACR, the Postal Service must:

• Identify the factors that drive Market Dominant product satisfaction for residential, 

small/medium business, and large business customers

• Identify the root causes of lower customer satisfaction for any mailing service with a 

result that declines between FY 2023 and FY 2024

• Describe specific actions taken as well as plans, initiatives, and strategies implemented 

in FY 2024 to improve customer satisfaction with Market Dominant products

• Explain how these actions, plans, initiatives, and strategies improved Market 

Dominant product satisfaction for residential, small/medium business, and large 

business customers

• Explain how these actions, plans, initiatives, and strategies impacted FY 2024 results

• Describe specific plans for improving Market Dominant product satisfaction in FY 

2025 that target mailing services with lower satisfaction results in FY 2024

296 Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-18 of Chairman’s Information Request No. 13, February 

17, 2022, question 8.
Docket No. ACR2023 Appendix A

Page 1 of 20

Appendix A: Key Commission Findings 

and Directives Requiring Postal Service 

Action for Future Annual Compliance 

Reports

Workshare Discounts:

• The Commission finds that all workshare discounts in effect in FY 2023 were in 

compliance with 39 C.F.R. part 3030, subpart J at the time they were introduced in rate 

adjustment proceedings based on the most recent avoided costs available at the time 

of each rate adjustment filing. FY 2023 ACD, Chapter II.

• The Commission directs the Postal Service to bring all current workshare discounts 

approved in Docket No. R2024-1 and identified in Table II-1 that are not equal to their 

avoided costs based on the new FY 2023 avoided costs into compliance with 39 C.F.R. 

§ 3030.283 and 39 C.F.R. § 3030.284 in the next rate adjustment proceeding, which 

could include aligning workshare discounts with avoided costs or explaining how the 

workshare discounts comply with existing exceptions (including waivers granted in 

accordance with the rules set forth in 39 C.F.R. § 3030.286). In addition, all workshare 

discounts proposed in rate adjustment proceedings must be consistent with 39 C.F.R. 

§ 3030.282. FY 2023 ACD, Chapter II.

Market Dominant, Non-Compensatory Classes:

• Periodicals:

o The Commission reiterates its longstanding findings that despite numerous costreduction initiatives designed to reduce flat-shaped mail costs, including 

Periodicals costs, these costs have risen over time. FY 2023 ACD, Chapter III.

o Furthermore, the Commission encourages the Postal Service to continue to 

maximize its usage of rate authority granted under 39 C.F.R. § 3030.222 and to 

maximize its cost coverage by strategically pricing Periodicals. FY 2023 ACD, 

Chapter III.
Docket No. ACR2023 Appendix A

Page 2 of 20

Market Dominant, Non-Compensatory Products in Compensatory Classes:

• USPS Marketing Mail Flats:

o The Commission finds that the cost coverage for USPS Marketing Mail Flats 

remained severely deficient in FY 2023 and reminds the Postal Service that under 

39 C.F.R. § 3030.221, it must propose a rate increase for USPS Marketing Mail Flats 

that is at least 2 percentage points above the average increase for the class in any 

rate adjustment filing affecting USPS Marketing Mail. FY 2023 ACD, Chapter III.

o In addition, the Commission urges the Postal Service to continue to pursue cost 

reductions of flat-shaped products, including USPS Marketing Mail Flats. FY 2023 

ACD, Chapter III.

• USPS Marketing Mail Carrier Route:

o The Commission finds that the FY 2023 revenue for USPS Marketing Mail Carrier 

Route was not sufficient to cover attributable cost. The Commission reminds the 

Postal Service that under 39 C.F.R. § 3030.221, the Postal Service must propose a 

rate increase for USPS Marketing Mail Carrier Route that is at least 2 percentage 

points above the average increase for USPS Marketing Mail whenever the Postal 

Service files a rate adjustment filing affecting USPS Marketing Mail. FY 2023 ACD, 

Chapter III.

o In addition, the Commission urges the Postal Service to continue to pursue cost 

reductions of flat-shaped products, including USPS Marketing Mail Carrier 

Route. FY 2023 ACD, Chapter III.

• Package Services—Media Mail/Library Mail:

o The Commission finds that the FY 2023 revenue for Media Mail/Library Mail was 

not sufficient to cover its attributable cost. The Commission reminds the Postal 

Service that under 39 C.F.R. § 3030.221, the Postal Service must increase the prices 

of Media Mail/Library Mail by at least 2 percentage points above the class average 

in each Market Dominant rate adjustment affecting Package Services through the 

issuance of the FY 2024 ACD. FY 2023 ACD, Chapter III.

o Further, the Commission directs the Postal Service to include the percentage of 

Media Mail/Library Mail volume sent by air transportation in FY 2024 in their 

discussion of the Package Services class in the FY 2024 ACR. If that number is 

greater than zero, the Postal Service must explain why that occurred. FY 2023 

ACD, Chapter III.
Docket No. ACR2023 Appendix A

Page 3 of 20

Competitive Products, Cross-Subsidization:

• The Commission finds Competitive products satisfied 39 U.S.C. § 3633(a)(1) in FY 2023. 

FY 2023 ACD, Chapter IV.

Competitive Products, Cost Coverage, Domestic:

• The Commission finds that, in FY 2023, every Competitive domestic product with rates 

of general applicability covered its attributable cost1 and, thereby, satisfied the 

statutory requirements of 39 U.S.C. § 3633(a)(2). FY 2023 ACD, Chapter IV.

Competitive Products, Cost Coverage, Negotiated Service Agreements:

• The Commission finds that Priority Mail Contract 543 and Parcel Select Contract 52 

were not in compliance with 39 U.S.C. § 3633(a)(2) in FY 2023. However, because these 

contracts have already terminated, no further action is required. FY 2023 ACD, 

Chapter IV.

• To ensure accurate recordkeeping and timely identification of any discrepancies, the 

Commission directs the Postal Service to file in the instant proceeding, on a quarterly 

basis, a summary spreadsheet listing all NSAs active during the prior quarter and 

identifying all extensions, expirations, and early terminations including exact dates 

and respective notices filed. FY 2023 ACD, Chapter IV.

• Each report must include correct contract partner names, contract type and number, 

docket number(s), and dates in the identical format as ACR reports. Each report is due 

within 7 days after the conclusion of each quarter of the fiscal year, with the first such 

report due April 8, 2024, and the last such report due January 9, 2025. FY 2023 ACD, 

Chapter IV.

• The Commission encourages the Postal Service to review the spreadsheet and related 

docket filings each quarter to identify errors, ensure the quality and accuracy of the 

spreadsheet, and file notices of termination or errata where necessary. FY 2023 ACD, 

Chapter IV.

1 See Library Reference PRC-LR-ACR2023-1, Excel file “FY23 Summary_NPLR-1.xlsx,” tab “Total All Mail Appendix A.”
Docket No. ACR2023 Appendix A

Page 4 of 20

Competitive Products, Cost Coverage, International:

• Inbound Parcel Post (at UPU Rates):

o The Commission directs the Postal Service to take all necessary steps to ensure that 

it meets all UPU requirements for parcel rate bonuses. FY 2023 ACD, Chapter IV.

o The Commission also directs the Postal Service to provide a progress report on its 

efforts to this end, including detailing any technology and process limitations, and 

to provide its most recently available UPU report cards for FY 2024 showing the 

Postal Service’s compliance with all UPU parcel rate bonus requirements within 

180 days of the issuance of this ACD. FY 2023 ACD, Chapter IV.

o The Commission further directs the Postal Service to provide the amount of any 

revenue forgone on UPU bonuses on parcel rates with an explanation of the 

calculation with all future ACRs. FY 2023 ACD, Chapter IV.

o The Commission encourages the Postal Service to work through the UPU to change 

the methodology to calculate the remuneration for Inbound Parcel Post (at UPU 

rates) to bring it to a compensatory level. FY 2023 ACD, Chapter IV.

o The Commission also encourages the Postal Service to continue to expend a 

reasonable amount of resources given the size of the product to explore and 

implement measures to reduce the unit cost of Inbound Parcel Post (at UPU rates). 

The Postal Service shall report on these measures and results in the FY 2024 ACR. 

FY 2023 ACD, Chapter IV.

• International Surface Air Lift (ISAL):

o The Commission finds that ISAL was not in compliance with 39 U.S.C. § 3633(a)(2) 

in FY 2023. FY 2023 ACD, Chapter IV.

o The Commission recognizes that ISAL has generally covered its cost in prior years, 

and this is likely a unique issue, as confirmed by the Postal Service. Nonetheless, the 

Commission directs the Postal Service to file a report within 180 days of the 

issuance of this ACD on its progress toward a more timely settlement process as 

well as a status report on its consideration of a potential rulemaking. Should the 

Postal Service conclude that a rulemaking is not appropriate, it shall discuss how it 

reached this conclusion in its status report. FY 2023 ACD, Chapter IV.

o The Commission also encourages the Postal Service to monitor the impact of the 

price increase that took effect in January 2024 on the product and to request 

further price increases as necessary based on its continued assessment of the 

product’s projected cost coverage. FY 2023 ACD, Chapter IV.
Docket No. ACR2023 Appendix A

Page 5 of 20

• International Money Transfer Service (IMTS)—Outbound:

o The Commission finds that the IMTS—Outbound product was not in compliance 

with 39 U.S.C. § 3633(a)(2) in FY 2023. FY 2023 ACD, Chapter IV.

o The Commission directs the Postal Service to propose a price increase for the 

IMTS—Outbound product that more adequately reflects the costs of the product in 

its next request to adjust prices of general applicability for Competitive products. 

FY 2023 ACD, Chapter IV.

o The Commission encourages the Postal Service to consider potential costing 

methodological changes or special cost studies that would improve the cost 

estimation of IMTS products. FY 2023 ACD, Chapter IV.

• International Ancillary Services—Inbound Competitive International Registered 

Mail:

o The Commission finds that the International Ancillary Services product was not in 

compliance with 39 U.S.C. § 3633(a)(2) in FY 2023 because one of its subcomponents, Inbound Competitive International Registered Mail, did not cover its 

attributable cost. FY 2023 ACD, Chapter IV.

o The Commission directs the Postal Service to file a follow-up report on its efforts to 

move registered items to a tracked offering within 180 days of the issuance of this 

ACD and in the FY 2024 ACR. This filing should include a specific description of the 

Postal Service’s plan, including anticipated major milestones and progress toward 

achieving them. FY 2023 ACD, Chapter IV.

Competitive Products, Cost Coverage, Competitive Outbound International Products 

Consisting of Negotiated Service Agreements:

• Outbound:

o The Commission concludes that Competitive outbound international products 

consisting of NSAs satisfied 39 U.S.C. § 3633(a)(2), except for eight Competitive 

outbound international NSAs that did not cover their attributable costs.2 Of these 

agreements, three have expired and five are still in effect.3 FY 2023 ACD, Chapter 

IV.

2 The Commission notes that one of these eight NSAs was a serial-numbered agreement within the GEPS—NPR 15 product. Although this NSA 

did not cover its attributable cost, the GEPS—NPR 15 product as whole covered its attributable cost.

3 As noted above, one of these five NSAs, which is scheduled to expire on April 30, 2024, is inactive due to the customer no longer mailing 

pursuant to this NSA.
Docket No. ACR2023 Appendix A

Page 6 of 20

o The Commission strongly recommends that the Postal Service continually monitor 

the financial performance of each outbound international NSA, ensure built-in 

contingencies are sufficient to ensure the product remains compensatory, and take 

steps to terminate or renegotiate agreements that are non-compensatory. FY 2023 

ACD, Chapter IV.

o The Commission continues to strongly encourage the Postal Service to enforce the 

minimum volume and/or revenue requirement in each NSA and to seriously 

consider the viability of certain outbound NSAs whose projected cost coverage calls 

into question whether their financial performance will be compensatory given the 

current volatility of cost increases in transportation, processing, and delivery, and 

losses in economies of density. FY 2023 ACD, Chapter IV.

o To ensure accurate recordkeeping and timely identification of any discrepancies, 

the Commission directs the Postal Service to file in this docket, on a quarterly basis, 

a summary spreadsheet listing all NSAs active during the prior quarter and 

identifying all extensions, expirations, and early terminations. Each report is due 

within seven days after the conclusion of each quarter of the fiscal year, with the 

first report due April 8, 2024, and the last report due January 7, 2025. FY 2023 

ACD, Chapter IV.

o The Commission encourages the Postal Service to review the spreadsheet and 

related docket filings each quarter to identify errors, ensure the quality and 

accuracy of the spreadsheet, and file notices of termination or errata where 

necessary. FY 2023 ACD, Chapter IV.

Competitive Products, Cost Coverage, Competitive Inbound International Products 

Consisting of Negotiated Service Agreements:

• Inbound Express Mail Services (EMS):

o The Commission concludes that Competitive inbound international products 

consisting of NSAs satisfied 39 U.S.C. § 3633(a)(2), except for Inbound EMS that did 

not cover its attributable cost. The Commission finds that the Inbound EMS product 

was not in compliance with 39 U.S.C. § 3633(a)(2) in FY 2023. FY 2023 ACD, 

Chapter IV.

o The Commission directs the Postal Service to increase the price of Inbound EMS to 

a compensatory level at the next available opportunity, which would be by August 

31, 2024, for rates to go into effect in CY 2025. FY 2023 ACD, Chapter IV.

o In addition, regardless of whether the Postal Service decides to increase its annual 

rates for Inbound EMS in the future or not, the Commission directs the Postal 

Service to file for Commission approval each year Inbound EMS rates for the 
Docket No. ACR2023 Appendix A

Page 7 of 20

following CY and related financial workpapers. These financial workpapers should 

demonstrate estimated cost coverage and incorporate the most recently available 

cost projections. They should be filed with the Commission for approval on or 

before August 16 each year in the event that new rates need to be communicated 

to the UPU by August 31. FY 2023 ACD, Chapter IV.

o Furthermore, the Commission directs the Postal Service to identify and fix issues 

impeding the Postal Service from being able to collect full remuneration for 

Inbound EMS in accordance with the UPU EMS Pay-for-Performance Plan, to file a 

report within 180 days of the issuance of this ACD on progress it is making to fix 

those issues, and to provide all available EMS report card results for FY 2024. FY 

2023 ACD, Chapter IV.

o The Commission also directs the Postal Service to file the applicable UPU EMS Payfor-Performance Plans with its future annual filings in the ACR docket. FY 2023 

ACD, Chapter IV.

o To ensure accurate recordkeeping and timely identification of any discrepancies, 

the Commission directs the Postal Service to file in this docket, on a quarterly basis, 

a summary spreadsheet listing all NSAs active during the prior quarter and 

identifying all extensions, expirations, and early terminations. Each report is due 

within 7 days after the conclusion of each quarter of the fiscal year, with the first 

report due April 8, 2024, and the last report due January 7, 2025. FY 2023 ACD, 

Chapter IV.

o The Commission encourages the Postal Service to review the spreadsheet and 

related docket filings each quarter to identify errors, ensure the quality and 

accuracy of the spreadsheet, and file notices of termination or errata where 

necessary. FY 2023 ACD, Chapter IV.

Competitive Products, Other Issues Related to International Products:

• Remuneration for Returned Undeliverable Letter Post Items:

o The Commission commends the Postal Service for increasing revenue by collecting 

remuneration for the return of undeliverable letter post items for which it could 

not prior to CY 2022 and encourages the Postal Service to maximize this revenue. 

FY 2023 ACD, Chapter IV.

o The Commission directs the Postal Service to specify the remuneration it pays to 

and receives from each foreign designated operator for the return of undeliverable 

letter post items in its future ACRs. This information should include the formats 

(letters, flats, and small packets/bulky letters) to which the remuneration applies. 

FY 2023 ACD, Chapter IV.
Docket No. ACR2023 Appendix A

Page 8 of 20

• Forfeited Revenue Based on UPU Quality Link to Terminal Dues Score:

o The Commission directs the Postal Service to incorporate in future ACRs any 

potential terminal dues bonus that it would have received if it met or exceeded the 

UPU annual service performance target in a CY in its Inbound Letter Post and 

Inbound Letter Post Small Packets and Bulky Letters forfeited revenue calculations, 

if applicable. FY 2023 ACD, Chapter IV.

Competitive Products, Appropriate Share:

• The Commission finds that in FY 2023 Competitive products satisfied 39 U.S.C. 

§ 3633(a)(3) by covering an appropriate share of the Postal Service’s institutional 

costs. FY 2023 ACD, Chapter IV.

Competitive Products, Pilot Program—Gift Cards:

• The Commission directs the Postal Service to continue to report quarterly information 

on the Pilot Program. The report shall be filed in Docket No. MC2022-60 and shall 

include information on volume, revenue, and costs (which should include training 

development costs, as well as the costs of conducting the training, labor costs 

associated with the retail transactions, and supply costs). In addition, the report must 

include any plans for modifications or other future plans of the Pilot Program, 

including any plans for termination of the Pilot Program. FY 2023 ACD, Chapter IV.

Interagency Agreements:

• The Commission finds that the Postal Service complied with the applicable 

requirements of 39 U.S.C. chapter 37 during FY 2023. FY 2023 ACD, Chapter IV.

Service Performance Overall for Market Dominant Products:

• The Commission recommends that the Postal Service analyze trends in employee 

availability and focus its efforts to reduce seasonal variation in employee availability 

to improve service performance.

• The Commission recommends that the Postal Service analyze the diverse impacts of 

employee turnover across functional areas to focus retention efforts where they are 

likely to yield the most benefit for service performance.

• Because decreasing CLTs represents an opportunity to improve service performance 

across many products and categories, the Commission recommends that the Postal 

Service prioritize the migration to CLEAR and the full implementation of its ILE as 
Docket No. ACR2023 Appendix A

Page 9 of 20

soon as possible. The Commission also recommends that continued consistent 

monitoring of delayed inventory to mitigate other transportation backlogs.

• The Commission recommends that the Postal Service develop an independent method 

to enable it to isolate and measure the impact of specific improvement initiatives on 

service performance.

• The Commission recommends that the Postal Service provide greater clarity regarding 

the purpose and basis behind changed targets to help the Commission evaluate the 

reasonableness of such targets and promote public transparency.

• The Commission reiterates its expectation that the Postal Service continue to 

consistently monitor and leverage CLTs and delayed inventory metrics to improve the 

efficacy of its transportation initiatives.

• The Commission recommends that the Postal Service continue to consider options to 

maximize peak season staffing for November-December 2024 (FY 2025 Quarter 1) to 

ensure that it is able to maintain consistent levels of service performance throughout 

this period.

• The Commission recommends that the Postal Service develop an independent method 

to enable it to isolate and measure the impact of specific improvement initiatives on 

service performance. In particular, the Commission encourages the Postal Service to 

develop a method that would enable it to measure the impact of changes associated 

with requests for advisory opinions under 39 U.S.C. § 3661, given that the Postal 

Service often justifies such changes with expectations about service performance 

effects made prior to implementation.

• The Commission directs the Postal Service to improve service performance results to 

achieve the applicable on-time percent target level for these non-compliant products 

in FY 2024. The Commission has specifically developed directives designed to increase 

transparency regarding service performance for non-compliant products. These 

directives elicit data from the Postal Service and information on the steps that the 

Postal Service will have to take to restore service performance for those products in FY 

2024. These directives include continued Postal Service reporting of specific 

information developed from its internal metrics within 90 days of the issuance of this 

ACD and as part of the Postal Service’s FY 2024 ACR.
Docket No. ACR2023 Appendix A

Page 10 of 20

Service Performance Measurement for Market Dominant Products:

• Given that the Commission has been closely monitoring mail included and excluded in 

measurement for several fiscal years, the Commission expects the Postal Service to 

again file this information in table form, including detailed descriptions for data that 

are not available or not applicable, for FY 2024 along with the FY 2024 ACR.

• The Commission recommends that the Postal Service prioritize pursuing the full 

implementation of its ILE as soon as possible. The Commission also reminds the Postal 

Service that, pursuant to 39 C.F.R. § 3055.5, “all changes to measurement systems” are 

required to be filed with the “30 days prior to planned implementation.” Further, the 

Commission intends to evaluate if the quality of service data has become significantly 

inaccurate pursuant to 39 U.S.C. § 3652(e)(2)(B) and to determine if any planned 

Postal Service changes to the “measurement systems, service standards, service goal or 

reporting methodologies [will] have a material impact on the accuracy, reliability, or 

utility of the [service performance] measurement" pursuant to 39 C.F.R. § 3055.5.

• The Commission recommends that the Postal Service renew its focus on increasing the 

percentage of mail in measurement and analyzing and improving its mail in 

measurement program.

First-Class Mail Service Performance:

• The following First-Class Mail products/categories did not achieve their service 

performance targets in FY 2023: Single-Piece Letters/Postcards, Overnight and 2-Day 

Presorted Letters/Postcards, Flats, Inbound Letter Post, and Outbound Single-Piece 

First-Class Mail International. Considering this, the Commission finds Single-Piece 

Letters/Postcards, Presorted Letters/Postcards, Flats, Inbound Letter Post, and 

Outbound Single-Piece First-Class Mail International were each out of compliance in 

FY 2023. Specifically for Presorted Letters/Postcards, the Commission notes that the 3-

5-Day service standard category did exceed its target whereas the Overnight and 2-

Day service standard category did not achieve its target in FY 2023. The Commission 

directs the Postal Service to improve service performance results to achieve the 

applicable on-time percent target level for these First-Class Mail products in FY 2023. 

The Commission directs the Postal Service to refine and apply its data leveraging 

techniques to improve service performance for its First-Class Mail products.

• The Commission directs the Postal Service to provide information on the following five 

matters. If the Postal Service cannot provide responsive information at the requested 

level of granularity, then responsive information should be provided at the most 

practicable level of granularity, along with a narrative explaining the level of 

granularity provided in the response and detailing why the requested level of 

granularity could not be reached. The Postal Service should file a motion for 

clarification in Docket No. ACR2023, if necessary. Where appropriate, the Postal 
Docket No. ACR2023 Appendix A

Page 11 of 20

Service shall explain the reasons for any differences in the calculation of data in FY 

2024 versus FY 2023 and shall propose a method for comparing the data.

(a) Nationwide Transit and Last Mile Improvement 

Initiatives

First, the Commission directs the Postal Service to evaluate the efficacy of its FY 2024 

nationwide initiatives to improve transit and Last Mile and to provide specific detailed plans 

to improve service performance results for First-Class Mail, as described in items 1 and 2.

1. The transit evaluation shall explain how the progress made in FY 2024 (or lack 

thereof) toward ensuring on-time departures, ensuring timely tender to transit 

suppliers, and minimizing en route delays affected on-time service performance 

results for First-Class Mail in FY 2024. The transit plan shall explain how the 

Postal Service will improve results for First-Class Mail by describing: each 

planned initiative, the problem that the planned initiative is expected to 

remediate, the estimated timeframe for implementation and completion of 

each planned initiative, and the key performance indicators (KPIs) used to 

measure and evaluate progress toward completion.

2. The Last Mile evaluation shall explain how the progress made in FY 2024 (or 

lack thereof) toward ensuring that facilities have proper education and are 

held accountable affected on-time service performance results for First-Class 

Mail in FY 2024. The Last Mile plan shall explain how the Postal Service will 

improve results for First-Class Mail by describing: each planned initiative, the 

problem that the planned initiative is expected to remediate, the estimated 

timeframe for implementation and completion of each planned initiative, and 

the KPI(s) used to measure and evaluate progress toward completion.

The evaluations shall include quantitative comparisons of the same period last year (e.g., 

compare FY 2024 Quarter 1 to FY 2023 Quarter 1) and provide a narrative explaining the 

practices employed to remediate the underlying problem(s) in FY 2024. Because the Postal 

Service has indicated that its progress and plans related to transit and the Last Mile apply to 

all categories of First-Class Mail generally,4 the Commission will allow the Postal Service to 

describe its progress and plans at a class level. However, where appropriate, the evaluation 

shall indicate if the reported progress and effect on results apply only to particular categories 

of First-Class Mail (e.g., shape, product, or service standard). The evaluation and plan shall 

identify a responsible Postal Service representative, with knowledge of these matters, who will 

be available to provide prompt responses to requests for clarification from the Commission. 

The evaluation and plan shall be filed within 90 days of the issuance of this ACD (by June 26, 

2024). An updated evaluation and plan shall be filed at the time of the FY 2023 ACR (by 

December 30, 2024).

4 See, e.g., Docket No. ACR2018, Responses of the United States Postal Service to Questions 1-15, 17-50 of Chairman’s Information Request No. 

1, question 22, January 11, 2019.
Docket No. ACR2023 Appendix A

Page 12 of 20

(b) Division Improvement Initiatives

Second, the Commission directs the Postal Service to provide information for each of the 

geographic Postal Service Divisions on the following matters, described in items 1 and 2. 

Because the Postal Service has indicated that these service performance improvement 

initiatives are led by personnel in the Logistics and Processing Operations unit, and the 

Commission continues to have concerns regarding whether local actions are adhering to 

national strategies, the Commission directs the Postal Service to provide narrative reports 

from each Division to ensure a sufficiently wide set of narrative responses of geographic 

breadth.

1. For each Division, the Postal Service shall evaluate the efficacy of its FY 2024 

initiatives to improve on-time service performance results for First-Class Mail 

by describing the Division’s progress made toward addressing the top root 

causes of failure to deliver First-Class Mail on time and explaining how the 

Division’s progress (or lack thereof) toward addressing each root cause 

affected on-time results for First-Class Mail in FY 2024. This evaluation shall 

include quantitative comparisons of the same period last year (e.g., compare FY 

2024 Quarter 1 to FY 2023 Quarter 1) and provide a narrative explaining the 

practices employed to remediate the underlying problem(s) in FY 2024.

2. For each Division, the Postal Service shall provide a detailed plan to improve 

on-time service performance results for First-Class Mail that describes each 

planned initiative, the problem that the planned initiative is expected to 

remediate, the estimated timeframe for implementation and completion of 

each planned initiative, and the KPI(s) used to measure and evaluate progress 

toward completion.

Because the Postal Service has indicated that its progress and plans apply to all categories of 

First-Class Mail generally, the Commission will allow the Postal Service to describe its 

progress and plans at a class level.5 However, where appropriate, the report shall indicate if 

the information applies only to particular categories of First-Class Mail (e.g., shape, product, 

presort/single-piece, or service standard). The report for each Division shall identify a 

responsible Postal Service representative, with knowledge of these matters specific to the 

Division, who will be available to provide prompt responses to requests for clarification from 

the Commission. Each Division’s narrative report shall specify its area of geographic oversight 

as compared to the legacy geographic organization. The report for each Division shall be filed 

within 90 days of the issuance of this ACD (by June 26, 2024). An updated report from each 

Division shall be filed at the time of the FY 2023 ACR (by December 30, 2024).

5 See generally FY 2023 Division Report; FY 2023 Division Report - Attachment A.
Docket No. ACR2023 Appendix A

Page 13 of 20

(c) Consistent Data

Third, to facilitate the consistent monitoring of First-Class Mail service performance, the 

Commission directs the Postal Service to provide the number of CLTs (any HCR that is late by 

more than 4 hours), presented for the nation, each Area, and each District.6 Data shall be 

provided for FY 2024 Quarter 1, Quarter 2, and “mid-year”7 within 90 days of the issuance of 

this ACD (by June 26, 2024). Data shall be provided for FY 2024 Quarter 3, Quarter 4, “secondhalf”8 and annualized for the fiscal year, in the FY 2024 ACR (by December 30, 2024). The 

Commission continues to direct the Postal Service to provide Area- and District-level data to 

allow comparability to prior fiscal years.

(d) FY 2023 ISC Improvement Initiatives

To monitor the Postal Service’s initiatives to improve on-time service performance results for 

Inbound Letter Post and Outbound Single-Piece First-Class Mail International, the 

Commission directs the Postal Service to provide information from each ISC (and the 

Honolulu, Hawaii facility responsible for processing Outbound Single-Piece First-Class Mail 

International) on the following matters, described in items 1 and 2.

1. For each facility, the Postal Service shall evaluate the efficacy of its FY 2024 

initiatives to improve on-time service performance results for Inbound Letter 

Post and Outbound Single-Piece First-Class Mail International by describing the 

facility’s progress made toward addressing the identified deficiencies related to 

each facility’s adherence to processing requirements and explaining how the 

facility’s progress (or lack thereof) toward addressing each identified 

deficiency affected results for these products in FY 2024.

2. For each facility, the Postal Service shall provide a detailed plan to improve on 

time service performance results for Inbound Letter Post and Outbound SinglePiece First-Class Mail International that describes each planned initiative, the 

problem that the planned initiative is expected to remediate, the estimated 

timeframe for implementation and completion of each planned initiative, and 

the KPI(s) used to measure and evaluate progress toward completion.

The evaluations described in items 1 and 2 above shall include quantitative analysis that 

identifies the KPI(s) used in support thereof, and if quantitative support is unavailable, the 

facility shall explain why it is unavailable and provide qualitative analysis in support of the 

evaluation. The report for each facility shall identify a responsible Postal Service 

representative, with knowledge of these two matters specific to the facility, who will be 

available to provide prompt responses to requests for clarification from the Commission. Each 

facility shall quantify the Inbound Letter Post and Outbound Single-Piece First-Class Mail 

International volume that it processed each Quarter and provide corresponding 

6 See, e.g., Library Reference USPS-FY23-29, Excel file “ACR2023 CLT Data.xlsx.”

7 Mid-year refers to the aggregation of the data for Quarters 1 and 2 of FY 2024.

8 Second-half refers to the aggregation of the data for Quarters 3 and 4 of FY 2024. Annualized refers to the aggregation of the data for all four 

quarters of FY 2024.
Docket No. ACR2023 Appendix A

Page 14 of 20

quantification for the same period during FY 2024. The report for each facility shall be filed 

within 90 days of the issuance of this ACD (by June 26, 2024). An updated report from each 

facility shall be filed at the time of the FY 2023 ACR (by December 30, 2024).

USPS Marketing Mail Service Performance:

• Although on-time service performance scores increased for each USPS Marketing Mail 

product from FY 2022 to FY 2023, three products did not achieve their service 

performance targets in FY 2023: (1) High Density and Saturation Flats/Parcels; (2) 

Flats; and (3) EDDM-R. Considering this, the Commission finds that High Density and 

Saturation Flats/Parcels, Flats, and EDDM-R were each out of compliance in FY 2023. 

The Commission directs the Postal Service to improve service performance results to 

achieve the applicable on-time percent target level for these products in FY 2024. The 

Commission directs the Postal Service to refine and apply its data leveraging 

techniques to improve service performance for USPS Marketing Mail products that did 

not achieve their targets.

• To monitor the Postal Service’s initiatives to remediate service performance issues 

with respect to these non-compliant products, the Commission directs the Postal 

Service to provide information concerning the following matters for High Density and 

Saturation Flats/Parcels, Flats, and EDDM-R (as well as any other USPS Marketing 

Mail product that fails to meet its applicable service performance target in FY 2024).

• The Commission directs the Postal Service to evaluate the efficacy of its FY 2024 

nationwide initiatives to improve service performance for High Density and Saturation 

Flats/Parcels, Flats, and EDDM-R (as well as any other USPS Marketing Mail product 

that fails to meet its applicable service performance target in FY 2024), and to provide 

specific detailed plans to improve these products’ service performance, as described in 

items 1 and 2.

1. The Postal Service shall evaluate the efficacy of its FY 2024 initiatives to 

improve on-time results for these products by describing the progress made 

(the status of initiatives identified in Docket Nos. ACR2021, ACR2022, and 

ACR2023) and explaining how the Postal Service’s progress (or lack thereof) 

affected on-time results for these products in FY 2024. The evaluations shall 

include quantitative comparisons of the same period last year (e.g., compare FY 

2024 Quarter 1 to FY 2023 Quarter 1) and provide a narrative explaining the 

practices observed to remediate the underlying problem(s) in FY 2024.

2. The Postal Service shall provide a detailed plan to improve on-time results for 

these products that describes each planned initiative, the problem that the 

planned initiative is expected to remediate, the estimated timeframe for 

implementation and completion of each planned initiative, and the KPI(s) used 

to measure and evaluate progress toward completion.
Docket No. ACR2023 Appendix A

Page 15 of 20

• The report shall identify a responsible Postal Service representative, with knowledge of 

these two matters specific to these products, who will be available to provide prompt 

responses to requests for clarification from the Commission. This report shall be filed 

within 90 days of the issuance of this ACD (by June 26, 2024). An updated report shall 

be filed at the time of the FY 2024 ACR (by December 30, 2024).

Periodicals Service Performance:

• The Commission recognizes that both Periodicals products met their on-time service 

performance targets in FY 2023 and notes that the Postal Service has raised these 

targets for FY 2023. However, the targets set by the Postal Service for Periodicals 

remain below targets set for other Market Dominant products as well as below historic 

targets set for both Periodicals products. With this in mind, and because both 

Periodicals products performed below target from FY 2009 through FY 2021, the 

Commission directs the Postal Service to provide, for Periodicals products that do not 

meet their targets in FY 2024, specific detailed plans to improve service performance 

as described in items 1 and 2.

1. The Postal Service shall evaluate the efficacy of its FY 2024 initiatives to 

improve on-time results for Periodicals by describing the progress made 

(including the status of initiatives identified in Docket Nos. ACR2021, ACR2022, 

and ACR2023) and explaining how the Postal Service’s progress (or lack 

thereof) affected on-time results for Periodicals in FY 2024. The evaluations 

shall include quantitative comparisons of the same period last year (e.g., 

compare FY 2024 Quarter 1 to FY 2023 Quarter 1) and provide a narrative 

explaining the practices employed to remediate the underlying problem(s) in 

FY 2024.

2. The Postal Service shall provide a detailed plan to improve on-time results for 

Periodicals that describes each planned initiative, the problem that the planned 

initiative is expected to remediate, the estimated timeframe for implementation 

and completion of each planned initiative, and the KPI(s) used to measure and 

evaluate progress toward completion.

• The report shall identify a responsible Postal Service representative, with knowledge of 

these two matters specific to Periodicals, who will be available to provide prompt 

responses to requests for clarification from the Commission. This report shall be filed 

at the time of the FY 2024 ACR (by December 30, 2024).
Docket No. ACR2023 Appendix A

Page 16 of 20

Package Services Service Performance:

• Although on-time service performance scores increased for each Package Services 

product from FY 2022 to FY 2023, BPM Flats did not achieve its service performance 

targets in FY 2023. While the on-time performance result for BPM Flats increased from 

FY 2022 to FY 2023 by approximately 2 percentage points, the Commission remains 

concerned that this product is substantially below its target. Moreover, FY 2023 marks 

the twelfth consecutive year that BPM Flats has remained below its target. The 

Commission acknowledges that the Postal Service has repeatedly asserted that this 

product has significant volumes that are incompatible with existing equipment and 

therefore undergo manual processing, which is slower and costlier. Considering this, 

the Commission finds that BPM Flats was out of compliance in FY 2023. The 

Commission directs the Postal Service to improve service performance results to 

achieve the applicable on-time percent target level for this product in FY 2024. The 

Commission directs the Postal Service to refine and apply its data leveraging 

techniques to improve service performance for BPM Flats.

• To monitor the Postal Service’s initiatives to remediate these ongoing issues related to 

this non-compliant product, the Commission directs the Postal Service to evaluate the 

efficacy of the Postal Service’s FY 2024 initiatives (including the status of initiatives 

identified in Docket Nos. ACR2021, ACR2022, and ACR2023) to improve on-time 

service performance for BPM Flats. The Postal Service shall also provide a detailed 

plan for how each product’s results will be improved, describing: each planned 

initiative, the problem that the planned initiative is expected to remediate, the 

estimated timeframe for implementation and completion of each planned initiative, 

and the KPI(s) used to measure and evaluate progress toward completion. The report 

shall identify a responsible Postal Service representative, with knowledge of these two 

matters specific to BPM Flats, who will be available to provide prompt responses to 

requests for clarification from the Commission. This report shall be filed within 90 days 

of the issuance of this ACD (by June 26, 2024). An updated report shall be filed at the 

time of the FY 2023 ACR (by December 30, 2024).

Special Services Service Performance:

• Two Special Services products did not achieve their service performance targets in FY 

2023: Post Office Box Service and Ancillary Services. Considering this, the Commission 

finds that Post Office Box Service and Ancillary Services were out of compliance in FY 

2023. The Commission directs the Postal Service to improve service performance 

results to achieve the applicable on-time percent target level for these products in FY 

2024.

• To monitor the Postal Service’s initiatives to remediate these ongoing issues with 

respect to these non-compliant products, the Commission directs the Postal Service to 

provide the following information in the FY 2024 ACR for Post Office Box Service and 
Docket No. ACR2023 Appendix A

Page 17 of 20

Ancillary Services: (1) an evaluation of the efficacy of the Postal Service’s FY 2024 

initiatives (including the status of initiatives identified in Docket Nos. ACR2021, 

ACR2022, and ACR2023) to improve on-time service performance for each product; 

and (2) a detailed plan explaining how each product’s results will be improved.

Customer Access:

• The Commission reiterates the importance of providing accurate and consistent 

information among the Annual Report, ACR, and CHIR responses. To promote 

consistency, the Postal Service must continue reporting the number of contractoroperated retail facilities using the CPUT system. The FY 2024 Annual Report, FY 2024 

ACR, and Library Reference USPS-FY24-33 must report the number of retail facilities 

for FY 2022 and FY 2023 using data from the January 19 Response to CHIR No. 2, 

question 46. If there are any discrepancies, the Postal Service must identify and 

reconcile them in the FY 2024 ACR.

• In the FY 2024 ACR, Library Reference USPS-FY24-33 must correct data entry and 

calculation errors and report accurate, consistent information.

Retail Facilities:

• In future ACRs, the Postal Service must include a statement confirming that no 

changes were made to the version of Handbook PO-101 filed in the previous ACR. If 

changes are made, the Postal Service must include a public copy of (or a working 

website link that is accessible to the general public rather than restricted to Postal 

Service employees) Handbook PO-101.

Post Office Suspensions:

• The Postal Service must resolve all of the 78 suspended Post Offices remaining from the 

end of FY 2016. The Commission directs the Postal Service to continue filing quarterly 

reports on the status of these suspended Post Offices in both Docket No. ACR2023 and 

Docket No. PI2022-1. The Postal Service must file this information within 40 days after 

the end of each quarter in FY 2024 and in FY 2025 for Quarters 1 and 2. Quarterly 

reports must continue to include a spreadsheet containing, at a minimum, the same 

columns and information provided in the spreadsheet filed with the FY 2024, Quarter 1 

Suspensions report on February 9, 2024.

• Each quarterly report must reflect the most accurate data currently available and 

correct any discrepancies from the prior quarterly report. The Postal Service must 

identify and reconcile any discrepancies or differences in the body of the report and the 

accompanying Excel spreadsheet by highlighting information added or changed and 

striking through information removed.
Docket No. ACR2023 Appendix A

Page 18 of 20

• Each quarterly report shall identify any changes to the staffing of the Suspension and 

Discontinuance team, including the relevant chain of command, the responsible 

management-level personnel, and the current staffing levels (including number of 

careers versus contractor support roles).

• Each quarterly report shall also include status updates on the Postal Service’s progress 

in addressing each of the following items (along with the projected implementation 

date for incomplete items or the actual implementation date for complete items):

o Revising Handbook PO-101

o Fixing the technical issue with the CSDC system

o Developing and implementing the Suspensions Dashboard

o Publishing nine suspensions in the Postal Bulletin

o Discontinuing nine suspensions pending resolution of the CSDC system 

technical issue

o Hiring one full-time employee to work on the suspension and discontinuance 

process

• If the Postal Service does not resolve all 78 remaining suspended Post Offices by the 

end of FY 2024, it must explain why in the FY 2024 ACR, as well as how it plans to 

resolve them in FY 2025. The FY 2024 ACR must also include a detailed plan and 

timeline for resolving Post Offices suspended from FY 2017 through FY 2024.

• For each Post Office that is suspended at the end FY 2024, the FY 2024 ACR or Library 

Reference USPS-FY24-33 must contain a spreadsheet that includes the following 

information:

o a. Post Office Name

o b. Street Address

o c. City, State, and ZIP

o d. Suspension Date

o e. Suspension Reason

o f. Postal Area

o g. Postal District

o h. Finance Number

o i. Facility ID

o j. Facility Type
Docket No. ACR2023 Appendix A

Page 19 of 20

Collection Boxes:

• The Commission will continue to monitor the number of collection boxes in Docket No. 

ACR2024. The FY 2024 ACR must comply with 39 C.F.R. § 3055.91(c) by reporting, at 

the national and area levels, the number of collection boxes at the beginning and end 

of FY 2024, as well as the number of collection boxes added to new locations and 

removed during FY 2024. If there are any discrepancies between the number of 

collection boxes at the beginning and end of FY 2024 and the number of collection 

boxes added and removed during FY 2024, the Postal Service must reconcile these 

discrepancies in the FY 2024 ACR.

• In FY 2024, the Commission recommends that the Postal Service continue conducting 

annual volume density testings consistent with the procedures specified in the POM to 

ensure that the collection box network is cost-effective while meeting the needs of its 

customers. The Commission also recommends that the Postal Service describe in the FY 

2024 ACR any plans or initiatives to remove collection boxes beyond the procedures 

specified in the POM.

Wait Time in Line:

• The Commission will monitor wait time in line in Docket No. ACR2024 to ensure 

continued improvement. The Commission encourages the Postal Service to continue 

implementing strategies for improving wait time in line. In the FY 2024 ACR, the Postal 

Service must:

o Describe actions taken and strategies implemented during FY 2024 to improve 

wait time in line

o Explain which actions and strategies were most and least effective in reducing 

wait time in line

o Identify the strategies and actions for addressing the issue of staffing concerns 

and gaps in District duties and responsibilities

o Explain whether these strategies and actions were effective in addressing 

staffing concerns and gaps in District duties and responsibilities

• If wait time in line worsens during FY 2024, the FY 2024 ACR must:

o Explain why wait time in line increased, and identify causes and factors 

contributing to the increase

o Describe plans for improving wait time in line during FY 2025 that identify 

specific actions, strategies, and initiatives for addressing the causes of 

increased wait time in line
Docket No. ACR2023 Appendix A

Page 20 of 20

Alternative Access:

• The Commission recommends that the Postal Service continue to offer and expand 

alternative access channels to ensure customers have continued access to essential 

postal services. If revenue from retail channels continues to decline across the board in 

FY 2024, the Postal Service must identify the root causes for these declines and 

describe plans to address them in the FY 2024 ACR.

Customer Satisfaction:

• In FY 2024, the Postal Service should continue to take appropriate actions to maintain 

Market Dominant product satisfaction for residential, small/medium business, and 

large business customers. In the FY 2024 ACR, the Postal Service must:

o Identify the factors that drive Market Dominant product satisfaction for 

residential, small/medium business, and large business customers

o Identify the root causes of lower customer satisfaction for any mailing service 

with a result that declines between FY 2023 and FY 2024

o Describe specific actions taken as well as plans, initiatives, and strategies 

implemented in FY 2024 to improve customer satisfaction with Market 

Dominant products

o Explain how these actions, plans, initiatives, and strategies improved Market 

Dominant product satisfaction for residential, small/medium business, and 

large business customers

o Explain how these actions, plans, initiatives, and strategies impacted FY 2024 

results

o Describe specific plans for improving Market Dominant product satisfaction in 

FY 2025 that target mailing services with lower satisfaction results in FY 2024
Docket No. ACR2023 Appendix B

Page 1 of 1

Appendix B: Initial and Reply Comments

FY 2023 Annual Compliance Determination

Commenter Comment Citation Citation Short Form

Alliance of Nonprofit Mailers 

(Alliance)

Comments of Alliance of Nonprofit Mailers

January 29, 2024

Alliance Comments

Amazon.com Services, Inc. 

(Amazon)

Reply Comments of Amazon.com Services LLC

February 13, 2024

Amazon Reply 

Comments

American Catalog Mailers 

Association (ACMA)

Initial Comments of the American Catalog 

Mailers Association

January 30, 2024

ACMA Comments

Association for Postal Commerce 

(PostCom)

Comments of the Association for Postal 

Commerce, January 30, 2024 PostCom Comments

Greeting Card Association (GCA) Initial Comments of the Greeting Card 

Association, January 30, 2024 GCA Comments

National Postal Policy Council 

(NPPC)

Comments of the National Postal Policy 

Council, January 30, 2024 NPPC Comments

The News/Media Alliance (N/MA) Comments of the News/Media Alliance

January 30, 2024 N/MA Comments

Pitney Bowes Inc. (Pitney Bowes) Comments of Pitney Bowes Inc.

January 30, 2024 Pitney Bowes Comments

Public Representative (PR) Public Representative Comments

January 30, 2024 PR Comments

Taxpayers Protection Alliance 

(TPA)

Taxpayers Protection Alliance Comments for 

ACR 2023 – Annual Compliance Review, 2023

January 22, 2024

TPA Comments

United States Postal Service 

(Postal Service)

Reply Comments of the United States Postal 

Service, February 13, 2024

Postal Service Reply 

Comments
Docket No. ACR2023 Appendix C

Page 1 of 4

Appendix C: Information Requests and 

Responses to Information Requests

FY 2023 Annual Compliance Determination

Full Form Citation Short Form Citation

Chairman’s Information Requests

Chairman’s Information Request No. 1, January 5, 2024. CHIR No. 1

Chairman’s Information Request No. 2 and Notice of Filing Under Seal, January 12, 2024. CHIR No. 2

Chairman’s Information Request No. 3, January 17, 2024. CHIR No. 3

Chairman’s Information Request No. 5, January 18, 2024. CHIR No. 5

Chairman’s Information Request No. 6 and Notice of Filing Under Seal, January 19, 2024. CHIR No. 6

Chairman’s Information Request No. 7 and Notice of Filing Under Seal, January 26, 2024. CHIR No. 7

Chairman’s Information Request No. 8, January 31, 2024. CHIR No. 8

Chairman’s Information Request No. 9 and Notice of Filing Under Seal, February 2, 2024. CHIR No. 9

Chairman’s Information Request No. 10 and Notice of Filing Under Seal, February 9, 2024. CHIR No. 10

Chairman’s Information Request No. 12 and Notice of Filing Under Seal, February 14, 

2024. CHIR No. 12

Chairman’s Information Request No. 14 and Notice of Filing Under Seal, February 20, 

2024. CHIR No. 14

Chairman’s Information Request No. 15 and Notice of Filing Under Seal, February 26, 

2024. CHIR No. 15

Chairman’s Information Request No. 17, March 1, 2024. CHIR No. 17

Chairman’s Information Request No. 18, March 8, 2024. CHIR No. 18
Docket No. ACR2023 Appendix C

Page 2 of 4

Full Form Citation Short Form Citation

Responses to Chairman’s Information Requests

1

Responses of the United States Postal Service to Questions 1-7, 9-15(a-f), 16, and 18 of 

Chairman’s Information Request No. 1, January 12, 2024.

January 12 Response to CHIR 

No. 1

Responses of the United States Postal Service to Questions 8, 15(g), and 17 of Chairman’s 

Information Request No. 1, January 19, 2024.

January 19 Response to CHIR 

No. 1

Responses of the United States Postal Service to Questions 1-26, 28-57, 61 of Chairman’s 

Information Request No. 2, January 19, 2024.

January 19 Response to CHIR 

No. 2

Responses of the United States Postal Service to Questions 21, 27, and 59-60 of 

Chairman’s Information Request No. 2, January 22, 2024.

January 22 Response to CHIR 

No. 2

Notice of the United States Postal Service of Reformatted Response to Question 16 of 

Chairman’s Information Request No. 2 -- Errata, January 22, 2024.

Errata to January 19 

Response to CHIR No. 2

Responses of the United States Postal Service to Questions 58 and 62 of Chairman’s 

Information Request No. 2, January 25, 2024.

January 25 Response to CHIR 

No. 2

Response of the United States Postal Service to Question 1 of Chairman’s Information 

Request No. 3, January 24, 2024. Response to CHIR No. 3

Responses of the United States Postal Service to Questions 1-2 of Chairman’s Information 

Request No. 5, January 24, 2024. Response to CHIR No. 5

Responses of the United States Postal Service to Questions 1-11, 12.b - 21 of Chairman’s 

Information Request No. 6, January 26, 2024.

January 26 Response to CHIR 

No. 6

1 The Postal Service filed motions for late acceptance. See United States Postal Service Motion for Late Acceptance of Responses to Questions 8, 

15(g), and 17 of Chairman’s Information Request No. 1, January 19, 2024; Motion of the United States Postal Service for Late Acceptance of 

Responses to Questions 21, 27, and 59-60 of Chairman’s Information Request No. 2, January 22, 2024; Motion of the United States Postal 

Service for Late Acceptance of Nonpublic Material Relating to Responses to Chairman’s Information Request No. 2, January 22, 2024; Motion of 

the Postal Service for Late Acceptance of Responses to Questions 58 and 62 of Chairman’s Information Request No. 2, January 25, 2024;Motion 

of the United States Postal Service for Late Acceptance of the Response to Question 12.a of Chairman’s Information Request No. 6, January 29, 

2024; Motion of the United States Postal Service for Late Acceptance of Responses to Questions 20.b and 25 of Chairman’s Information Request 

No. 7, February 6, 2024; Motion of the United States Postal Service for Late Acceptance of Responses to Questions 12 and 14 of Chairman’s 

Information Request No. 9, February 13, 2024; Motion of the United States Postal Service for Late Acceptance of Response to Question 10 of 

Chairman’s Information Request No. 10, February 20, 2024; Motion of the United States Postal Service for Late Acceptance of the Response to 

Question 4 of Chairman’s Information Request No. 17, March 12, 2024. These motions for late acceptance are all granted.
Docket No. ACR2023 Appendix C

Page 3 of 4

Full Form Citation Short Form Citation

Responses to Chairman’s Information Requests, continued

Response of the United States Postal Service to Question 12.a of Chairman’s Information 

Request No. 6, January 29, 2024.

January 29 Response to CHIR 

No. 6

Responses of the United States Postal Service to Questions 1-5, 7-18.a, 18.c-24, 26-27 of 

Chairman’s Information Request No. 7, February 2, 2024.

February 2 Response to CHIR 

No. 7

Motion for Reconsideration of Question 6 of Chairman’s Information Request No. 7, 

February 2, 2024.

Motion for Reconsideration, 

Question 6

Motion for Reconsideration of Question 18 in Chairman’s Information Request No. 7, 

February 2, 2024.

Motion for Reconsideration, 

Question 18

Responses of the United States Postal Service to Questions 20.b and 25 of Chairman’s 

Information Request No. 7, February 6, 2024.

February 6 Response to CHIR 

No. 7

Response of the United States Postal Service to Question 18(B) of Chairman’s Information 

Request No. 7, March 8, 2024.

March 8 Response to CHIR 

No. 7

Responses of the United States Postal Service to Questions 1-2 of Chairman’s Information 

Request No. 8, February 6, 2024. Response to CHIR No. 8

Notice Concerning Chairman’s Information Request No. 7, Question 6, February 8, 2024. Notice CHIR No. 7

Responses of the United States Postal Service to Questions 1-11, 13, and 15-22 of 

Chairman’s Information Request No. 9, February 9, 2024.

February 9 Response to CHIR 

No. 9

Responses of the United States Postal Service to Questions 12 and 14 of Chairman’s 

Information Request No. 9, February 13, 2024.

February 13 Response to 

CHIR No. 9

Responses of the United States Postal Service to Questions 1-9, 11-19 of Chairman’s 

Information Request No. 10, February 16, 2024.

February 16 Response to 

CHIR No. 10

Response of the United States Postal Service to Question 10 of Chairman’s Information 

Request No. 10, February 20, 2024.

February 20 Response to 

CHIR No. 10

Responses of the United States Postal Service to Questions 1-2 of Chairman’s Information 

Request No. 12, February 21, 2024. Response to CHIR No. 12
Docket No. ACR2023 Appendix C

Page 4 of 4

Full Form Citation Short Form Citation

Responses to Chairman’s Information Requests, continued

Response of the United States Postal Service to Question 1 of Chairman’s Information 

Request No. 14, February 27, 2024. Response to CHIR No. 14

Responses of the United States Postal Service to Questions 1-4 of Chairman’s Information 

Request No. 15, February 29, 2024. Response to CHIR No. 15

Responses of the United States Postal Service to Questions 1-3 and 5-9 of Chairman’s 

Information Request No. 17, March 8, 2024.

March 8 Response to CHIR 

No. 17

Response of the United States Postal Service to Question 4 of Chairman’s Information 

Request No. 17, March 12, 2024.

March 12 Response to CHIR 

No. 17

Response of the United States Postal Service to Question 1 of Chairman’s Information 

Request No. 18, March 14, 2024.

Response to CHIR No. 18

Commission Information Requests

2

Commission Information Request No. 1, February 8, 2024. CIR No. 1

Responses to Commission Information Requests

Response of the United States Postal Service to Question 1 of Commission Information 

Request No. 1, February 20, 2024. Response to CIR No. 1

2 The Postal Service file a motion of late acceptance. See Motion of the United States Postal Service for Late Acceptance of Response to 

Commission Information Request No. 1, February 20, 2024. The motion is granted.
Docket No. ACR2023 Appendix D

Page 1 of 3

Appendix D: Acronyms and Abbreviations

Acronym/Abbreviation Meaning

ACD Annual Compliance Determination

ACMA American Catalog Mailers Association, Inc.

ACR Annual Compliance Report

ADC area distribution center

AIM Areas Inspiring Mail

BPM Bound Printed Matter

CeC Connect eCommerce

C.F.R. Code of Federal Regulations

CET critical entry time

CHIR Chairman’s Information Request 

CLEAR Contract Logistics Enterprise Acquisition Resource

CIR Commission Information Request

CLT Critically Late Trip

CPI consumer price index

CPI-U consumer price index for all urban consumers 

CPO community Post Office

CPU contract postal unit

CPUT Contract Postal Unit Technology

CRA Cost and Revenue Analysis

CSDC Change Suspension Discontinuance Center

CX Customer Experience

CY Calendar Year

DADC destination area distribution center

DDU destination delivery unit

DFA Delivering for America

DMM Domestic Mail Manual

DMU Detached Mail Unit

DNDC destination network distribution center

ECSI educational, cultural, scientific, or informational (value)

EDDM Every Door Direct Mail

EDDM-R Every Door Direct Mail—Retail

EMS Express Mail Service

FAST Facility Access and Shipment Tracking

FPO foreign postal operator

FY Fiscal Year

GCA Greeting Card Association
Docket No. ACR2023 Appendix D

Page 2 of 3

Acronym/Abbreviation Meaning

GEPS—NPR Global Expedited Package Services—Non-Published Rates

HCR Highway Contract Route

HD High Density

HDSF High Density and Saturation Flats/Parcels

HDSL High Density and Saturation Letters

HD+ High Density Plus

IB International Bureau

ICRA International Cost and Revenue Analysis

ILE Integrated Logistics Environment

IMb Intelligent Mail barcode

IMbA Intelligent Mail barcode Accounting

IMTS—Inbound International Money Transfer Service—Inbound

IMTS—Outbound International Money Transfer Service—Outbound

Internal SPM Internal Service Performance Measurement System

IOCS In-Office Cost System

IAA interagency agreement

IPKs items per kilogram

IPA International Priority Airmail

ISAL International Surface Air Lift

ISC International Service Center

KPI key performance indicator

LPC Local Processing Center

MCS Mail Classification Schedule

MTAC Mailer’s Technical Advisory Committee

N/MA The News/Media Alliance

NDC network distribution center

NPPC National Postal Policy Council

NSA negotiated service agreement

OIG Office of Inspector General

OPP Operating Plan Precision

OADC origin area distribution center

ONDC origin network distribution center

OSCF origin sectional center facility

P&DC/F processing and distribution center/facility

PAEA Postal Accountability and Enhancement Act

Pitney Bowes Pitney Bowes Inc.

PO Boxes Post Office Boxes

POM Postal Operations Manual

POS Point of Sale
Docket No. ACR2023 Appendix D

Page 3 of 3

Acronym/Abbreviation Meaning

PostCom Association for Postal Commerce

PR Public Representative

PSAs Package Support Annexes

PSRA Postal Service Reform Act of 2022

PTR Product Tracking and Reporting System

RPDC Regional Processing and Delivery Center

S&DC Sorting and Delivery Center

SCF sectional center facility

SPM service performance measurement

SRP supplementary remuneration program

SSKs Self-Service Kiosks

SSOP site-specific operating plan

SV Surface Visibility

TPA Taxpayers Protection Alliance

U.S.C. United States Code

UPU Universal Postal Union

VPO Village Post Office
HELP US IMPROVE THIS REPORT

In connection with Section 2 of the Plain Writing Act of 2010, the Postal 

Regulatory Commission is committed to providing communications that are 

valuable to our readers.

We would like to hear your comments on what you find useful about our Annual 

Compliance Determination report and how we can improve its readability and 

value.

Please contact the Commission’s Office of Public Affairs and Government 

Relations to provide your feedback.

Postal Regulatory Commission

Office of Public Affairs and Government Relations

901 New York Avenue, NW

Suite 200

Washington, DC 20268

Phone: 202-789-6800

Email: PRC-PAGR@prc.gov