POSTAL REGULATORY COMMISSION

Annual Compliance 

Determination Report

Fiscal Year 2022

March 29, 2023

Postal Regulatory Commission

Submitted 3/29/2023 1:31:00 PM

Filing ID: 124784

Accepted 3/29/2023
TABLE OF CONTENTS

Page

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

CHAPTER I. INTRODUCTION............................................................................................................................6

CHAPTER II. MARKET DOMINANT PRODUCTS: PRICING REQUIREMENTS.............................. 15

Workshare Discount Data Used in Report..................................................... 16

Workshare Discounts with 100 Percent Passthroughs............................ 18

Workshare Discounts with Passthroughs that Exceed 100 Percent... 19

Workshare Discounts with Passthroughs Under 85 Percent................. 22

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

ISSUES .................................................................................................................................................................... 28

Periodicals.................................................................................................................. 29

USPS Marketing Mail.............................................................................................. 36

Package Services...................................................................................................... 57

Special Services........................................................................................................ 61

First-Class Mail......................................................................................................... 65

CHAPTER IV. COMPETITIVE PRODUCTS.................................................................................................. 70
- ii -

Competitive Domestic Products with Rates of General Applicability. 72

Competitive Domestic Products Consisting of NSAs ................................. 72

Competitive International Products with Rates of General 

Applicability .............................................................................................................. 75

Competitive International Products Consisting of NSAs ......................... 84

Competitive Nonpostal Services........................................................................ 89

Comments on Appropriate Share Provision................................................. 90

Commission Analysis............................................................................................. 91

CHAPTER V. SERVICE PERFORMANCE ...................................................................................................103

Introduction ............................................................................................................103

Issues Affecting Service Performance for All Market Dominant 

Products in FY 2022.............................................................................................106

FY 2022 Service Performance Measurement Systems ...........................122

FY 2022 Service Performance Results by Class.........................................131

Nonpostal Services ...............................................................................................173

Introduction ............................................................................................................174

Retail Facilities.......................................................................................................175

Post Office Suspensions ......................................................................................177

Delivery Points.......................................................................................................183

Collection Boxes.....................................................................................................184

Wait Time in Line..................................................................................................186

Alternative Access.................................................................................................188

Background .............................................................................................................190

Commission Analysis...........................................................................................193

Appendix A—Key Commission Findings and Directives Requiring Future Postal Service 

Action for Annual Compliance Reports

Appendix B—Initial and Reply Comments FY 2022 Annual Compliance Determination

Appendix C—Information Requests and Responses to Information Requests FY 2022

Annual Compliance Determination

Appendix D—Acronyms and Abbreviations
EXECUTIVE SUMMARY

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

(FY) 2022,1 fulfilling the Commission’s responsibility to produce an annual assessment of 

Postal Service rates and service mandated by 39 U.S.C. §§ 3653 and 3705.2 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) and 3705(e). These 

statutory subsections require the Commission to make determinations on whether any 

rates and fees in effect during FY 2022 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 2022 were not met. The Commission’s review in this year’s ACD is based on the rates 

approved in Docket No. R2022-1 and all the rates in effect during FY 2022 for Competitive 

products.

Principal Findings: Market Dominant Rate 

and Fee Compliance

In Chapter II, the Commission identifies compliance issues related to workshare discounts 

that did not comply with the Commission’s new regulations under 39 C.F.R. part 3030, 

subpart J. These regulations are aimed at pricing efficiency, as measured by the 

passthrough ratio, which compares a discount’s size with the cost that the Postal Service 

avoids when the workshare customer instead performs the relevant sortation and/or 

transportation activities. Under the Efficient Component Pricing (ECP) rule, which guided 

the Commission’s approach, pricing efficiency is achieved when workshare discounts are 

set equal to their avoided costs (that is, produce passthroughs equal to 100 percent). The 

Commission’s current rules allow for deviation from ECP in certain circumstances.

For the three workshare discounts with passthroughs equal to 100 percent, the Postal 

Service cannot change the workshare discounts in any rate adjustment proceeding 

occurring prior to the issuance of the FY 2023 ACD.

For the 21 workshare discounts with passthroughs that exceed 100 percent, the Postal 

Service must bring the workshare discounts into compliance consistent with 39 C.F.R. 

§ 3030.283 in the next rate adjustment proceeding.

1 Docket No. ACR2022, United States Postal Service FY 2022 Annual Compliance Report, December 29, 2022 (FY 2022 ACR).

2 Chapter 37 of Title 39 of the United States Code was added by the Postal Service Reform Act of 2022 (PSRA), Pub. L. 117-108, 136 Stat. 1127 

(2022) and expanded the Postal Service’s reporting requirements related to the ACR. Additional discussion related to the PSRA can be found in 

Chapter I of this Report.
Docket No. ACR2022 - 2 -

For the 39 workshare discounts with passthroughs below 85 percent, the Postal Service 

must bring the workshare discounts into compliance consistent with 39 C.F.R. § 3030.284 

in the next rate adjustment proceeding.

Principal Findings: Market Dominant NonCompensatory Products

In Chapter III, the Commission identifies non-compensatory products and classes, as well 

as fully compensatory classes, for Market Dominant products. Consistent with the 

Commission’s new regulations under 39 C.F.R. part 3030, subpart G, the Commission 

differentiates non-compensatory products within non-compensatory classes and noncompensatory products within compensatory classes. The Commission’s new regulations 

grant additional rate authority to non-compensatory classes and more strictly govern how 

rate authority must be used for non-compensatory products in compensatory classes. 

Collectively, the Postal Service lost $1.32 billion in FY 2022 from non-compensatory classes 

and products.

The Commission identifies one non-compensatory class, Periodicals, and two noncompensatory products within the non-compensatory class, Periodicals In-County and 

Periodicals Outside County.

For Periodicals In-County and Periodicals Outside County, although these products 

experienced improvement in FY 2022, the Commission reiterates its longstanding finding 

that despite cost reduction initiatives and the maximization of its pricing authority, the 

costs of these products have risen in the long term, while unit revenue has been unable to 

keep up with changes in unit costs, negatively effecting cost coverage. 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 revenue by strategically pricing Periodicals.

The Commission identifies five non-compensatory products within compensatory classes, 

USPS Marketing Mail Flats, USPS Marketing Mail Carrier Route, USPS Marketing Mail 

Parcels, Media Mail/Library Mail, and Money Orders.

As it relates to USPS Marketing Mail Flats and USPS Marketing Mail Carrier Route, while 

cost coverage for both products improved in FY 2022, the Commission finds that both 

products failed to cover their attributable costs and therefore the Postal Service must 

increase the price for each product by at least 2 percentage points above the class average 

in each generally applicable Market Dominant rate proceeding in which the Postal Service 

proposes prices for USPS Marketing Mail, consistent with 39 C.F.R. part 3030, subpart G. 

The Commission also urges the Postal Service to continue to pursue cost reductions for 

both products.

For USPS Marketing Mail Parcels, the Commission finds that while this product's cost 

coverage improved in FY 2022, the product still failed to cover its attributable costs and 
Docket No. ACR2022 - 3 -

therefore the Postal Service must increase the price for this product by at least 2 

percentage points above the class average in each generally applicable Market Dominant 

rate proceeding in which the Postal Service proposes prices for USPS Marketing Mail, 

consistent with 39 C.F.R. part 3030, subpart G. 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 opportunities to further reduce the unit cost of the 

product, and report on those opportunities and results in the FY 2023 ACR.

For Media Mail/Library Mail, the Commission finds that while the cost coverage for this 

product improved in FY 2022, the product still failed to cover its attributable costs and 

therefore the Postal Service must increase the price for the product by at least 2 percentage 

points above the class average in each generally applicable Market Dominant rate 

proceeding in which the Postal Service proposes prices for Package Services, consistent 

with 39 C.F.R. part 3030, subpart G.

For the Special Services product Money Orders, the Commission finds that the cost 

coverage for Money Orders improved in FY 2022. However, the product still failed to cover 

its attributable costs and therefore the Postal Service must increase the price for this 

product by at least 2 percentage points above the class average in each generally applicable 

Market Dominant rate proceeding in which the Postal Service proposes prices for Special 

Services, consistent with 39 C.F.R. part 3030, subpart G. The Commission also encourages 

the Postal Service to look for ways to reduce product costs, including the reduction of 

window service costs.

The Commission identifies one fully compensatory class, First-Class Mail, in which all 

products covered their attributable costs.

Principal Findings: Competitive Products 

Rate and Fee Compliance

In Chapter IV, the Commission finds that revenues for Competitive products as a whole 

exceeded incremental costs. As such, Competitive products were not subsidized by Market 

Dominant products during FY 2022, thereby satisfying 39 U.S.C. § 3633(a)(1). Collectively, 

Competitive products satisfied the appropriate share requirement of 39 U.S.C. § 3633(a)(3) 

during FY 2022. Moreover, while most Competitive products’ revenues covered their 

attributable costs in compliance with 39 U.S.C. § 3633(a)(2), revenues for five Competitive 

products did not do so. The Competitive products that did not cover attributable costs are 

International Money Transfer Service—Inbound (IMTS—Inbound), International Money 

Transfer Service—Outbound (IMTS—Outbound), Competitive International Ancillary 

Services, as well as two negotiated service agreements (NSAs) — Priority Mail Contract 

543 and Priority Mail Express International, Priority Mail International, First-Class Package 

International Service & Commercial ePacket Contract 5. The Commission directs the Postal 

Service to take corrective action as it relates to these products except for Priority Mail 
Docket No. ACR2022 - 4 -

Express International, Priority Mail International, First-Class Package International Service 

& Commercial ePacket Contract 5, which expired during FY 2022 and was not renewed.

The Commission also gathered additional information as it relates to a Pilot Program being 

run by the Postal Service which allows postal retail customers to use payroll and business 

checks to purchase stored value Gift Cards, which is a Competitive product. Questions 

remain with regard to this time-limited Pilot Program. The Commission again reminds the 

Postal Service that the Commission regulates what products may be offered, controls the 

addition and removal of products through the Mail Classification Schedule (MCS), and thus 

instructs the Postal Service to ensure that future changes that have an impact on a 

product’s use or classification be filed with the Commission. The Commission further notes 

that the Postal Service is not lawfully empowered to make unilateral decisions regarding 

what is or is not a new or experimental product. Finally, the Commission continues to 

direct the Postal Service to file quarterly reports on the Pilot Program and the Gift Card 

product as a whole.3 These reports must be filed in Docket No. MC2022-60 and shall 

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. The report 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). Finally, the report 

must include any plans for modifications or other future plans of the Pilot Program or Gift 

Card product, including any plans for termination of the Pilot Program.

Finally, as it relates to the Postal Service’s agreement with other government agencies for 

the provision of nonpostal products (also known as 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. § 3704.4 For these IAAs, the Commission recognizes 

that there is a need to establish an accepted methodology (or methodologies) for 

calculating the revenue and attributable costs associated with IAAs entered into by the 

Postal Service as authorized under 39 U.S.C. §§ 3703 and 3704 in the future. Therefore, the 

Commission directs the Postal Service to develop a proposed methodology (or 

methodologies) for calculating and attributing costs and revenue to interagency 

agreements entered into by the Postal Service as authorized under 39 U.S.C. §§ 3703 and 

3704. The Postal Service must file this proposed methodology (or methodologies) by 

initiating a rulemaking proceeding (or proceedings) in accordance with 39 C.F.R. § 3050.11 

no later than May 31, 2023.

3 Chairman Kubayanda and Commissioner Poling do not agree with including the Gift Card product as a whole in this directive.

4 The Commission made no finding of compliance with 39 U.S.C. § 3703 because no agreements with state, local, or tribal governments were in 

effect in FY 2022.
Docket No. ACR2022 - 5 -

Principal Findings: Service Performance

In Chapter V, the Commission finds that a significant number of Market Dominant products 

failed to meet their service performance targets for FY 2022 and directs the Postal Service 

to take corrective action. Of the 27 Market Dominant products/categories measured, 13 

products/categories (48 percent) did not meet their targets in FY 2022, and some were 

substantially below the applicable target.

The Postal Service met its service performance targets for 14 Market Dominant 

products/categories in FY 2022:

• four First-Class Mail categories (2-Day Single-Piece Letters and Cards and 

Overnight, 2-Day, and 3-5-Day Presorted Letters and Cards),

• four USPS Marketing Mail products (Letters, Carrier Route, Parcels, and High 

Density and Saturation Letters),

• both Periodicals products (In-County and Outside County),

• one Package Services product (Bounded Printed Matter (BPM) Parcels), and

• three Special Services products (International Ancillary Services, Money Orders, and 

Stamp Fulfillment Services).

Service performance results for the following Market Dominant products did not meet their 

targets and were found to be out of compliance in FY 2022:

• four First-Class Mail products (3-5-Day Single-Piece Letters/Postcards, Flats, 

Inbound Letter Post, and Single-Piece Outbound International),

• three USPS Marketing Mail products (High Density and Saturation Flats/Parcels, 

Flats, and Every Door Direct Mail—Retail (EDDM-R)),

• two Package Service products (BPM Flats and Media Mail/Library Mail), and

• two Special Services products (Ancillary Services and Post Office Box Service).

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 2023. The Commission has also 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 2023. These directives include continued Postal 

Service reporting of specific information developed from its internal metrics within 90 

days of the issuance of this Report and as part of its FY 2023 ACR.
Docket No. ACR2022 - 6 -

CHAPTER I. INTRODUCTION

Statutory Context

Section 3652 of Title 39 of the United States Code 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.

5 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 the regulations issued thereunder) and whether any service 

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

On April 6, 2022 (during FY 2022 Quarter 3), the Postal Service Reform Act of 2022 (PSRA) 

amended Title 39 of the United States Code and other relevant statutory provisions.6

Among other changes, newly added chapter 37 of Title 39 of the United States Code 

expanded the Postal Service’s reporting requirements related to the ACR to include costs, 

revenues, rates, and quality of service for nonpostal services in effect during the fiscal year 

under review. See 39 U.S.C. § 3705(a). Newly added 39 U.S.C. § 3705(e) requires the 

Commission to review the Postal Service’s reporting related to nonpostal services and 

determine whether the activities carried out in the fiscal year under review complied with 

applicable provisions of chapter 37 of Title 39 of the United States Code.7

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 2023.8 Similarly, the Commission will 

5 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).

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

7 39 U.S.C. § 3705(e); see 39 U.S.C. § 3652(a). Consistent with 39 U.S.C. § 3705(f), the Commission intends to initiate a rulemaking proceeding 

that would prescribe the reporting requirements for the Postal Service and the Commission’s compliance review associated with the 

analyzation of costs, revenues, and rates for agreements that provide property or nonpostal services for use in future ACR filings. The 

Commission has already promulgated 39 C.F.R. § 3055.25 prescribing the reporting requirements for the Postal Service relating to quality of 

service for agreements that provide property or nonpostal services for use in future ACR filings. See Docket No. RM2022-7, Order Revising Rules 

for Periodic Reporting of Service Performance, February 9, 2023, Attachment at 8-9 (Order No. 6439).

8 See, e.g., Docket No. ACR2021, Financial Analysis of United States Postal Service Financial Results and 10-K Statement, May 18, 2022 (FY 2021 

Financial Analysis).
Docket No. ACR2022 - 7 -

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

and program performance report pursuant to 39 U.S.C. § 3653(d).9

Timeline and Commission Responsibilities

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.10 For the fiscal year 

under review, the Commission must make a written determination as to whether any rates 

or fees 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). If the Commission makes a timely written determination of 

non-compliance, it shall take such action as it deems appropriate. 39 U.S.C. § 3653(c); 

39 U.S.C. § 3705(e)(3). The Commission must complete the ACD within 90 days of receiving 

the ACR. 39 U.S.C. § 3653(b); 39 U.S.C. § 3705(e)(2). The Postal Service filed the FY 2022 

ACR on December 29, 2022; thus, the Commission must issue this ACD no later than March 

29, 2023.

Focus of the ACR

The focus of the ACR filed by the Postal Service 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, mail 

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 Market 

Dominant products with workshare discounts, the Postal Service must report the per-item 

cost it avoided through the worksharing activity performed by the mailer, the percentage 

of the per-item cost avoided that the current workshare discount represents, and the peritem contribution to institutional costs. 39 U.S.C. § 3652(b). In addition, the Commission 

posts the most current workshare cost avoidance models on its website. The Commission 

used those models in its preparation of this ACD.

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 

9 See 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.

10 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. ACR2022 - 8 -

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

costs. See 39 U.S.C. § 3633(a).

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). 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. § 41111, 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).

Accepted Analytical Principles

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 seven approved methodology changes.12 The 

Postal Service discusses the effect of methodology changes to FY 2022 ACR library 

references in Library Reference USPS-FY22-9 (Roadmap Document).13

In FY 2022, the PSRA resulted in significant changes to the Postal Service’s balance sheet, 

which has led to a dispute over the Postal Service’s use of accepted analytical principles for 

this fiscal year. Specifically, the PSRA repealed former 5 U.S.C. § 8909a(d), thereby 

eliminating the requirement of annual retiree health benefit (RHB) payments, including 

contributions to the Postal Service Retiree Health Benefits Fund for the normal costs of 

RHBs14 as well as unfunded amortization payments. PSRA § 102(b); see 5 U.S.C. § 8909a(d).

The PSRA further relieved the Postal Service of defaulted accruals for RHBs. PSRA § 102(b); 

see 5 U.S.C. § 8909a.

11 This refers 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.” 5 U.S.C. § 105.

12 Docket No. RM2021-4, Order on Analytical Principles Used in Periodic Reporting (Proposal Two), February 22, 2022 (Order No. 6109); Docket 

No. RM2022-8, Order on Analytical Principles Used in Periodic Reporting (Proposal Two), September 23, 2022 (Order No. 6280); Docket No. 

RM2022-9, Order on Analytical Principles Used in Periodic Reporting (Proposal Three), September 12, 2022 (Order No. 6272); Docket No. 

RM2022-10, Order Approving Analytical Principles Used in Periodic Reporting (Proposal Four), September 23, 2022 (Order No. 6279); Docket 

No. RM2022-11, Order Approving Analytical Principles Used in Periodic Reporting (Proposal Five), October 20, 2022 (Order No. 6307); Docket 

No. RM2022-13, Order on Analytical Principles Used in Periodic Reporting (Proposal Six), November 3, 2022 (Order No. 6322).

13 Library Reference USPS-FY22-9, December 29, 2022, file “USPS-FY22-9 Roadmap.pdf,” at 92-108 (Roadmap Document).

14 Normal costs represent the present value of the estimated RHBs attributable to active employees’ current year of service. See FY 2021 

Financial Analysis at 7 n.9 (citing United States Postal Service, 2021 Report on Form 10-K, November 10, 2021, at 39).
Docket No. ACR2022 - 9 -

In Docket No. RM2023-1, the Commission outlined the accepted analytical principles 

governing the treatment of the PSRA-related changes described above.15 As it relates to 

RHB amortization and normal costs, the Commission determined that “[a]ccepted 

analytical principles dictate the treatment of costs incurred by the Postal Service, and do 

not require the inclusion of costs that are not incurred.” It concluded that “[a]s a result, 

under the accepted methodology, there are no amortization and normal costs to account 

for in the Postal Service's financial reporting for FY 2022.”16

In the FY 2022 ACR, the Postal Service did not include or attribute the RHB normal costs, 

consistent with the direction set forth by the Commission in Order No. 6363 and the 

current accepted analytical principles in effect at the time of filing. The Commission 

acknowledges that the absence of attributable RHB normal costs has observable effects on 

figures reported by the Postal Service in the FY 2022 ACR when compared to prior years 

when the Postal Service incurred and attributed such costs.17 Specifically, the absence of 

attributable RHB normal costs due to the PSRA impacted product-level cost coverage as 

well as the avoided cost calculations which form the foundation of the Postal Service’s 

system of workshare discounts.

The Commission encouraged interested parties to file a petition to initiate a change in 

analytical principles pursuant to 39 C.F.R. part 3050 should any party “desire the 

Commission rely on a different analytical principle” associated with the treatment of RHB 

normal costs. Order No. 6363 at 11. As a result, a coalition of mailer associations filed such 

a petition,18 which the Commission considered in Docket No. RM2023-3. See Order No. 

6430. The Commission’s review of the petition took place concurrently with its analysis in 

the Annual Compliance Review docket. In Order No. 6464, the Commission rejected the 

petition to include and attribute RHB normal costs in FY 2022 and determined that the 

current analytical principles that apply to RHB benefits normal costs should not be 

changed.19 To the extent that commenters discuss concerns related to this treatment of 

RHB normal costs in the FY 2022 cost data, the Commission notes that those comments fall 

15 Docket No. RM2023-1, Order Granting Petition, in Part, for Reconsideration, December 9, 2022, at 10 (Order No. 6363).

16 Order No 6363 at 10. As it relates to the PSRA’s forgiveness of defaulted accruals, the Commission stated that “currently accepted analytical 

principles dictate that this reallocation be treated in the same manner as Cost Segment 18, Component 203 was during the FY 2021 ACD. This 

treatment would result in including the $56.9 billion as offsetting institutional costs.” Id. at 9.

17 The accepted analytical principle for attributing RHB normal costs consists of “applying the estimated labor volume variabilities to the retiree 

health benefit normal costs in the same proportions as direct labor costs.” Docket Nos. RM2023-1 and RM2023-3, Order Denying Request for 

Reconsideration and Notice of Proposed Rulemaking on Analytical Principles Used in Periodic Reporting (NPPC et al. Proposal One), January 25, 

2023, at 17 (Order No. 6430). Using this methodology, a portion of RHB normal costs were attributed to products in prior years. Order No. 6430 

at 17. However, the accepted analytical principles also include a limiting principle that sets the Postal Service’s RHB accounting costs as a ceiling 

that attributed RHB normal costs cannot exceed. Id. at 19. Due to the PSRA, there are no RHB accounting costs in FY 2022, and thus there are 

no RHB normal costs that can be attributed in FY 2022 due to the additional limiting principle. Id. at 23.

18 Docket Nos. RM2023-1 and RM2023-3, Motion for Reconsideration or, in the Alternative, Petition to Initiate a Proceeding Regarding the 

Appropriate Analytical Principle for Retiree Health Benefit Normal Costs, December 19, 2022.

19 See Docket No. RM2023-3, Order Rejecting Proposed Changes to Accepted Analytical Principles (NPPC et al. Proposal One), March 27, 2023 

(Order No. 6464). The Commission separately addressed a proposal to change the accepted analytical principle regarding the treatment of the 

PSRA’s forgiveness of defaulted accruals. See Docket No. RM2023-2. The Commission approved a one-time change as part of Order No. 6459. 

See Docket No. RM2023-2, Order on Analytical Principles Used in Periodic Reporting (Proposal Seven), March 17, 2023 (Order No. 6459).
Docket No. ACR2022 - 10 -

outside the scope of this proceeding and—to the extent they were also raised in Docket No. 

RM2023-3—were addressed as part of that proceeding.20

To the extent that any commenters argue that certain events occurring in FY 2022 could 

frustrate the meaningfulness of comparing FY 2022 data with prior years,21 the 

Commission observes that 39 U.S.C. §§ 3652 and 3653 do not require the Commission to 

complete year-over-year comparisons or analysis of historical trends as part of the ACD. 

Each year’s ACR presents data that reflect the revenue generated and costs incurred in that 

fiscal year, as calculated using the accepted analytical principles. Changes from one year to 

the next reflect the effects of many factors such as demand, input prices, operational 

changes, and legal obligations, in addition to changes in accepted analytical principles. 

Identifying factors that may have had a substantial impact can assist with interpreting the 

changes between years, but it is not necessary to adjust for such effects for prior years to 

be comparable. In addition, in Order No. 6464, the Commission found that maintaining the 

current accepted analytical principles with regard to the treatment of RHB normal costs 

allowed for more accurate comparison of year-over-year cost data. Order No. 6464 at 37.

With respect to any arguments that failing to attribute RHB normal costs creates systemic 

issues that could frustrate the achievement of the objectives of the Market Dominant 

ratemaking system set forth in 39 U.S.C. § 3622(b) or that the Commission must decline to 

make compliance decisions enforcing the regulations set forth by that system,22 the 

Commission observes that consideration of systemic changes is also outside the scope of 

Annual Compliance Review dockets and is instead to be considered via a Rulemaking 

proceeding.23 Therefore, the Commission declines to make any systemic changes to its 

regulations in any Annual Compliance Review proceeding and is obligated to make 

compliance decisions warranted by the regulations and the accepted analytical principles.

Instead, the Commission remains committed to conducting a review of the Market 

20 See, e.g., NPPC Comments at 3 (“Retiree [health] benefits comprise part of the economic costs of postal operations ... [The National Postal 

Policy Council] estimates that any cost figure – including unit costs and costs avoided by worksharing -- that is based on attributable labor costs 

is understated, perhaps by as much as 7 percent.”); id. at 3-4 (“It also follows that the Commission should regard with substantial skepticism 

any Postal Service claims of cost reductions. To the extent that reported costs are lower than in past year[s] because of the exclusion of RHB 

normal costs, such reduced cost is caused neither by operational decisions nor by improved efficiency.”); Pitney Bowes Comments at 3 (“The 

Postal Service’s exclusion of attributable retiree health benefit (RHB) normal costs from the modeled cost avoidance estimates presented in the 

FY2022 ACR will result in understated cost avoidance estimates and, thus, inaccurate workshare compliance findings.”); NAPM Comments at 7 

(“Although the PRC has accepted [RHB normal costs] treatment as the current analytic[al] principle, these omissions have implications for ... the 

PRC’s compliance findings in its Annual Compliance Determination (ACD)....”); PostCom Comments at 2 (“[T]he Postal Service’s decision to not 

accrue RHB Normal Costs has produced distorting effects in measured costs.”).

21 See, e.g., NPPC Comments at 2 (“The FY 2022 ACR is not comparable to previous ACRs because of the omission of retiree health benefit 

normal costs[.]”).

22 See, e.g., Pitney Bowes Comments at 3 (“The systematic understatement of costs and, by extension, modeled costs avoided frustrates the 

efficiency objectives of the Commission’s workshare rules....”). See also NPPC Comments at 1, 5-11 (arguing that because the costs are 

understated, the Commission should decline to follow the regulations set forth in 39 C.F.R. §§ 3030.283 and 3030.284); PostCom Comments at 

2 (arguing “against continued application of the additional two percent rate authority for non-compensatory products” as specified in 39 C.F.R. 

§ 3030.222).

23 Additionally, two petitions for rulemaking remain pending before the Commission that seek revisions to the regulations governing the Market 

Dominant ratemaking system to reflect the enactment of the PSRA. Docket No. RM2022-5, Petition for Rulemaking of the Association for Postal 

Commerce and Alliance of Nonprofit Mailers, April 11, 2022; Docket No. RM2022-6, Petition for Post-Legislation Review of the System for 

Regulating Market-Dominant Rates and Classes, April 11, 2022.
Docket No. ACR2022 - 11 -

Dominant ratemaking system 5 years after the date of its enactment.24 The modified 

Market Dominant ratemaking system took effect on January 14, 2021.25 Therefore, the 

Commission plans to initiate the 5-year review in early Calendar Year (CY) 2026.26

Moreover, in connection with the Consolidated Appropriations Act, 2022 (the 

Appropriations Act), the Commission prepared the Report on Rate Increases for Market 

Dominant Products, which it published on December 9, 2022.27 As part of the 

Appropriations Act making appropriations to the Commission for its FY 2022 budget, the 

House Committee on Appropriations (the Committee) stated that it is “concerned with the 

size and timing of the [Postal Service’s August 2021] rate increase [for Market Dominant 

products] and that the [Postal Accountability and Enhancement Act of 2006 (PAEA)] 

process did not account for the impact of the pandemic, including factors such as higher 

package revenues and emergency funding provided to the [Postal Service].”28 The 

Commission concluded that “the size and timing of the August 2021 rate increase were 

consistent with applicable law and show the modified ratemaking system was working as 

intended to address specific drivers of the Postal Service’s net losses outside of its direct 

control.” 2022 Market Dominant Rate Increase Report at 51. As instructed by the 

Committee, the Commission “considered the impact of the pandemic (including higher 

package revenues and emergency funding provided by the [Coronavirus Aid, Relief, and 

Economic Security] Act) on the modified ratemaking system and rate increases and found it 

did not alter its findings that the initial ratemaking system failed and the modified system 

is necessary to achieve the statutory objectives.” Id.

Organization of the FY 2022 ACD

In Chapter II, the Commission evaluates the workshare discounts for Market Dominant 

products to determine compliance with applicable statutory and regulatory requirements. 

See 39 U.S.C. § 3622(e); 39 C.F.R. pt. 3030, subpt. J. Chapter III focuses on other compliance 

issues related to Market Dominant products’ rates and fees, including non-compensatory 

classes and products and Market Dominant nonpostal services. Chapter IV covers 

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

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

30, 2020, at 267 (Order No. 5763) (“A thorough and insightful review must provide more than two rate cycles as data points to assess the 

impact of the changes to the Market Dominant ratemaking system. An abbreviated review period would not provide the Commission with 

sufficient data to evaluate the final rules in operation, account for outlying data, and determine the impact on mailers.”). The Commission 

further indicated, as needed to address anomalies, the Commission may undertake isolated rulemaking proceedings sooner than the scheduled 

5-year timeframe. Order No. 5763 at 20, 83, 93, 117, 272-73.

25 System for Regulating Market Dominant Rates and Classifications, 85 Fed. Reg. 81,124 (Dec. 15, 2020) (codified at 39 C.F.R. pts. 3030, 3040, 

3045, 3050, 3055).

26 See Order No. 5763 at 267 (“[T]he Commission intends ‘5 years after implementation’ to mean 5 years after the date the final rules go into 

effect.”).

27 Postal Regulatory Commission, Report on Rate Increases for Market Dominant Products, December 9, 2022 (2022 Market Dominant Rate 

Increase Report), available at https://www.prc.gov/docs/123/123720/Rate%20Increases%20for%20M-D%20Products.pdf.

28 H.R. Rep. No. 117-79, at 100 (2021). The Joint Explanatory Statement accompanying the Appropriations Act directs the Commission to consult 

with stakeholders for its report on Market Dominant products. 168 Cong. Rec. H1709 (daily ed. Mar. 9, 2022) (explanatory statement submitted 

by Rep. Rosa L. DeLauro, Chair of the House Committee on Appropriations, regarding the House amendment to the Senate amendment to H.R. 

2471, Consolidated Appropriations Act, 2022).
Docket No. ACR2022 - 12 -

Competitive 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 the initial and reply comments filed in this proceeding 

and the citations to these filings, 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.

In prior ACDs, the Commission has separately analyzed and discussed the significant 

challenges facing the Postal Service associated with the processing and delivery of flatshaped mailpieces in a cost-effective manner.29 As part of the PSRA, Congress required the 

Commission to investigate and study the inefficiencies in the Postal Service’s flats 

operations. See PSRA § 206(a)(1). On July 14, 2022, the Commission initiated its study 

concerning Flats operations (Flats Study) in order to “comprehensively identify the causes 

of inefficiencies in the collection, sorting, transportation, and delivery of Flats” and allow 

the Commission to “quantify the effects of volume trends, investments decisions, excess 

capacity, and operational inefficiencies of the Postal Service on the direct and indirect costs 

of the Postal Service that are attributable to Flats.”30 The Commission’s Flats Study must be 

submitted no later than April 6, 2023. See PSRA § 206(a)(3). As a result of the Flats Study, 

the Commission will not provide a separate chapter related to flat-shaped mailpieces in this 

ACD.

Procedural History

On December 29, 2022, the Postal Service filed its FY 2022 ACR, covering the period from 

October 1, 2021, through September 30, 2022. See FY 2022 ACR. The ACR includes an 

extensive narrative and a substantial amount of 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 volume information presented in billing 

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

to the FY 2022 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, n.13.

29 See, e.g., Docket No. ACR2021, Annual Compliance Determination, March 29, 2022, at 228-77 (FY 2021 ACD); Docket No. ACR2020, Annual 

Compliance Determination, March 29, 2021, at 236-62 (FY 2020 ACD).

30 Docket No. SS2022-1, Notice Initiating Proceeding for Flats Operations Study, July 14, 2022, at 1-2 (quoting PSRA § 206(a)(1)(A), (a)(1)(B)).
Docket No. ACR2022 - 13 -

The Postal Service concurrently filed its FY 2022 Annual Report and FY 2022 

Comprehensive Statement on Postal Service Operations as part of Library Reference USPSFY22-17 to the FY 2022 ACR.31

On January 3, 2023, the Commission issued an order establishing Docket No. ACR2022 to 

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

general public, and establishing January 31, 2023, and February 14, 2023, as the deadlines 

for comments and reply comments, respectively.32

Confidentiality

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

Commission, to concomitantly file an application for non-public treatment. 39 C.F.R. 

§ 3011.200(a). The application for non-public treatment must clearly identify all nonpublic materials and fulfill the burden of persuasion that the materials should be withheld 

from the public. Id. § 3011.201. The FY 2022 ACR includes such an application with respect 

to certain Competitive and international Market Dominant products. FY 2022 ACR, 

Attachment 2.

On January 13, 2023, United Parcel Service, Inc. (UPS) filed a motion for access to nonpublic information filed as part of the Postal Service’s ACR.33 The Commission evaluated 

the Postal Service’s response and ultimately granted this motion in full.34

Requests for Additional Information

Two CIRs and fifteen CHIRs were issued with respect to the ACR from January 3, 2023, to 

March 28, 2023. See generally Appendix C. The Postal Service responded to the CIRs and 

CHIRs, often filing supplemental information in support of the responses.35 In response to 

CHIR No. 16, the Postal Service filed a motion for reconsideration requesting that the 

Commission reconsider the scope of question 2 of CHIR No. 16.36 This Postal Service 

Motion is pending before the Commission.

31 Library Reference USPS-FY22-17, December 29, 2022, file “FY2022 Annual Report to Congress.pdf” (FY 2022 Annual Report).

32 Notice of Postal Service's Filing of Annual Compliance Report and Request for Public Comments, January 3, 2023 (Order No. 6396). On 

January 11, 2023, the Commission established separate comment deadlines for the Postal Service’s FY 2022 annual performance report (FY 

2022 Report) and FY 2023 annual performance plan (FY 2023 Plan). Order No. 6407 at 3, 4.

33 United Parcel Service, Inc.’s Motion Requesting Access to Non-Public Materials Under Protective Conditions, January 13, 2023, at 1.

34 Order Granting Motion for Access, in Part, January 18, 2023 (Order No. 6417) (granting access to non-public library references for which UPS 

represented that the Postal Service authorized UPS to represent as uncontested); Order Granting Motion for Access, January 25, 2023 (Order 

No. 6429) (granting access to remaining non-public library references); see United States Postal Service Response to United Parcel Service Inc.’s 

Motion Requesting Access to Non-Public Materials Under Protective Conditions, January 20, 2023.

35 See generally id. With respect to the Postal Service’s Response to CHIR No. 10, the Postal Service filed a motion for extension of time to 

respond to question 9, including a request to reduce the scope of the question. Motion for Extension of Time to Respond and for Partial 

Reconsideration of Question 9 of Chairman’s Information Request No. 10, February 9, 2023. The Commission granted the motion, providing the 

Postal Service with additional time to respond and narrowing the scope of CHIR No. 10, question 9. 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).

36 United States Postal Service Motion for Reconsideration of Question 2 of Chairman’s Information Request No. 16, March 9, 2023 (Postal 

Service Motion).
Docket No. ACR2022 - 14 -

The National Postal Policy Council (NPPC), the Association for Postal Commerce (PostCom), 

the Major Mailers Association (MMA), the National Association of Presort Mailers (NAPM), 

and N/MA – The News/Media Alliance (N/MA) (collectively, NPPC et al.) filed a motion for 

issuance of an information request on January 18, 2023, with questions they stated were 

intended “to provide data necessary for an accurate assessment of workshare discounts.”37

The Postal Service opposed all requested questions and urged the Commission to reject the 

NPPC et al. Motion.38 The Commission denied the motion, finding that the information 

sought by NPPC et al. was premature at this time and would not have been of material 

assistance to the Commission.39

On January 19, 2023, Steve Hutkins filed a motion for issuance of information requests with 

questions he stated “would be beneficial to the Commission’s annual evaluation of the 

Postal Service’s compliance with the provisions of 39 U.S.C. § 3652 and with the related 

regulations regarding Customer Access to Postal Services as set forth in 39 C.F.R. 

§ 3055.91.”40 The Postal Service opposed four of the proposed questions and urged the 

Commission to decline to issue proposed questions 7 through 10.41 The Commission 

partially granted the Hutkins Motion; CHIR No. 8 was issued containing proposed questions 

7 through 9 with some rephasing.42 The Commission rejected issuing proposed question 10 

because it was not appropriate for an Annual Compliance Review proceeding, given that 

the Hutkins Motion did not demonstrate how proposed question 10 related to FY 2022 

compliance. Order No. 6432 at 8-10.

37 Motion for Issuance of Chairman’s Information Request, January 18, 2023, at 1 (NPPC et al. Motion).

38 Response of the United States Postal Service in Opposition to Mailers’ Motion Seeking Information Request, January 19, 2023, at 6-7.

39 Order Denying Motion for Information Request, January 27, 2023, at 6-7 (Order No. 6431).

40 Motion for Issuance of Information Request, January 19, 2023, at 1 (Hutkins Motion).

41 Response of the United States Postal Service in Opposition to Steve Hutkins’ Motion for Issuance of Information Requests, January 20, 2023.

42 Order Granting in Part and Denying in Part Steve Hutkins’ Motion for Issuance of Information Request, January 30, 2023, at 5, 8 (Order No. 

6432); CHIR No. 8, questions 1-3 (incorporating proposed questions 7 through 9). With respect to the proposed questions 1-6, which the Postal 

Service did not explicitly oppose, the thrust of the proposed questions was incorporated (with adjustments to phrasing and timing of issuance, 

as proportional to the needs of Docket No. ACR2022) within multiple lines of inquiry pursued via CHIRs. See Order No. 6432 at 2-3 n.3; see also

CHIR No. 6, questions 6.b., 9 (incorporating proposed question 5 and inquiry related to proposed question 6); CHIR No. 7 (incorporating 

proposed questions 1 through 3); Revised CHIR No. 10, question 24 (incorporating further inquiry related to proposed question 6); Docket No. 

ACR2021, Chairman’s Information Request No. 35, February 14, 2023, question 1 (incorporating inquiry related to proposed question 4).
Docket No. ACR2022 - 15 -

CHAPTER II. MARKET DOMINANT 

PRODUCTS: PRICING REQUIREMENTS

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. See generally Order 

No. 5763. Chapter II discusses the class-level price cap and workshare discounts.

The Class-Level Price Cap

The Commission approved one price adjustment that went into effect during FY 2022, 

which complied with all rate authority provisions, in accordance with 39 C.F.R. part 3030, 

subparts C, D, E, and G.43

Workshare Discounts

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.44 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.

43 See Docket No. R2022-1, Order on Price Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals, Package Services, and Special 

Services Products and Related Mail Classification Changes, May 27, 2022 (Order No. 6188).

44 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. 

Workshare discounts are “rounded to the nearest thousandth or $0.001” while historically the avoided cost was unrounded, and the 

passthrough percentage was “rounded to the nearest tenth.” See Docket No. RM2017-3, Revised Notice of Proposed Rulemaking, December 5, 

2019, at 205 (Order No. 5337). However, the Commission has determined, to improve consistency, that the workshare discount and the 

avoided cost should be rounded to the same number of decimal places. Thus, 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 (expressed as a percentage) should continue to be 

rounded to one decimal place.
Docket No. ACR2022 - 16 -

The Commission’s regulations impose several requirements on non-conforming workshare 

discounts that must be complied with in each rate adjustment proceeding. First, 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. One such exception is that a workshare discount set below its avoided 

cost is permitted if it has a passthrough of at least 85 percent. Id. § 3030.284(e). The 

remaining exceptions related to workshare discounts set above and below their avoided 

costs are discussed in more detail below.

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.45 However, because changes in avoided costs are calculated 

for each fiscal year in the ACR proceeding, the Commission also analyzes workshare 

discounts’ consistency with the regulations as part of this Report.

Workshare Discount Data Used in Report

The Commission determines workshare discount compliance by identifying which 

workshare discounts had 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. Order No. 

5337 at 207; Order No. 5763 at 199. Non-compliant workshare discounts must be brought 

into compliance in the next rate adjustment proceeding, while workshare discounts that 

are equal to avoided costs cannot be altered in any rate adjustment proceeding until 

updated avoided costs are filed. See Order No. 5337 at 207; Order No. 5763 at 199. 

Accordingly, the sections below identify the workshare discounts with passthroughs that 

equaled 100 percent, exceeded 100 percent, or were below 85 percent in FY 2022.

Section 3653(b)(1) of Title 39 requires the Commission to base its determination on the 

rates and fees “in effect” during FY 2022. 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.46

45 See, e.g., Order No. 6188 at 2 (approving workshare discounts proposed by the Postal Service as consistent with applicable regulations).

46 See, e.g., FY 2021 ACD at 15-16; FY 2020 ACD at 12; 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. ACR2022 - 17 -

The end-of-year prices in effect in FY 2022 were the prices approved in Docket No. R2022-

1. Therefore, consistent with its long-standing practice, the Commission evaluates 

workshare discounts for compliance using the Docket No. R2022-1 prices in conjunction 

with the FY 2022 avoided costs.

Several commenters express concerns with the costs used to calculate FY 2022 

passthroughs, including the exclusion of RHB normal costs in FY 2022.47

NPPC states that “[i]f these costs were attributed at the same general rate as in previous 

years, approximately $2.6 billion more costs would be attributed across products than the 

FY2022 ACR reports.” NPPC Comments at 3. According to NPPC, the exclusion of such costs

caused the “costs avoided by worksharing,” among others, to be “understated, perhaps by 

as much as 7 percent.” Id.; see id. at 6. In NPPC’s view, this resulted in “inflated 

passthroughs.” Id. at 9; see id. at 5-10. Thus, NPPC recommends that the Commission not 

make a finding of noncompliance for discounts that exceed 100 percent by up to 7 percent, 

nor should it make a finding of compliance for discounts within 5 to 7 percentage points of 

the 85 percent passthrough minimum in 39 C.F.R. § 3030.284(e). Id. at 6; see 39 C.F.R. 

§ 3030.284(e).

Other commenters take comparable positions by arguing that the exclusion of RHB normal 

costs distorts passthroughs, leading to inaccurate workshare discount compliance findings 

or frustrating efficiency objectives.48 In addition, NPPC and NAPM note that passthrough 

data reflecting the inclusion of RHB normal costs should be filed. See NAPM Comments at 8; 

NPPC Comments at 10.

The Commission acknowledges that excluding RHB normal costs from the costs used to 

calculate passthroughs affects passthrough levels. However, as discussed in Chapter I, the 

Postal Service properly followed the accepted analytical principles in effect at the time of 

filing its FY 2022 ACR by excluding RHB normal costs from the costs used to calculate 

passthroughs. See Chapter I, supra. Comments that discuss the treatment of these costs fall 

outside the scope of this proceeding. The Commission’s findings of workshare discount 

passthrough compliance or non-compliance will adhere to the requirements of 39 U.S.C. 

§ 3622(e) and 39 C.F.R. part 3030, subpart J. See generally 39 U.S.C. § 3622(e); 39 C.F.R. pt. 

3030, subpt. J.

47 See generally PostCom Comments at 2-3; N/MA Comments at 6; NAPM Comments at 9-10, 11; NPPC Comments at 2-11; Pitney Bowes 

Comments at 3-4.

48 See, e.g., Pitney Bowes Comments at 3; PostCom Comments at 2-3; NAPM Comments at 9; N/MA Comments at 6.
Docket No. ACR2022 - 18 -

Workshare Discounts with 100 Percent 

Passthroughs

To prohibit the Postal Service from making workshare discounts more inefficient in rate 

adjustment proceedings, 39 C.F.R. § 3030.282(a) requires that workshare discounts that 

are set equal to their avoided costs and with passthroughs of 100 percent cannot be 

changed in a rate adjustment proceeding prior to the issuance of the next ACD.

There were three workshare discounts with passthroughs equal to 100 percent in FY 2022, 

of which one was within First-Class Mail and two were within USPS Marketing Mail. Table 

II-1 identifies the applicable discount, avoided cost, and passthrough for each of the three 

workshare discounts equal to their avoided costs.

Table II-1

FY 2022 Workshare Discounts with 100 Percent Passthroughs

Type of Worksharing Discount Avoided Cost Passthrough

First-Class Mail Presorted Letters Presorting ($/piece)

Automation AADC Letters $0.024 $0.024 100.0%

USPS Marketing Mail Commercial & Nonprofit Letters Barcoding ($/piece)

Automation Mixed AADC Letters $0.006 $0.006 100.0%

USPS Marketing Mail Commercial & Nonprofit Flats Presorting ($/piece)

Non-automation 3-Digit Flats $0.064 $0.064 100.0%

Note: AADC refers to automated area distribution center.

Although NPPC suggests that the automated area distribution center (AADC) passthrough, 

like other passthroughs in FY 2022, is inflated because of the exclusion of RHB costs,49 as 

the Commission has already discussed, this exclusion is consistent with accepted analytical 

principles. See supra Chapter I.

In any rate adjustment proceeding before the FY 2023 avoided costs are filed, the Postal 

Service cannot change the workshare discounts identified in Table II-1 consistent with 

39 C.F.R. § 3030.282(a).

49 See NPPC Comments at 7.
Docket No. ACR2022 - 19 -

Workshare Discounts with Passthroughs that 

Exceed 100 Percent

In rate adjustment proceedings, a proposed workshare discount that exceeds its avoided 

cost is only permissible if a listed exception applies. 39 C.F.R. § 3030.283(a). These 

exceptions include: (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; and (3) the proposed workshare discount is provided in connection with a 

subclass of mail, consisting exclusively of mail matter of educational, cultural, scientific, or 

informational (ECSI) value. Id. § 3030.283(b), (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 

discounts over time to mitigate rate shock, and avoiding an impediment to the efficient 

operation of the Postal Service. The Commission notes that no discounts received a waiver 

and all discounts complied with the applicable regulations for purposes of Docket No. 

R2022-1, the only rate adjustment proceeding in FY 2022.

In FY 2022, 21 workshare discounts exceeded the avoided costs of the corresponding 

worksharing activities. There were 6 within First-Class Mail, 13 within USPS Marketing 

Mail, and 2 within Package Services. Table II-2 identifies the applicable discount, avoided 

cost, and passthrough for each of these workshare discounts.
Docket No. ACR2022 - 20 -

Table II-2

FY 2022 Workshare Discounts with Passthroughs that Exceed 100 Percent

Type of Worksharing Discount Avoided 

Cost Passthrough

First-Class Mail Single Piece Letters/Cards Barcoding ($/piece)

Qualified Business Reply Mail Letters $0.022 $0.021 104.8%

Qualified Business Reply Mail Cards $0.022 $0.021 104.8%

First-Class Mail Presorted Letters Barcoding ($/piece)

Non-automation Non-machinable Mixed AADC

 Letters $0.166 $0.137 121.2%

Non-automation Non-machinable 3-Digit Letters $0.123 $0.120 102.5%

Non-automation Non-machinable 5-Digit Letters $0.109 $0.107 101.9%

First-Class Mail Flats Presorting ($/piece)

Automation 5-Digit Flats $0.207 $0.206 100.5%

USPS Marketing Mail Commercial & Nonprofit Letters Presorting ($/piece)

Automation AADC Letters $0.021 $0.020 105.0%

USPS Marketing Mail Nonprofit Machinable & Irregular 

Parcels Dropshipping ($1,000/piece & pound total)

DNDC $1,331 $875 152.1%

DSCF $302 $177 171.1%

DDU $39 $28 138.0%

USPS Marketing Mail Commercial & Nonprofit Marketing 

Parcels Dropshipping ($1,000/piece & pound total)

DNDC $367 $244 150.0%

DSCF $1,889 $1,127 167.6%

DDU $2,198 $1,490 147.5%

USPS Marketing Mail Nonprofit Parcels Presorting ($/piece)

NDC Irregular Parcels $0.361 $0.234 154.3%

SCF Irregular Parcels $0.832 $0.511 162.8%

USPS Marketing Mail Nonprofit Parcels Barcoding ($/piece)

Mixed NDC Machinable Barcoded Parcels $0.041 $0.040 102.5%

Mixed NDC Irregular Barcoded Parcels $0.041 $0.040 102.5%

USPS Marketing Mail Commercial & Nonprofit Marketing 

Parcels Presorting ($/piece)

SCF Marketing Parcels $0.370 $0.244 151.6%

USPS Marketing Mail Commercial & Nonprofit Marketing 

Parcels Barcoding ($/piece)
Docket No. ACR2022 - 21 -

Mixed NDC Barcoded Marketing Parcels $0.041 $0.040 102.5%

Package Services Media Mail Presorting ($/piece)

Basic $0.230 $0.196 117.3%

Package Services Library Mail Presorting ($/piece)

Basic $0.220 $0.196 112.2%

Note: AADC refers to automated area distribution center. SCF refers to sectional center facility. DDU refers to destination delivery unit. DNDC 

refers to destination network distribution center. DSCF refers to destination sectional center facility. NDC refers to network distribution 

center.

The Public Representative reviews the passthroughs that exceeded 100 percent in FY 2022. 

See PR Comments at 14-22. The Public Representative notes that although the Postal 

Service explains that cost avoidance models are calibrated to the In-Office Cost System 

(IOCS)/Cost and Revenue Analysis (CRA) costs, which fluctuate for several reasons, it “does 

not elaborate further as to the nature of these reasons.” Id. at 14. Thus, the Public 

Representative suggests that the Commission inquire further into the reasons for the 

IOCS/CRA cost fluctuations. See id.

In addition, several commenters raise concerns about the 100.5 percent passthrough for 

First-Class Mail 5-Digit Automation Flats. Both NAPM and NPPC contend that the 

passthrough for this workshare discount was excessive because the exclusion of RHB 

normal costs caused the passthrough of this workshare discount to exceed 100 percent and 

had those costs been included, it would have resulted in a lower passthrough.50 PostCom 

compares the FY 2022 passthrough of 100.5 percent to the FY 2021 passthrough of 84.5 

percent and argues that this workshare discount is an example of the Postal Service 

sending inefficient price signals. PostCom Comments at 4. It further notes that the 

passthrough for this workshare discount had been set at 100 percent in both of the Postal 

Service’s most recent rate adjustment proceedings and that changes in cost avoidance 

resulted in fluctuating passthroughs. See id.

Under the Commission’s formula for calculating passthroughs, changes in avoided costs 

(without proportional changes in workshare discounts) necessarily will affect passthrough 

levels.51 Updated avoided costs in the ACR may differ from the avoided costs used to set 

workshare discounts and calculate associated passthroughs due to the timing of rate 

adjustment proceedings and associated cost review. The Commission acknowledges the 

Public Representative’s comments and encourages the Postal Service to explain significant 

and atypical cost fluctuations affecting passthroughs in subsequent ACRs. Finally, as it 

50 See NPPC Comments at 8 (“the [First-Class Mail Automation 5-Digit Flats] discount exceeds 100 percent, although the passthrough surely 

would be in the mid-90’s if all economic costs were included”); NAPM Comments at 9 (“Using the historical approach for account of the [RHB] 

normal costs, however, the [First-Class Mail Automation 5-Digit Flats] passthrough surely would be well below 100%, negating the need to 

reduce the discount”). NAPM mistakenly describes the discount as “Marketing Mail 5-Digit Auto Presort Letters;” however, the Commission 

notes the comments reflect NAPM’s intention to discuss the First-Class Mail Automation 5-Digit Flats passthrough. See NAPM Comments at 9.

51 See, e.g., Order No. 6188 at 6 n.7 (“The relationship between workshare discounts and avoided costs is usually expressed as a percentage 

called a passthrough, which is generally calculated by dividing the discount by the cost avoided.”).
Docket No. ACR2022 - 22 -

relates to comments on the exclusion of RHB normal costs, the Commission reiterates that 

this exclusion is consistent with accepted analytical principles. See supra Chapter I.

In the next rate adjustment proceeding, the Postal Service must bring the workshare 

discounts identified in Table II-2 into compliance with 39 C.F.R. § 3030.283, which could 

include aligning workshare discounts with avoided costs or explaining how the workshare 

discount complies with existing exceptions (including waivers granted in accordance with the 

rules set forth in 39 C.F.R. § 3030.286). In addition, the workshare discounts identified in 

Table II-2 cannot be increased in any rate adjustment proceeding before the FY 2023 avoided 

costs are filed consistent with 39 C.F.R. § 3030.282(b).

Workshare Discounts with Passthroughs Under 

85 Percent

In rate adjustment proceedings, a proposed workshare discount that is less than its 

avoided cost is only permissible if a listed exception applies. 39 C.F.R. § 3030.284(a). These 

exceptions include: (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; and (3) the percentage passthrough for the proposed workshare 

discount is at least 85 percent. Id. § 3030.284(b), (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). The Commission notes that no discounts received a waiver and all discounts 

complied with the applicable regulations for purposes of Docket No. R2022-1, the only rate 

adjustment proceeding in FY 2022.

Because passthroughs between 85 and 100 percent are permissible, the Commission 

focuses its compliance analysis on workshare discounts with passthroughs under 85 

percent. In FY 2022, 39 workshare discounts had passthroughs that were less than 85 

percent. There were 4 within First-Class Mail, 12 within the Periodicals class, 19 within the 

USPS Marketing Mail class, and 4 within the Package Services class. Table II-3 identifies the 

applicable discount, avoided cost, and passthrough for each of the 39 workshare discounts 

with passthroughs under 85 percent in FY 2022.
Docket No. ACR2022 - 23 -

Table II-3

FY 2022 Workshare Discounts with Passthroughs Under 85 Percent

Type of Worksharing Discount Avoided 

Cost Passthrough

First-Class Mail Presorted Letters/Cards Presorting ($/piece)

Automation Mixed AADC Letters $0.055 $0.069 79.7%

Automation Mixed AADC Cards $0.013 $0.016 81.3%

First-Class Mail Presorted Letters Barcoding ($/piece)

Non-automation Machinable Mixed AADC Letters $0.044 $0.058 75.9%

First-Class Mail Flats Presorting ($/piece)

Automation ADC Flats $0.113 $0.136 83.1%

Periodicals Outside County Mail Presorting ($/piece)

Machinable Non-automation 3-Digit/SCF Flats $0.045 $0.057 78.9%

High Density Flats $0.033 $0.039 84.6%

Saturation Flats $0.022 $0.042 52.4%

Periodicals Outside County Mail Barcoding ($/piece)

Machinable Automation MADC Flats $0.061 $0.074 82.4%

Periodicals In-County Mail Presorting ($/piece)

3-Digit Presort Flats $0.035 $0.063 55.6%

5-Digit Presort Flats $0.053 $0.162 32.7%

Carrier Route Basic Flats $0.130 $0.264 49.2%

HD Flats $0.026 $0.039 66.7%

Saturation Flats $0.020 $0.042 47.6%

Periodicals In-County Mail Barcoding ($/piece)

Basic Automation Flats $0.069 $0.084 82.1%

3-Digit Automation Flats $0.056 $0.073 76.7%

Periodicals In-County Mail Dropshipping ($/piece)

DDU $0.012 $0.021 57.1%

USPS Marketing Mail Commercial & Nonprofit Letters Presorting ($/piece)

Non-automation AADC Machinable Letters $0.016 $0.030 53.3%

USPS Marketing Mail Commercial & Nonprofit Letters Dropshipping ($/piece)

DNDC Letters $0.023 $0.031 74.2%

USPS Marketing Mail Nonprofit Auto & Nonauto Flats Dropshipping ($1,000/piece & pound total)

DNDC $44,279 $55,690 79.5%
Docket No. ACR2022 - 24 -

USPS Marketing Mail Commercial & Nonprofit Basic Carrier Route 

Flats Dropshipping ($1,000/piece & pound total)

DNDC $23,435 $38,510 60.9%

DSCF $309,733 $432,022 71.7%

USPS Marketing Mail Commercial & Nonprofit HD/HD+/Saturation 

Flats Dropshipping ($1,000/piece & pound total)

DNDC $4,481 $5,708 78.5%

USPS Marketing Mail Nonprofit Parcels Presorting ($/piece)

NDC Machinable Parcels $0.563 $0.719 78.3%

5-Digit Machinable Parcels $0.783 $0.929 84.3%

USPS Marketing Mail Commercial & Nonprofit Carrier Route 

Letters Dropshipping ($/piece)

DNDC Letters $0.023 $0.031 74.2%

USPS Marketing Mail Commercial & Nonprofit Carrier Route Flats Presorting ($/piece)

Origin Flats on Delivery Sort Containers $0.022 $0.027 81.5%

DNDC Flats on Delivery Sort Containers $0.022 $0.027 81.5%

DSCF Flats on Delivery Sort Containers $0.022 $0.027 81.5%

DDU Flats on Delivery Sort Containers $0.022 $0.027 81.5%

USPS Marketing Mail Commercial & Nonprofit HD/Saturation 

Letters Presorting ($/piece)

HD Letters $0.130 $0.741 17.5%

USPS Marketing Mail Commercial & Nonprofit HD/Saturation 

Letters Dropshipping ($/piece)

DNDC Letters $0.023 $0.031 74.2%

USPS Marketing Mail Commercial & Nonprofit HD/Saturation Flats Presorting ($/piece)

HD Flats $0.070 $0.091 76.9%

Origin Flats on Delivery Sort Containers (HD) $0.012 $0.027 44.4%

Origin Flats on Delivery Sort Containers (HD+) $0.010 $0.027 37.0%

Origin Flats on Delivery Sort Containers (Saturation) $0.007 $0.027 25.9%

Package Services BPM Flats Dropshipping ($/piece)

Basic, Carrier Route DSCF Flats $0.607 $0.765 79.3%

Basic, Carrier Route DDU Flats $0.818 $1.165 70.2%

Package Services BPM Parcels/IPPs Dropshipping ($/piece)

Basic, Carrier Route DSCF Parcels/IPPs $0.598 $0.765 78.2%

Basic, Carrier Route DDU Parcels/IPPs $0.815 $1.165 70.0%

Note: AADC refers to automated area distribution center. ADC refers to area distribution center. SCF refers to sectional center facility. MADC 

refers to mixed area distribution center. DDU refers to destination delivery unit. DNDC refers to destination network distribution center. DSCF 

refers to destination sectional center facility. HD refers to High Density. HD+ refers to High Density Plus. NDC refers to network distribution 

center. BPM refers to Bound Printed Matter. IPPs refer to irregular parcels and pieces.
Docket No. ACR2022 - 25 -

As it relates to low workshare discount passthroughs, several commenters contend that the 

Postal Service’s workshare discount pricing is inefficient.52

PostCom states that it is concerned, based on “the large number of passthroughs that are 

less than the prescribed 85 percent floor,” that the Postal Service is attempting to “maintain 

a minimal level of compliance.” PostCom Comments at 3. In PostCom’s view, such an 

approach is “inconsistent with the spirit of the Commission’s regulations” and “may 

continue to add volatility in pricing.” Id. According to PostCom, “the Postal Service 

continues to inappropriately favor passthroughs well below 100 percent of avoided costs.” 

Id. at 5.

Pitney Bowes Inc. (Pitney Bowes) states that “progress has been made” in “mov[ing] 

workshare discounts over time closer to 100 percent of the corresponding avoided costs” 

but argues that the Commission’s workshare discount rules “are too permissive and must 

be further refined and strengthened.” Pitney Bowes Comments at 1. Thus, Pitney Bowes 

urges the Commission to require workshare discount rates that “promote pricing and 

operational efficiency, for example, narrowing the ‘safe harbor,’” if the Postal Service does 

not use its authority to achieve such efficiency. Id. at 2.

NAPM urges “the [workshare] discounts to be realigned to be as close to 100% as possible 

rather than seeking waivers from doing so.” NAPM Comments at 12. Similarly, NPPC 

suggests that “allowing the Postal Service to set the minimum workshare discount 

passthrough at 85 percent of avoided costs ensures that far too many discounts will, in fact, 

long be set at inefficient levels[.]” NPPC Comments at 1. In N/MA’s view, “[t]he Postal 

Service should be required to move more urgently to set discounts at economically efficient 

levels.” N/MA Comments at 6.

The Postal Service disagrees with the commenters’ arguments that workshare discount 

pricing is inefficient. Postal Service Reply Comments at 3-7. The Postal Service contends 

that it is not required “to raise the workshare passthroughs over time to 100 percent” but 

asserts that it is doing so nevertheless. See id. at 3-4. For example, the Postal Service states 

that “the number of passthroughs below 85 percent decreased substantially from the FY 

2021 ACR to the FY 2022 ACR” and that “the number of passthroughs below 85 percent 

decreased percentagewise in the two most recent price cases....” Id. at 4, 5. Thus, the Postal 

Service argues that “[t]here is no indication of a need for stricter passthrough requirements 

such as a 95 percent floor” and that “the proper proceeding to consider any changed 

requirements regarding workshare discounts is in the 5-year review of the pricing system.” 

Id. at 7.

In addition, several commenters raise concerns about specific workshare discounts set 

below avoided costs. N/MA raises concerns about Periodicals In-County Mail, Carrier Route 

Basic Flats, because of the level of the passthrough and the proportion of Periodicals In52 N/MA Comments at 4-6; NPPC Comments at 1; Pitney Bowes Comments at 1-2; PostCom Comments at 3-5; see NAPM Comments at 10-12.
Docket No. ACR2022 - 26 -

County Mail that Carrier Route Basic Flats comprises.53 N/MA contends that this pricing is 

inefficient. See id. Further, N/MA states that four Outside County passthroughs “are below 

the 85 percent safe harbor” and that more passthroughs would be below the 85 percent 

threshold if RHB normal costs were included in the costs used to calculate the 

passthroughs. Id. at 6.

Multiple commenters express specific concern over the 85.7 percent passthrough level of 

First-Class Mail Automation 5-Digit Letters.54 Pitney Bowes argues that this passthrough 

“remains pegged at a level that minimizes permissible incentives to reduce costs and 

increase efficiency.” Pitney Bowes Comments at 2. According to NAPM, the Postal Service 

“has consistently failed to move the First-Class Mail Automation Presort Letters 5-Digit 

passthrough closer to 100 percent....” NAPM Comments at 12. Pitney Bowes, NAPM, and 

NPPC argue that if RHB normal costs were included in the costs used to calculate 

passthroughs, this passthrough would fall below the 85 percent passthrough threshold and 

would be required to be increased. See Pitney Bowes Comments at 3; NAPM Comments at 

9; NPPC Comments at 7.

As it relates to commenters’ concerns about pricing efficiency, 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....”55 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.

The Commission maintained this approach in Docket Nos. R2021-2, R2022-1, and R2023-

156 but added that “should the Postal Service use the exception in 39 C.F.R. § 3030.284(e) to 

not move workshare discounts closer to 100 percent on a consistent basis, the Commission 

53 N/MA Comments at 5 (stating that although “Basic Carrier Route comprised 65 percent of Within County mail in FY2022,” “the discount for 

Within County Basic Carrier Route passes through only...49.2 percent (measured by the ACR costs, which N/MA believes are understated)”) 

(emphasis in original; footnote omitted).

54 See Pitney Bowes Comments at 2, 3; NAPM Comments at 9, 10-11, 12; NPPC Comments at 7. In this regard, NAPM discusses First-Class Mail 

Automation 5-Digit Cards in conjunction with First-Class Mail Automation 5-Digit Letters. See NAPM Comments at 10-11.

55 Order No. 5763 at 212. The Commission determined that a balanced approach was necessary due to the newness of the regulatory 

requirements related to workshare discounts less than their avoided costs and because such discounts are less detrimental to the Postal 

Service. See id.

56 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, at 61 (Order No. 5937) (“[I]t will likely take multiple price adjustments before it 

would be reasonable to assess if 39 C.F.R. part 3030, subpart J as a whole is having its intended effect.”); Order No. 6188 at 55 (declining to 

open a rulemaking proceeding to “consider requiring 100 percent passthroughs for non-compensatory products’ workshare discounts” and 

stating that considering revisions to 39 C.F.R. part 3030 is “premature at this time”); Docket No. R2023-1, Order on Price Adjustments for FirstClass Mail, USPS Marketing Mail, Periodicals, Package Services, and Special Services Products and Related Mail Classification Changes, 

November 28, 2022, at 31 (Order No. 6341) (“[T]he Commission declines to open a rulemaking proceeding to review 39 C.F.R. part 3030, 

subpart J at this time.”).
Docket No. ACR2022 - 27 -

may find it appropriate to regulate workshare discounts set below avoided costs more 

stringently when it undertakes its [5-year] review.” Order No. 5937 at 61.

The Commission maintains that approach here. This is the second compliance 

determination under the new regulations. The Commission will continue to monitor this 

issue and is open to considering adjustments to the regulations during its planned 5-year 

review should experience show adjustments are necessary.

The Commission notes that, with regard to all workshare discounts set below their avoided 

costs, the Postal Service must comply with 39 C.F.R. § 3030.284 if a waiver has not been 

granted and may not decrease such discounts in the next rate adjustment proceeding. 

39 C.F.R. §§ 3030.282(c), 3030.284. The Commission encourages the Postal Service to work 

with mailers to address specific concerns falling outside the scope of the regulations.

Finally, as it relates to comments on the exclusion of RHB normal costs, the Commission 

reiterates this exclusion is consistent with accepted analytical principles. See supra Chapter 

I.

In the next rate adjustment proceeding, the Postal Service must bring the workshare 

discounts identified in Table II-3 into compliance with 39 C.F.R. § 3030.284, which could 

include aligning workshare discounts with avoided costs or explaining how the workshare 

discount complies 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 set below their FY 

2022 avoided costs, including those identified in Table II-3, cannot be decreased in any rate 

adjustment proceeding before the FY 2023 avoided costs are filed consistent with 39 C.F.R. 

§ 3030.282(c).
Docket No. ACR2022 - 28 -

CHAPTER III. MARKET DOMINANT 

PRODUCTS: OTHER RATE AND FEE 

COMPLIANCE ISSUES

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.57 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. § 3030.221.58 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 2022: Periodicals. 

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

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

Route, (3) USPS Marketing Mail Parcels, (4) Media Mail/Library Mail, and (5) Money 

Orders.59 The Commission notes that one class was fully compensatory in FY 2022: 

57 See Order No. 5763 at 181-97. Whether a class or product is non-compensatory is determined by the Commission. 39 C.F.R. § 3030.220.

58 This requirement does not apply to a non-compensatory product for which the Commission has determined that the Postal Service lacks 

independent authority to set rates (such as rates set by treaty obligation). Id.

59 The Commission notes that an additional Market Dominant nonpostal product, Philatelic Sales, was initially reported as being noncompensatory. FY 2022 ACR at 102. However, in response to CHIRs, the Postal Service explained that this was due to an error in the calculation 

of the product’s cost coverage, which involved the use of an incorrect Service-Wide Benefit factor in the product’s cost model. Response to 

CHIR No. 4, question 12. The Postal Service provided updated calculations demonstrating that Philatelic Sales did, in fact, cover its attributable 

costs in FY 2022 with a cost coverage of 124.85 percent. Id.; Response to CHIR No. 7, question 21. The Postal Service states that in future ACR 

filings it intends to separately identify the Service-Wide Benefit factor in the source referred to in the cost model to prevent such an error from 

re-occurring. Id. question 21.b. The Commission agrees that this would be a helpful improvement and encourages the Postal Service to do so in 

future ACR filings.
Docket No. ACR2022 - 29 -

First-Class Mail. However, collectively, the Postal Service lost $1.32 billion in FY 2022 from 

non-compensatory classes and products.60

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 class.

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

raised by commenters.

Non-Compensatory Class

Periodicals

a. Introduction

The Periodicals class comprises two products, In-County61 and Outside County. Revenue 

for both products was insufficient to cover their attributable cost in FY 2022. However, the 

cost coverage for the class increased from 53.2 percent in FY 2021 to 61.1 percent in 

FY 2022. In this section, the Commission discusses the FY 2022 financial results for 

Periodicals in more detail.

b. FY 2022 Results

As illustrated in Table III-1, the cost coverage for Periodicals increased in FY 2022, up to 

61.1 percent in FY 2022 from 53.2 percent in FY 2021, resulting in a negative contribution 

of nearly $612 million in FY 2022.62

Table III-1

Periodicals Cost Coverage, FY 2018–FY 2022

Fiscal Year Periodicals

Class In-County Outside County

FY 2018 67.5% 67.9% 67.5%

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%

Source: Library Reference PRC-LR-ACR2022-5.

60 As noted in Chapter I, the Postal Service did not incur, and thus did not attribute, RHB normal costs consistent with the direction set forth by 

the Commission in Order No. 6363 and the current accepted analytical principles in effect at the time of filing. See Chapter I, supra. The 

Commission acknowledged that the absence of attributable RHB normal costs due to the PSRA impacted product-level cost coverage. See id.

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

62 See Library Reference PRC-LR-ACR2022-5, Excel file “FY 2022 CH3 Periodicals.xlsx.”
Docket No. ACR2022 - 30 -

The Postal Service notes that Periodicals cost coverage increased because revenue-perpiece increased while cost-per-piece decreased. FY 2022 ACR at 40-41. 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 e-readers.63 The Postal 

Service observes that, from FY 2021 to FY 2022, 3.8 percent of publications ceased mailing. 

Id.

c. 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.64 In the FY 2021 ACD, the Commission also made several recommendations to 

the Postal Service to develop specific plans and set goals to improve FY 2022 cost and 

service issues for flat-shaped mailpieces, which includes both In-County and Outside 

County Periodicals. FY 2021 ACD at 228-77.

d. Comments on Periodicals

N/MA states that the Periodicals class continues to see high costs and price increases that 

impact Periodicals volume. N/MA Comments at 2-4, 4-6. It explains that although the Postal 

Service reports that the unit costs of Periodicals declined in FY 2022, the reduction is 

“completely unrelated to any improvements in actual Periodicals operations” because the 

FY 2022 costs exclude RHB normal costs that were embedded in the FY 2021 costs. Id. at 1-

2. N/MA asks the Commission to determine whether the reported Periodicals cost declined 

due to actual operational improvement or due to accounting of retiree liabilities. Id. at 2.

The American Catalog Mailers Association (ACMA) states that city carrier street times 

associated with flats categories, including Periodicals, appear excessive relative to lettershaped mail. ACMA Comments at 15-16.

The Public Representative comments that the cost coverage shortfall of Periodicals is a 

longstanding issue but notes its improvement in FY 2022. PR Comments at 10. He urges the 

Postal Service to continue utilizing the rate authority available to non-compensatory 

classes to improve the cost coverage of the Periodicals class. Id. at 11.

e. Commission Analysis

Since FY 2018, Periodicals volume declined by 31.9 percent, total revenue declined by 24.9 

percent, total attributable cost declined by 16.9 percent, and in that time, the Periodicals 

class has provided cumulative negative contribution of $3.5 billion.65 To better understand 

63 See Library Reference USPS-FY22-45, December 29, 2022, folder “Rule 3050.50 Flats,” folder “Paragraph (b) -- Financial Report,” PDF file “Part 

B Narratives-FY 22 Rule 3050.50.pdf,” at 9.

64 See, e.g., FY 2017 ACD at 50; FY 2018 ACD at 46; FY 2019 ACD at 25; Docket No. ACR2020, Annual Compliance Determination, March 29, 2021, 

at 20 (FY 2020 ACD); FY 2021 ACD at 27.

65 See Library Reference PRC-LR-ACR2022-5, Excel file “FY 2022 CH3 Periodicals.xlsx.”
Docket No. ACR2022 - 31 -

the contribution shortfall of Periodicals, the Commission analyzes Periodicals revenue and 

cost.

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 rules governing the new ratemaking system went into effect in January 

2021.66 Prior to that, however, the price cap which is based on the consumer price index for 

all urban consumers (CPI-U) limited the Postal Service’s ability to raise prices. The recent 

addition of density, retirement, and non-compensatory rate authorities has allowed the 

Postal Service more pricing flexibility within the Periodicals class. In Docket No. R2021-2, 

the Postal Service raised Periodicals prices by 8.771 percent on average. Order No. 5937 

at 106-07. In Docket No. R2022-1, the Postal Service raised Periodicals prices by 8.540 

percent on average. Order No. 6188 at 80. The magnitude of these price increases is 

significant compared to previous rate increases limited by the CPI-U price cap.67

As such, FY 2022 Periodicals unit revenue increased 10 percent after 4 years of flat unit 

revenue growth. As detailed in Figure III-1, from FY 2018 to FY 2021, Periodicals unit 

revenue remained flat. Unit revenue for In-County was $0.109 in FY 2021 and $0.118 in 

FY 2022, an increase of 8.7 percent. Unit revenue for Outside County was $0.277 in FY 2021 

and $0.306 in FY 2022, an increase of 10.5 percent.

66 See 85 Fed. Reg. 81,124 (Dec. 15, 2020).

67 For example, in Docket Nos. R2021-1 and R2020-1, the average increase for Periodicals was 1.456 percent and 1.900 percent, respectively. 

See Docket No. R2021-1, Order on Price Adjustments for First-Class Mail, USPS Marketing Mail, Periodicals, Package Services, and Special 

Services Products and Related Mail Classification Changes, November 18, 2020, at 30-31 (Order No. 5757); Docket No. R2020-1, Order on Price 

Adjustments for USPS Marketing Mail, Periodicals, Package Services, and Special Services Products and Related Mail Classification Changes, 

November 22, 2019, at 29-30 (Order No. 5321).
Docket No. ACR2022 - 32 -

Figure III-1

Periodicals Unit Revenue, FY 2018–FY 2022

Source: Library Reference PRC-LR-ACR2022-5.

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 87.2 

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 the elements are decreasing. As 

detailed in Table III-2, average weight for Outside County decreased by 9.8 percent and 

average advertising content decreased by 5.6 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 2022 more noteworthy.

Table III-2

Periodicals Outside County Revenue Elements, FY 2018–FY 2022

Fiscal Year Weight (Ounces) Advertising Content

FY 2018 5.75 35.8%

FY 2019 5.59 34.2%

FY 2020 5.32 31.9%

FY 2021 5.26 30.7%

FY 2022 5.18 30.2%

Source: Library Reference PRC-LR-ACR2022-5.

$0.111 $0.113 $0.109 $0.109 $0.118 

$0.272 $0.275 $0.275 $0.277 

$0.306 

 $-

 $0.050

 $0.100

 $0.150

 $0.200

 $0.250

 $0.300

 $0.350

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Unit Revenue (dollars)

Fiscal Year

In-County Outside County
Docket No. ACR2022 - 33 -

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, impact Periodicals. See Library 

Reference USPS-FY22-45. As the Commission has previously discussed, the Postal Service 

has been unable to quantify the expected impact of those operational initiatives and 

changes.68

Figure III-2

Periodicals Unit Attributable Cost, FY 2018–FY 2022

Source: Library Reference PRC-LR-ACR2022-5.

As detailed in Figure III-2, from FY 2018 through FY 2022, Periodicals unit attributable cost

increased overall. Unit attributable cost for In-County was $0.163 in FY 2018 and $0.241 in 

FY 2022, an increase of 47.6 percent. Unit attributable cost for Outside County was $0.403 

in FY 2018 and $0.494 in FY 2022, an increase of 22.7 percent. However, from FY 2021 to 

FY 2022, Periodicals unit attributable cost decreased; In-County decreased by 0.3 percent 

and Outside County decreased by 4.0 percent.

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.

68 See, e.g., FY 2021 ACD at 31. As noted in Chapter I, the Commission analyzes inefficiencies in flats operations and the impact of these 

initiatives on the cost of Periodicals in its forthcoming Flats Study. See Chapter I, supra.

$0.163 

$0.193 $0.213 

$0.242 $0.241 

$0.403 

$0.428 

$0.480 

$0.514 $0.494 

 $-

 $0.100

 $0.200

 $0.300

 $0.400

 $0.500

 $0.600

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Unit Revenue (dollars)

Fiscal Year

In-County Outside County
Docket No. ACR2022 - 34 -

Figure III-3

Periodicals Unit Contribution, FY 2018–FY 2022

Source: Library Reference PRC-LR-ACR2022-5.

In FY 2022, Outside County constituted 87.2 percent of all Periodicals volume and 93.3 

percent of total Periodicals attributable cost.69 Figure III-4 shows that Outside County unit 

attributable cost increased by 9.13 cents from FY 2018 through FY 2022. However, from 

FY 2021 to FY 2022, Outside County unit attributable cost decreased by 1.99 cents.

69 See Library Reference PRC-LR-ACR2022-5, Excel file “FY 2022 CH3 Periodicals.xlsx.”

$(0.052)

$(0.080)

$(0.104)

$(0.133) $(0.123) $(0.131)

$(0.153)

$(0.205)

$(0.237)

$(0.188)

 $(0.300)

 $(0.250)

 $(0.200)

 $(0.150)

 $(0.100)

 $(0.050)

 $-

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Unit Contribution (dollars)

Fiscal Year

In-County Outside County
Docket No. ACR2022 - 35 -

Figure III-4

Periodicals Outside County Unit Attributable Cost, FY 2018–FY 2022

Source: Library Reference PRC-LR-ACR2022-5.

In FY 2022, the unit attributable cost increased for delivery and transportation, while the 

unit attributable cost decreased for mail processing and other costs.70 The Postal Service 

reports that mail processing costs decreased due in part to a decrease in manual processing 

and a reduction of leakage from Flats Sequencing System (FSS) operations. Response to 

CHIR No. 10, question 22. The Postal Service expected Periodicals domestic air cost to 

decrease due to new service standards that were implemented on October 1, 2021. From 

FY 2021 to FY 2022, Outside County domestic air costs decreased by 8.1 percent and 

highway costs increased by 14.2 percent.71 Taken together, Outside County total 

transportation costs increased by 11.7 percent and unit transportation costs increased by 

21.63 percent.

In addition, as noted by commenters and acknowledged by the Commission, the fact that 

the Postal Service did not incur costs related to RHB did impact product costs since there 

were no RHB-related costs to attribute to any products, including Periodicals. As discussed 

in Chapter I, the Postal Service appropriately excluded these costs in accordance with 

accepted analytical principles. See Chapter I, supra.

70 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 RHB, 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.

71 See Library Reference PRC-LR-ACR2022-5, Excel file “FY 2022 CH3 Periodicals.xlsx.”

12.5 13.2 13.7 15.0 14.3

11.2 12.0

15.0 16.1 16.7

4.1 4.7

4.6

12.4 5.5 6.7

13.0

14.8

14.8 11.7 40.3

42.8

48.0

51.4

49.4

0

10

20

30

40

50

60

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Unit Attributable Cost (cents)

Fiscal Year

Mail Processing Delivery Transportation Other Total
Docket No. ACR2022 - 36 -

As Table III-3 illustrates, mailer presortation of Outside County Carrier Route has 

decreased since FY 2018. In FY 2018, mailer presortation of Outside County Carrier Route 

was at 61.2 percent and had decreased to 57.6 percent by FY 2022. In addition, mailer 

dropship of Outside County decreased from 74.0 percent in FY 2018 to 70.0 percent in 

FY 2022.

Table III-3

Periodicals Outside County Mail Mix, FY 2018–FY 2022

Fiscal Year Presortation -

Carrier Route Basic

Dropship -

All Levels

FY 2018 61.2% 74.0%

FY 2019 59.9% 72.4%

FY 2020 58.9% 71.9%

FY 2021 58.7% 72.8%

FY 2022 57.6% 70.0%

Source: Library Reference PRC-LR-ACR2022-5.

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. Although the Commission analyzes inefficiencies in flats operations and 

the impact of these initiatives on the cost of Periodicals in its forthcoming Flats Study, the 

Postal Service should also monitor its costs and develop a plan to further reduce Periodicals 

costs. 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 revenue by 

strategically pricing Periodicals.

Non-Compensatory Products in 

Compensatory Classes

USPS Marketing Mail

As a class, USPS Marketing Mail covered its attributable costs in FY 2022 and had an overall 

cost coverage of 143.5 percent. Table III-4 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-4 

shows, three products within the class did not cover costs in FY 2022: (1) USPS Marketing 

Mail Flats; (2) USPS Marketing Mail Carrier Route; and (3) USPS Marketing Mail Parcels.
Docket No. ACR2022 - 37 -

Table III-4

USPS Marketing Mail Cost Coverage, FY 2018–FY 2022

Fiscal Year

USPS 

Marketing 

Mail 

Overall

Carrier 

Route Letters Flats Parcels HD/Sat Flats EDDM HD/Sat Letters

2018 142.4% 108.6% 195.0% 68.7% 58.5% 145.2% 267.6% 206.6%

2019 139.1% 99.9% 190.0% 67.7% 56.9% 138.2% 259.5% 204.7%

2020 129.5% 96.2% 171.4% 63.3% 76.5% 129.9% 257.7% 188.6%

2021 130.5% 94.6% 174.7% 60.3% 73.1% 125.4% 248.3% 182.4%

2022 143.5% 99.4% 191.2% 66.7% 87.5% 132.5% 263.9% 198.8%

Source: Library Reference PRC-LR-ACR2022-4.

In this chapter, the Commission discusses the FY 2022 financial results for USPS Marketing 

Mail non-compensatory products in more detail.

a. USPS Marketing Mail Flats

Introduction

In FY 2022, USPS Marketing Mail Flats continued to experience deficient cost coverage, 

although cost coverage improved from 60.3 percent in FY 2021 to 66.7 percent in FY 2022.

FY 2022 Results

In FY 2022, USPS Marketing Mail Flats had a cost coverage of 66.7 percent, 6.4 percentage 

points higher than in the prior year.72 As shown in Figure III-5, cost coverage for USPS 

Marketing Mail Flats declined 8.4 percentage points from FY 2018 to FY 2021, before 

improving 6.4 percentage points in FY 2022. Library Reference PRC-LR-ACR2022-4.

72 Library Reference PRC-LR-ACR2022-4. The Commission’s cost coverage calculation differs from the Postal Service’s calculation because, unlike 

the Postal Service, the Commission includes fees in the revenue for each product. See Library Reference PRC-LR-ACR2022-1.
Docket No. ACR2022 - 38 -

Figure III-5

USPS Marketing Mail Flats Cost Coverage and Contribution, FY 2018–FY 202273

Source: Library Reference PRC-LR-ACR2022-4.

Unit revenue grew by 11.4 percent in FY 2022, an improvement over the 2.9 percent unit 

revenue growth seen in FY 2021. Library Reference PRC-LR-ACR2022-4. The Postal Service 

notes that it implemented price 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 

four price changes to go into effect, including the 8.543 percent rate increase approved in 

Docket No. R2022-1. FY 2022 ACR at 21; Order No. 6188 at 68. The Postal Service also 

notes that after years of steady growth, the proportion of Nonprofit Flats, which in prior 

years has had an offsetting effect on the revenue realized due to price increases, remained 

essentially flat in FY 2022 at 32.0 percent. FY 2022 ACR at 21.

In addition, reported unit cost increased by 0.7 percent. Id. In responses to CHIRs, the 

Postal Service attributed this to increases in transportation costs, particularly highway 

transportation costs, which it states was likely due to an increase in origin-entered volume 

73 Complete USPS Marketing Mail Flats data for FY 2008 to FY 2022 can be found in Library Reference PRC-LR-ACR2022-4.

$(5.927)

$(6.671)

$(7.451)

$(8.269)

$(8.917)

$(0.752) $(0.744) $(0.780) $(0.817) $(0.649)

66.7%

56%

58%

60%

62%

64%

66%

68%

70%

 $(10)

 $(9)

 $(8)

 $(7)

 $(6)

 $(5)

 $(4)

 $(3)

 $(2)

 $(1)

 $-

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Contribution (billions)

Fiscal Year

Loss Since 2007 Contribution Cost

Coverage
Docket No. ACR2022 - 39 -

in FY 2022. The Postal Service explains that this increase was mitigated by decreases in 

unit delivery costs, and, to a lesser extent, in postmasters’ unit costs. Response to CHIR 

No. 7, question 18.a.

As a result of the improvement in unit revenue and the minor increase in unit cost, 

contribution improved by $168.5 million in FY 2022, as shown in Figure 5. Despite this 

improvement, the cumulative contribution loss from USPS Marketing Mail Flats between 

FY 2008 and FY 2022 grew to a negative $8.9 billion, as shown in Figure 5.

USPS Marketing Mail Flats volume continued to decline in FY 2022, decreasing by 175 

million pieces, or 6.1 percent, compared to FY 2021. FY 2022 ACR at 38, Table 12. This rate 

of decline was slower than in recent years, with the product’s volume having decreased 

10.3 percent in FY 2021 and 16.2 percent in FY 2020. Id. The Postal Service explains that 

most of the volume change with respect to flat-shaped USPS Marketing Mail, including 

USPS Marketing Mail Flats, was the result of FY 2022 not being part of a national election 

cycle. FY 2021, by comparison, included October 2020, which preceded a general election 

in November 2020. Response to CHIR No. 7, question 15.a.

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:74

• FY 2010 ACD directive: The Commission found that USPS Marketing Mail Flats 

prices did not comply with 39 U.S.C. § 101(d)75 and directed the Postal Service to 

increase the product’s cost coverage through a combination of above class-average 

price adjustments and cost reductions. In addition, the Commission directed the 

Postal Service to provide a description and estimation of the financial effect of 

operational changes designed to reduce USPS Marketing Mail Flats costs in the 

previous fiscal year, a description and estimation of the financial effect of all costing 

methodology or measurement improvements made in the previous fiscal year, a

statement summarizing the historical and current subsidy for the USPS Marketing 

Mail Flats product, and the estimated timeline for phasing out this subsidy in each 

subsequent ACR. FY 2010 ACD at 106-07.

• FY 2015 ACD directive: After finding that the Postal Service had made progress 

towards addressing the issues raised in the FY 2010 ACD in subsequent years,76 the 

Commission found that sufficient progress was no longer being made in FY 2015 

74 Docket No. ACR2010, Annual Compliance Determination, March 29, 2011 (FY 2010 ACD).

75 39 U.S.C. § 101(d) requires the costs of postal operations to be apportioned to postal users on a fair and equitable basis.

76 See Docket No. ACR2012, Annual Compliance Determination, March 28, 2021, at 116 (FY 2012 ACD); Docket No. ACR2013, Annual Compliance 

Determination, March 27, 2014, at 54 (FY 2013 ACD); Docket No. ACR2014, Annual Compliance Determination, March 27, 2015, at 47 (FY 2014 

ACD).
Docket No. ACR2022 - 40 -

and required the Postal Service to develop a plan to measure, track, and report on 

cost and service issues related to flat-shaped products. FY 2015 ACD at 181.

• FY 2018 ACD directive: The Commission found that the Postal Service had made no 

progress toward addressing the FY 2010 ACD directive in FY 2016 through FY 2018, 

and that this required further corrective action. FY 2016 ACD at 57; FY 2017 ACD at 

59; FY 2018 ACD at 70-71. As cost coverage continued to decline, the Commission 

found USPS Marketing Mail Flats to be in violation of 39 U.S.C. § 101(d) and required 

the Postal Service to propose a price increase for the product of at least 2 

percentage points above the class average for USPS Marketing Mail in the next 

Market Dominant rate adjustment. FY 2018 ACD at 72. The Commission also 

required the Postal Service to continue responding to the Commission’s FY 2010 

and FY 2015 directives. Id.

• FY 2019, FY 2020, and FY 2021 ACD directives: The Commission found USPS 

Marketing Mail Flats continued to violate 39 U.S.C. § 101(d), and in each of these 

years directed the Postal Service to propose a price increase at least 2 percentage 

points above the class average for USPS Marketing Mail in the next Market 

Dominant rate adjustment, in addition to continuing to comply with the FY 2010 

and FY 2015 directives for additional reporting. FY 2019 ACD at 42-43; FY 2020 

ACD at 41-42; FY 2021 ACD at 60. The Commission noted in FY 2020 and FY 2021 

that this directive also satisfies the new 39 C.F.R. § 3030.221, which requires such 

price increases for non-compensatory products in compensatory classes. FY 2020 

ACD at 41; FY 2021 ACD at 60.

In FY 2022, the Postal Service complied with the FY 2010 directives for additional 

reporting. Of note, the Postal Service points to three costing methodology changes in 

FY 2022 that had a potential measurable effect on the reported costs for USPS Marketing

Mail Flats. FY 2022 ACR at 35-36. The Postal Service explains that had these 

methodological changes been in place during FY 2022, they would have resulted in a 

slightly smaller year-over-year unit cost increase. Id.

The Postal Service also reports on the historical and current intra-class subsidy of USPS 

Marketing Mail Flats. Id. at 37-38. Despite the improvement in the contribution shortfall 

noted above, the Postal Service asserts that it is unable to provide an estimated timeline for 

phasing out the USPS Marketing Mail Flats subsidy, because “[u]nit costs change from year 

to year,...CPI is unpredictable, particularly over the long term, and...the volume of [USPS] 

Marketing Mail Flats sent has decreased dramatically—approximately by half—in the last 

seven years.” Id. at 38.

In response to the FY 2021 ACD directive and in compliance with 39 C.F.R. § 3030.221, the 

Postal Service raised prices for USPS Marketing Mail Flats by 2 percentage points higher 

than the USPS Marketing Mail class average in the Market Dominant rate increase during 
Docket No. ACR2022 - 41 -

FY 2022. Id. at 37-38. Specifically, the Postal Service raised rates on Flats by 8.543 percent 

in FY 2022.77

The Postal Service states that its schedule for future USPS Marketing Mail Flats price 

increases will continue to increase those rates by at least 2 percentage points above the 

class average, until such time as the product is no longer subject to 39 C.F.R. § 3030.221 or 

the Commission otherwise revises its pricing directives. Id. at 34.

Comments on USPS Marketing Mail Flats

The Public Representative notes the improvement in cost coverage for USPS Marketing 

Mail Flats in FY 2022. PR Comments at 9. He “concludes that in the future, above average 

price adjustments work effectively to close the gap between revenues and costs gradually 

in the next few years.” Id. at 10. At the same time, however, he states that “[a]lthough the 

Postal Service has taken some good steps to reduce [USPS Marketing Mail] Flats 

attributable costs, including the phasing out of the FSS program, it must apply additional 

investment and initiatives to enable revenue to exceed attributable cost.” Id.

ACMA notes the improvement in cost coverage for USPS Marketing Mail Flats in FY 2022 

but asserts that the costs associated with flat-shaped mail products, including USPS 

Marketing Mail Flats, USPS Marketing Mail Carrier Route, and USPS Marketing Mail HighDensity/Saturation Flats, have been excessive, with unit attributable costs well in excess of 

either CPI or factor prices. ACMA Comments at 6-10. ACMA also posits that the costs 

associated with USPS Marketing Mail Flats in the 5-Digit Automation price category appear 

too high relative to USPS Marketing Mail Carrier Route, given the similarities in processing 

operations between the two products. Id. at 13. As previously noted, ACMA also states that 

city carrier street times associated with flats categories appear excessive relative to lettershaped mail. Id. at 14; see Section III.B.1.d., supra. ACMA suggests that the reporting of 

aggregate unit attributable costs for combined flat-shaped products per 39 C.F.R. § 

3050.50(b)(5)(ii) could be improved by the Commission requiring the development of 

weighted unit cost indexes. Id. at 12. ACMA cautions that continued rate increases for flatshaped mail products will result in counter-productive volume losses. Id. at 2.

PostCom acknowledges the apparent improvement in USPS Marketing Mail Flats shortfall 

in FY 2022 relative to past years, but states that “much of that reduction is because volume 

declined by more than six percent.” PostCom Comments at 5-6. PostCom argues that the 

above-average price increases for USPS Marketing Mail Flats, which appears to be the 

Postal Service’s only approach to improving cost coverage, are not having the intended 

effect. Rather, by following Commission pricing directives, the Postal Service “is pricing flat 

mail out of the system and triggering an apparent death spiral.” Id. at 9. In PostCom’s 

opinion, 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 7.

77 Id. at 21. The class average rate increase was 6.500 percent. See id.
Docket No. ACR2022 - 42 -

NAPM encourages the Postal Service to restart the Headquarters cross-functional flats 

team,78 which the Postal Service reports is on hiatus pending the outcome of the Postal 

Service’s ongoing efforts to restructure its network.79

Commission Analysis

The Commission’s analysis of USPS Marketing Mail Flats examines cost coverage, the 

intra-class subsidy, changes in the product-level mail mix, and major cost segments.

(a) FY 2022 Cost Coverage and Unit Contribution

As described above, the cost coverage for USPS Marketing Mail Flats was 66.7 percent in 

FY 2022, 6.4 percentage points higher than in the prior year. Library Reference PRC-LRACR2022-4. As shown in Figure III-6, the unit contribution of USPS Marketing Mail Flats 

was -24.1 cents in FY 2022, a 4.4 cent increase from FY 2021. Since 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 11.4 percent, from 43.2 

cents in FY 2021 to 48.2 cents in FY 2022. Reported unit attributable cost increased by only 

0.7 percent in FY 2022, from 71.7 cents in FY 2021 to 72.2 cents in FY 2022, compared to 

8.0 percent in FY 2021. The Commission notes, however, that the rate of increase in costs is 

lower due in part to the absence of attributable RHB normal costs in FY 2022. See Section

I.A.D., supra.

78 NAPM indicates that the Headquarters cross-functional flats team’s goal is to identify and implement cost saving measures around flats 

processing and improvements aimed at boosting service performance. NAPM Comments at 13.

79 NAPM Comments at 13-14 (citing Library Reference USPS-FY22-45, ZIP folder “FY22.45.Files,” subfolder “Rule 3050.50 Flats,” subfolder 

“Paragraph (f) – Operational Changes Report,” file “FY22 Paragraph (f) Flats Operational Initiatives Report.pdf,” at 2).
Docket No. ACR2022 - 43 -

Figure III-6

USPS Marketing Mail Flats Unit Revenue, Attributable Cost,

and Contribution, FY 2018–FY 2022

Source: Library Reference PRC-LR-ACR2022-4.

(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.”80 The Commission issued the FY 2010 ACD directive with the 

intent of enabling the Postal Service to reduce the contribution gap between these 

products.81

80 See FY 2010 ACD at 105-07; Docket No. ACR2010-R, Order on Remand, August 9, 2012, at 8-10 (Order No. 1427); see also USPS 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 increases, 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.

81 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.

$0.405 $0.409 $0.420 $0.432 

$0.482 

$0.589 $0.604 

$0.664 

$0.717 $0.722 

$(0.184) $(0.195)

$(0.244)

$(0.285)

$(0.241)

-$0.40

-$0.20

$0.00

$0.20

$0.40

$0.60

$0.80

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Unit Cost (dollars)

Fiscal Year

Unit Revenue Unit Attributable Cost Unit Contribution
Docket No. ACR2022 - 44 -

As Figure III-7 shows, in FY 2022 the contribution gap between USPS Marketing Mail 

Letters and USPS Marketing Mail Flats showed improvement. 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 2021, the contribution gap between 

these two products had reached an all-time high of 37.8 cents. In FY 2022, however, the 

contribution gap fell slightly to 35.3 cents. As shown in Figure III-7, FY 2022 was only the 

second fiscal year since FY 2013, roughly the last 10 years, during which the contribution 

gap declined. Over the long term, the unit contribution for USPS Marketing Mail Flats has 

decreased by 16 cents since FY 2010, while the unit contribution for USPS Marketing Mail 

Letters since FY 2010 has gone up slightly.

Figure III-7

USPS Marketing Mail Flats and Letters Unit Contribution

and Contribution Gap, FY 2010–FY 2022

Source: Library Reference PRC-LR-ACR2022-4.

$0.086 $0.089 $0.086 $0.094 $0.104 $0.107 $0.105 $0.100 $0.101 $0.100 $0.088 $0.093 $0.112 

$(0.082) $(0.095) $(0.089) $(0.068) $(0.081) $(0.099) $(0.095)

$(0.135)

$(0.184) $(0.195)

$(0.244)

$(0.285)

$(0.241)

 $(0)

 $(0)

 $(0)

 $(0)

 $-

 $0

 $0

 $0

 $0

 $1

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Dollars

Fiscal Year

Letters Flats Letters/Flats Contribution Gap
Docket No. ACR2022 - 45 -

(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 in recent years. Figure III-8 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. However, the mail mix changed very little between FY 2021 and FY 2022. The Postal 

Service states that it is unable to say whether previously observed trends in migration from 

USPS Marketing Mail Flats to High-Density products affected FY 2022 or are likely to 

continue. CHIR No. 7, question 15.b.

The Postal Service explains that prior to the COVID-19 pandemic, 5 years of positive 

growth in USPS Marketing Mail High-Density Flats allowed for the drawing of general 

conclusions with respect to the impact of co-mailing on the USPS Marketing Mail mix, but 

current data are inconclusive. CHIR No. 7, question 15.b. While all three products 

experienced volume decreases in absolute terms in FY 2022, USPS Marketing Mail Flats 

volumes declined by 6.1 percent, whereas USPS Marketing Mail High Density/Saturation 

Flats declined by only 5.5 percent. Id. These volume declines, in combination with the mail 

mix shifts that have occurred over the previous 5 fiscal years, have resulted in the changes 

in volume distribution seen in Figure III-8.

Figure III-8

Volume Distribution of USPS Marketing Mail Flats, Carrier Route,

and High Density/Saturation Flats, FY 2018–FY 2022

Source: Library Reference PRC-LR-ACR2022-4.

51.0% 53.3% 55.8% 55.8% 56.0%

31.1% 29.2% 27.0% 28.2% 28.0%

17.9% 17.5% 17.1% 16.0% 16.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Percentage of Total Volume

Fiscal Year

High Density/Saturation Flats Carrier Route Flats
Docket No. ACR2022 - 46 -

Additional changes have occurred in the distribution of nonprofit and commercial mail 

within the USPS Marketing Mail Flats product as shown in Figure III-9. The nonprofit share 

of USPS Marketing Mail Flats increased each year between FY 2018 and FY 2021. However, 

after years of steady growth, the Postal Service notes that the proportion of Nonprofit Flats 

remained essentially flat in FY 2022 at 32.0 percent. FY 2022 ACR at 21.

Figure III-9

USPS Marketing Mail Flats Commercial-Nonprofit Mail Mix, FY 2018–FY 2022

Source: Library Reference PRC-LR-ACR2022-4.

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 volume shifts to nonprofit pieces which by law are required to have lower 

prices. See 39 U.S.C. § 3626(a)(6)(A). The Commission notes that it is too early to tell 

whether previously observed trends are changing or if FY 2022 was simply an anomalous 

year. The Commission will continue to monitor these trends and continues to encourage

the Postal Service to seek a better understanding of mail mix trends and factor them into its 

operational and pricing decisions.

(d) Major Unit Cost Segments

From FY 2021 to FY 2022, the reported unit attributable costs of USPS Marketing Mail Flats 

increased by 0.5 cents, or by 0.7 percent. Figure III-10 shows that reported mail processing 

costs remained relatively unchanged between FY 2021 and FY 2022, while unit delivery 

costs decreased by 0.5 cents, or 2.0 percent, and unit transportation costs increased by 1 

cent, or 20.9 percent.

73.8% 71.8% 70.9% 67.7% 68.0%

26.2% 28.2% 29.1% 32.3% 32.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Percentage of Total Volume

Fiscal Year

Nonprofit Percentage

Commercial Percentage
Docket No. ACR2022 - 47 -

Figure III-10

Unit Cost of Major Cost Segments, FY 2018–FY 202282

Source: Library Reference PRC-LR-ACR2022-4.

In Response to CHIR No. 7, the Postal Service explains that the increase in unit attributable 

costs for USPS Marketing Mail Flats in FY 2022 was primarily driven by increases in 

transportation costs, particularly highway transportation costs.83 These increased 

transportation costs were partially offset by a decline in unit delivery costs, and to a lesser 

extent, a decrease in postmasters’ unit costs. Id. question 18.b. While the Postal Service 

states that it is difficult to isolate the impact that specific cost mitigation efforts had on 

reducing costs in FY 2022, the Postal Service nevertheless identifies initiatives that “may” 

have had an effect on reducing USPS Marketing Mail Flats costs. Id. question 18.c. These 

include the Bundle Sorter Bin Expansion, Additional Package/Bundler Sorter Machines, and 

Full-Service Bundle Visibility initiatives. Id.

The Commission has acknowledged that some of the observed changes in costs are a result 

of the absence of attributable RHB normal costs in FY 2022, which were not incurred and 

appropriately excluded from the CRA in FY 2022. See Chapter I, supra. Furthermore, the 

82 Mail processing cost per unit is calculated as piggybacked mail processing cost segment components. See Library Reference USPS-FY22-24, 

December 29, 2022. Delivery cost per unit is calculated as piggybacked city carrier and rural carrier cost segments. See id. Transportation cost 

per unit is calculated as transportation cost segment per unit. See Library Reference USPS-FY22-2, December 29, 2022.

83 Response to CHIR No. 7, question 18.a. The Postal Service speculates that some of this increase might have been attributable to an increase 

in origin-entered volume in FY 2022. Id.

 $-

 $0.050

 $0.100

 $0.150

 $0.200

 $0.250

 $0.300

 $0.350

 $0.400

 $0.450

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Unit Cost (dollars)

Fiscal Year

Delivery per unit Mail Processing per unit Transportation per unit
Docket No. ACR2022 - 48 -

Commission continues to note that overarching issues facing flat-shaped products will be 

discussed in its forthcoming Flats Study. See id.

FY 2022 Directive

Given the continuing 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. The Commission recognizes the improvement in cost 

coverage for this product in FY 2022.

The Commission notes that its FY 2010, FY 2015, FY 2018, and FY 2019 through FY 2021 

directives have all, to a large extent, been eclipsed by recent regulatory changes, 

particularly the Commission’s adoption of new rules for non-compensatory classes and 

products, and improved flats reporting requirements. 39 C.F.R. pt. 3030, subpt. G; 39 C.F.R. 

§§ 3050.50, et seq. As a result, the Commission has determined not to re-issue the FY 2010, 

FY 2015, FY 2018, and FY 2019 through FY 2021 directives for FY 2023. The Commission is 

hopeful that further improvements in cost coverage and a further decrease in the intraclass subsidy will be observed in FY 2023. At the same time, the Commission recognizes 

that price increases alone will not 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 such cost 

reductions.

PostCom’s recommendation that the Postal Service hold rates constant to limit volume loss 

would conflict with 39 C.F.R. § 3030.221, whereunder, if the Postal Service chooses to file 

rate changes for the Marketing Mail class, the rate change on products whose attributable 

costs exceed revenue must be at least 2 percentage points above the class average. 

Additionally, even if holding rates steady were to reduce volume loss, steady rates and 

declining volume would necessarily lead to an increasing 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). The Commission also notes that ACMA’s recommendation that the 

Commission revise the existing methodology to index unit costs to correct for changes in 

the mail mix is outside the scope of this proceeding. However, the Commission encourages 

the Postal Service to consider the comments of NAPM to restart the Headquarters crossfunctional flats team.

USPS Marketing Mail Flats remains particularly emblematic of the problems that can occur 

when a non-compensatory product continues to exist for a prolonged period of time.84

The Commission finds that the cost coverage for USPS Marketing Mail Flats remains severely 

deficient, despite improvement in FY 2022. The Commission reminds the Postal Service that 

under 39 C.F.R. § 3030.221, the Postal Service must propose a price increase for USPS 

Marketing Mail Flats that is at least 2 percentage points above the average for the class. In 

addition, the Commission urges the Postal Service to continue to pursue cost reductions, while 

84 See Section III.C.1.a.(2), supra (citing a $8.9 billion loss).
Docket No. ACR2022 - 49 -

it concludes its analysis of inefficiencies in flats operations and the impact of initiatives on the 

cost of flat-shaped products as part of its Flats Study. For the reasons discussed above, the 

Commission removes the directives related to USPS Marketing Mail Flats stemming from the 

FY 2010, FY 2015, FY 2018, and FY 2019 through FY 2021 ACDs.

b. USPS Marketing Mail Carrier Route

Introduction

In FY 2022, USPS Marketing Mail Carrier Route had a cost coverage below 100 percent for 

the fourth year in a row, although cost coverage improved 4.8 percentage points compared 

to FY 2021, and the product is now nearly compensatory. Unit attributable cost has been 

increasing steadily over the past 5 years, but unit revenue has improved.

FY 2022 Results

In FY 2022, USPS Marketing Mail Carrier Route had a cost coverage of 99.4 percent, up 

from 94.6 percent in FY 2021. Library Reference PRC-LR-ACR2022-4. The Postal Service 

states that, in FY 2022, unit revenue increased by 12.4 percent, while unit cost rose by 7.0 

percent. FY 2022 ACR at 18-19. The Postal Service attributes the improvement in cost 

coverage in large part to the above-average price increase applied to Carrier Route in 

recent rate adjustments. Id. at 19. The Postal Service also attributes the improvement to 

changes in the mail mix within the product, noting that the proportion of the product made 

up of commercial volume increased by 5.2 percentage points to 92.7 percent, while the 

proportion of nonprofit volumes correspondingly decreased to 7.3 percent. Id.

The Postal Service states that the most significant drivers of the cost increase for USPS 

Marketing Mail Carrier Route in FY 2022 were increases in the unit cost for transportation, 

mail processing, and delivery. Response to CHIR No. 7, question 16.a.

The Postal Service explains that most of the volume change with respect to flat-shaped 

USPS Marketing Mail, including USPS Marketing Mail Carrier Route, was the result of 

FY 2022 not being part of a national election cycle as it was in FY 2021, which began in 

October 2020 and included a general election in November 2020. Id. question 15.a.

Prior Commission Directives

In FY 2021, the Commission required that the Postal Service propose price increases that 

were at least 2 percentage points above the class average for the USPS Marketing Mail class 

in each generally applicable Market Dominant price adjustment. FY 2021 ACD at 65. In 

FY 2022, the Postal Service complied with these directives. The Commission notes that the 

Postal Service has increased prices for USPS Marketing Mail Carrier Route more than 2 

percentage points above the class average in each of the last four rate adjustment 

proceedings, including an 8.657 percent increase in Docket No. R2022-1 and a 6.209 

percent increase in Docket No. R2023-1. See Order No. 6188 at 68; Order No. 6341 at 56. 

The class average for USPS Marketing Mail was 6.500 percent and 4.202 percent, 

respectively. See id.
Docket No. ACR2022 - 50 -

The Commission also directed the Postal Service to continue to explore and implement 

opportunities to further reduce the unit costs of flat-shaped mail products, including USPS 

Marketing Mail Carrier Route. FY 2021 ACD at 65. In accordance with the improved flats 

reporting requirements, the Postal Service reports on cost reduction initiatives in Library 

Reference USPS-FY22-45 pursuant to 39 C.F.R. § 3050.50.

Comments on USPS Marketing Mail Carrier Route

The Public Representative notes the improvement in cost coverage for USPS Marketing 

Mail Carrier Route in FY 2022. PR Comments at 7. He expresses concern about “the Postal 

Service’s continuing need to manage increasing costs for this and other products[,]” given 

that “persistent declining volumes constantly push up unit costs.” Id. at 7-8. As a result, he 

states that “maintaining cost control efforts targeted toward reduced volume expectation 

[is] recommended.” Id. at 8. He “anticipates that the 6.2 percent price increase due to 

Docket No. R2023-1 will be sufficient for Carrier Route to reach full cost coverage and [be] 

compensatory in FY 2023” if the Postal Service can manage its attributable costs efficiently. 

Id.

ACMA also notes the improvement in cost coverage for USPS Marketing Mail Carrier Route 

in FY 2022. ACMA Comments at 6. ACMA notes volume losses for nonprofit USPS Marketing 

Mail Carrier Route mail in FY 2022, which ACMA suggests is attributable to the nonprofit 

component receiving larger rate increases in FY 2022 than the commercial component. Id. 

at 7-8. Similar to USPS Marketing Mail Flats, AMCA also expresses concern with the rate of 

increase in unit attributable costs for USPS Marketing Mail Carrier Route relative to both 

the CPI and USPS Marketing Mail Letters. Id. at 9-10.

PostCom maintains that any apparent cost coverage improvements with respect to flatshaped mail products are to some extent due to the exclusion of RHB normal costs in 

FY 2022. PostCom Comments at 2. Using USPS Marketing Mail Carrier Route as an example, 

PostCom argues that “the murkiness of cost coverage estimates argues against continued 

application of the additional two percent rate authority on non-compensatory products 

until the Commission completes its congressionally-mandated flats study.” Id. In reply, the 

Postal Service states that PostCom’s premise is incorrect, because the Commission’s rules 

do not provide “additional” rate authority for compensatory classes. Postal Service Reply 

Comments at 7-8.

Commission Analysis

As Figure III-11 shows, unit contribution for USPS Marketing Mail Carrier Route, after 

falling steadily from FY 2018 to FY 2021, showed improvement in FY 2022. While the 

Postal Service has increased unit revenue by raising prices above the class average, these 

price increases have not been enough to keep up with the changes in unit cost over the last 

5 fiscal years. Since FY 2018, the last year that USPS Marketing Mail Carrier Route was 

compensatory, unit cost increased by 6.4 cents, while unit revenue increased by only 4.1 

cents. In FY 2022, the increase in unit revenue was 12.4 percent, which outpaced the 

increase in reported unit cost of 7.0 percent. FY 2022 ACR at 18-19. The Commission 

acknowledges, that the absence of attributable RHB normal costs has observable effects on 
Docket No. ACR2022 - 51 -

figures reported by the Postal Service in the FY 2022 ACR when compared to prior years 

when the Postal Service incurred and attributed such costs. See Chapter I, supra.

Figure III-11

USPS Marketing Mail Carrier Route

Unit Revenue, Unit Attributable Cost, and Unit Contribution, FY 2018–FY 202285

Source: Library Reference PRC-LR-ACR2022-4.

Figure III-12 illustrates changes in cost coverage for USPS Marketing Mail Carrier Route. 

Since its peak of 151.2 percent in FY 2008, cost coverage has dropped by 51.8 percentage 

points. The cost coverage for USPS Marketing Mail Carrier Route steadily decreased from 

FY 2016 through FY 2021 by an average of 8.6 percentage points each year, before 

recovering by 4.8 percentage points in FY 2022.

85 Complete FY 2008 through FY 2022 USPS Marketing Mail Carrier Route data can be found in Library Reference PRC-LR-ACR2022-4.

$0.263 $0.263 $0.266 

$0.270 

$0.304 

$0.242 

$0.263 

$0.276 $0.286 

$0.306 

0.021

0.000

-0.011 -0.016

-0.002

-$0.05

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Unit Cost (dollars)

Fiscal Year

Unit Revenue Unit Attributable Cost Unit Contribution
Docket No. ACR2022 - 52 -

Figure III-12

USPS Marketing Mail Carrier Route Cost Coverage, FY 2008–FY 2022

Source: Library Reference PRC-LR-ACR2022-4.

Given the improvement that has occurred, which includes the Postal Service not incurring 

costs related to RHB in FY 2022, the Commission is cautiously optimistic that the Postal 

Service will be able to restore this product to compensatory status going forward.

Although the Postal Service is correct that that the Commission’s rules do not grant 

additional rate authority for non-compensatory products within compensatory classes, the 

Commission understands PostCom’s comment as having been directed at the individual 

product requirement at 39 C.F.R. § 3030.221. As articulated in Order No. 5763, 39 C.F.R. 

§ 3030.221 serves an important purpose related to non-compensatory products in 

compensatory classes and the Commission intends to require the Postal Service to comply. 

Order No. 5763 at 182-83.

As noted above, the Commission finds that its FY 2021 directives related to USPS Marketing 

Mail Carrier Route have, to a large extent, been eclipsed by recent regulatory changes, 

particularly the Commission’s adoption of new rules for non-compensatory classes and 

products and improved flats reporting requirements. 39 C.F.R. pt. 3030, subpt. G; 39 C.F.R. 

§§ 3050.50, et seq.; Section III.C.3.1.a.(6). As a result, the Commission has determined not to 

re-issue these directives in FY 2023.

The Commission finds that the FY 2022 revenue for USPS Marketing Mail Carrier Route was 

not sufficient to cover attributable cost, but the product’s cost coverage showed improvement. 

The Commission reminds the Postal Service that under 39 C.F.R. § 3030.221, the Postal Service 

90%

100%

110%

120%

130%

140%

150%

160%

FY

2008

FY

2009

FY

2010

FY

2011

FY

2012

FY

2013

FY

2014

FY

2015

FY

2016

FY

2017

FY

2018

FY

2019

FY

2020

FY

2021

FY

2022

Cost Coverage

Fiscal Year
Docket No. ACR2022 - 53 -

must propose a price increase for USPS Marketing Mail Flats that is at least 2 percentage 

points above the average for the class. In addition, the Commission urges the Postal Service to 

continue to pursue cost reductions, while it concludes its analysis of inefficiencies in flats 

operations and the impact of initiatives on the cost of flat-shaped products as part of its Flats 

Study.

c. USPS Marketing Mail Parcels

Introduction

As with USPS Marketing Mail Flats, USPS Marketing Mail Parcels has a long history of 

deficient cost coverage. Both cost coverage and contribution for USPS Marketing Mail 

Parcels improved in FY 2022.

FY 2022 Results

In FY 2022, USPS Marketing Mail Parcels had a cost coverage of 87.5 percent, up 14.4 

percentage points from FY 2021. The Postal Service explains that unit revenue increased by 

16.6 percent while unit cost decreased by 2.5 percent. FY 2022 ACR at 19. The Postal 

Service notes that it followed the Commission’s directive to increase prices for USPS 

Marketing Mail Parcels by at least 2 percentage points above the class average. Id. at 19-20. 

In Docket No. R2022-1, the Postal Service proposed, and the Commission approved, a price 

increase of 9.785 percent for this product. Order No. 6188 at 64, Table VI-1.

The Postal Service explains the decrease in reported costs in FY 2022 as being primarily 

driven by decreases in the unit cost of transportation86 and delivery. The Postal Service 

attributes the decreases in the unit cost of transportation to both a methodological change, 

which was expected to have a slight decrease on transportation costs for USPS Marketing 

Mail Parcels, and a slightly higher percentage of volume being entered close to its 

destination. Response to CHIR No. 7, question 17.

Comments on USPS Marketing Mail Parcels

The Public Representative notes the improvement in cost coverage for USPS Marketing 

Mail Parcels in FY 2022. PR Comments at 8. Nevertheless, he “anticipates the Docket 

No. R2023-1 rate increase above the authorized 2 percent price increase might not be 

sufficient for [USPS] Marketing Mail Parcels to fully cover its costs in FY 2023 unless the 

Postal Service is able to manage and further reduce [USPS Marketing Mail] Parcels’ unit 

costs significantly.” Id. at 9.

PostCom states that it “is concerned that an overemphasis on repairing product level cost 

coverages through higher prices may damage USPS Marketing Mail” and that requirements 

to raise the price of USPS Marketing Mail products, including USPS Marketing Mail Parcels, 

86 The Postal Service attributed the decrease in transportation cost to a recent change in the accepted costing methodology that introduced 

TRACS-based highway peak season distribution keys into the transportation cost model. Response to CHIR No. 7, question 17. See Order 

No. 6322. The Postal Service also attributes the decrease to a shift in the destination-entry profile for USPS Marketing Mail Parcels, with more 

volume being entered closer to its destination in FY 2022. Response to CHIR No. 7, question 17.
Docket No. ACR2022 - 54 -

2 percent above the class average “will have a trivial effect on the Postal Service’s financial 

performance.” PostCom Comments at 8.

Prior Directives

The Commission has previously directed the Postal Service to utilize its pricing flexibility to

eliminate the intra-class cross-subsidy received by this product. See, e.g., FY 2010 ACD at 

108; FY 2020 ACD at 46. In the FY 2021 ACD directive, the Commission required that the 

Postal Service increase USPS Marketing Mail Parcels’ prices by at least 2 percentage points 

above the class average. FY 2021 ACD at 69. The Postal Service complied, increasing prices 

for USPS Marketing Mail Parcels by 9.785 percent in Docket No. R2022-1 and 20.493 

percent in Docket No. R2023-1. Order No. 6188 at 64, Table VI-1; Order No. 6341 at 52, 

Table VI-1. The average for the USPS Marketing Mail class in each of these dockets was 

6.500 percent and 4.202 percent respectively. The increase in unit revenue in FY 2022, 

coupled with a decrease in reported unit cost, led to an improvement in the product’s cost 

coverage.

The Commission also encouraged the Postal Service, commensurate with the small size of 

the product, to explore and implement opportunities to further reduce the unit costs of 

USPS Marketing Mail Parcels and report on those opportunities and results. FY 2021 ACD at 

69. The Postal Service complied with this directive, stating that “the extremely small 

absolute and relative volume of this product...greatly impedes the practicality of 

management efforts focused exclusively on this product alone[,]” as “[h]andling of 

Marketing Mail Parcels in postal facilities typically occurs in contexts in which such pieces 

are mixed with other pieces of similar size and shape.” FY 2022 ACR at 31. Nevertheless, 

the Postal Service explains that in FY 2022 it began shifting the processing of certain 

package volumes from NDCs to local processing and distribution centers (P&DCs), which 

the Postal Service speculates could result in improvements to unit costs for USPS 

Marketing Mail Parcels. Id.

Commission Analysis

In FY 2022, USPS Marketing Mail Parcels did not produce sufficient revenues to cover its 

attributable costs, although cost coverage improved substantially relative to FY 2021. 

Despite compliance with directives related to pricing and cost reporting, cost coverage for 

the product remains an issue. Figure III-13 displays the unit revenue, unit attributable cost, 

and unit contribution for USPS Marketing Mail Parcels from FY 2018 through FY 2022.
Docket No. ACR2022 - 55 -

Figure III-13

USPS Marketing Mail Parcels Financial Comparison, FY 2018–FY 202287

Source: Library Reference PRC-LR-ACR2022-4.

As illustrated in Figure III-13, unit attributable cost decreased from $2.09 in FY 2021 to 

$2.04 in FY 2022 while unit revenue increased from $1.53 in FY 2021 to $1.78 in FY 2022, 

resulting in a total negative unit contribution of 25.6 cents.

Figure III-14 shows the annual cost coverage for USPS Marketing Mail Parcels. In FY 2022, 

cost coverage for USPS Marketing Mail Parcels improved 14.4 percentage points. 

Contributing to this improvement was a substantial increase in unit revenue, coupled with 

a slight decrease in reported unit cost. The Commission does acknowledge that the absence 

of attributable RHB normal costs has observable effects on figures reported by the Postal 

Service in the FY 2022 ACR when compared to prior years when the Postal Service incurred 

and attributed such costs. See Chapter I, supra.

87 Complete FY 2008 through FY 2022 USPS Marketing Mail Parcels data can be found in Library Reference PRC-LR-ACR2022-4.

$1.240 $1.311 $1.354 

$1.530 

$1.784 

$2.120 

$2.304 

$1.771 

$2.093 $2.040 

$(0.880) $(0.993)

$(0.416)

$(0.563)

$(0.256)

-$1.50

-$1.00

-$0.50

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Unit Cost (dollars)

Fiscal Year

Unit Revenues Unit Attributable Costs Unit Contribution
Docket No. ACR2022 - 56 -

Figure III-14

USPS Marketing Mail Parcels Cost Coverage, FY 2012–FY 2022

Source: Library Reference PRC-LR-ACR2022-4.

The Commission finds the improvement in cost coverage for USPS Marketing Mail Parcels 

in FY 2022 to be a positive development. However, the Commission continues to be 

concerned about the repeated failure of USPS Marketing Mail Parcels to cover its costs, and 

the fluctuation in cost coverage makes it difficult to ascertain whether such improvement 

can be sustained. The cost coverage shortfall has existed for a significant period of time. 

The Commission concludes that USPS Marketing Mail Parcels’ prices, like those of USPS 

Marketing Mail Flats, do not comply with 39 U.S.C. § 101(d) because they do not apportion 

the costs of postal operations to postal users on a fair and equitable basis.

As noted above, the Commission finds that its FY 2021 directives related to USPS Marketing 

Mail Parcels have all, to a large extent, been eclipsed by recent regulatory changes, 

particularly the Commission’s adoption of new rules for non-compensatory classes and 

products and improved flats reporting requirements. 39 C.F.R. pt. 3030, subpt. G; 39 C.F.R. 

§§ 3050.50, et seq.; Section III.C.3.1.a.(6). As a result, the Commission has determined not to 

re-issue these directives in FY 2022.

The Commission finds that the FY 2022 revenue for USPS Marketing Mail Parcels was not 

sufficient to cover attributable cost, but the product’s cost coverage showed improvement. 

The Commission reminds the Postal Service that under 39 C.F.R. § 3030.221, the Postal Service 

must propose a price increase for USPS Marketing Mail Parcels that is at least 2 percentage 

points above the average for the class. 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 opportunities to further reduce the unit cost of USPS Marketing Mail Parcels, 

and the Postal Service shall report on those opportunities and results in the FY 2023 ACR.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Cost Coverage

Fiscal Year

Parcels Cost Coverage
Docket No. ACR2022 - 57 -

Package Services

a. Introduction

After 3 consecutive fiscal years of the Package Services class not covering its costs, Package 

Services covered its attributable costs in FY 2022 and had an overall cost coverage of 102.2 

percent, which was a 9.0 percentage point improvement from the class cost coverage of 

93.2 percent in FY 2021.

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 costs in 

FY 2022. The Media Mail/Library Mail product was the only Package Services product that 

failed to cover its costs in FY 2022. 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.

Table III-5

Package Services Cost Coverage, FY 2018–FY 2022

Fiscal Year Package Services 

Overall

Alaska Bypass 

Service

Bound Printed 

Matter Flats

Bound Printed 

Matter Parcels

Media Mail/ 

Library Mail

FY 2018 102.6% 175.8% 148.9% 109.0% 76.7%

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%

Source: Library Reference PRC-LR-ACR2022-6.

As Table III-5 shows, the cost coverage for the Package Services class in FY 2022 is near the 

highest cost coverage of the last 5 years, which was 102.6 percent cost coverage in 

FY 2018. Table III-5 further illustrates that cost coverages for all Package Services products 

except Media Mail/Library Mail decreased over the last 5 fiscal years. However, all Package 

Services products had an increase in cost coverage between FY 2021 and FY 2022.

Media Mail/Library Mail’s cost coverage improved by 14.6 percentage points between 

FY 2018 and FY 2022 but continues to have the lowest cost coverage of all Package Services 

products. Below, the Commission discusses the FY 2022 financial results for Media 

Mail/Library Mail in more detail.
Docket No. ACR2022 - 58 -

b. Media Mail/Library Mail

Introduction

In FY 2022, the Media Mail/Library Mail product failed to cover its attributable cost. 

FY 2022 was the sixteenth consecutive year that Media Mail/Library Mail did not generate 

sufficient revenue to cover its attributable cost. See FY 2021 ACD at 41.

FY 2022 Results

In FY 2022, Media Mail/Library Mail had a cost coverage of 91.3 percent, a 7.0 percentage 

point increase compared to FY 2021. The Postal Service states that the increase in cost 

coverage for Media Mail/Library Mail in FY 2022 is the result of a 51 cent increase in unit 

revenue, which outpaced the 22 cent increase in unit cost. FY 2022 ACR at 43.

The Postal Service states that the increase in unit revenue resulted from the above-average 

price increases in Docket No. R2021-2 and Docket No. R2022-1. Id. at 43-44. Docket No. 

R2021-2 included a 10.865 percent price increase for Media Mail/Library Mail, which was 

more than 2 percentage points above the average increase for the Package Services class of 

8.804 percent. Id.; Order No. 5937 at 116. Docket No. R2022-1 included an 8.897 percent 

price increase for Media Mail/Library Mail, which exceeded the average increase for the 

Package Services class of 8.511 percent. FY 2022 ACR at 43-44; Order No. 6188 at 90. These 

price increases went into effect on August 29, 2021, and July 10, 2022, respectively. Order 

No. 5937 at 6; Order No. 6188 at 6. The Postal Service states that the Docket No. R2022-1 

price increase coupled with the additional above-class average price increase in Docket No. 

R2023-1 (i.e., 4.381 percent) should have a significant effect on cost coverage in FY 2023 

and that it intends to continue to improve the cost coverage of Media Mail/Library Mail 

through above-average price increases. FY 2022 ACR at 44; Order No. 6341 at 92. The 

Docket No. R2023-1 price increase went into effect on January 22, 2023. Order No. 6341 

at 7.

With respect to the 22.3 cent increase in unit cost for Media Mail/Library Mail, the 

Commission notes that this increase occurred despite the fact that the Postal Service did 

not incur costs related to RHB in FY 2022. The Postal Service explains that the 5.1 percent 

increase in unit cost was driven by increasing transportation and window service costs. 

Response to CHIR No. 5, question 2.a. The Postal Service further explains that Media 

Mail/Library Mail unit transportation costs rose by 23.4 percent or 32 cents in FY 2022, an 

increase that it attributes to the expected impacts of the Proposal Six methodological 

change and increases in Media Mail/Library Mail transported via air transportation. Id.; see

Order No. 6322. The Postal Service states that unit window service costs increased by 16.8 

percent or 2.9 cents in FY 2022. Response to CHIR No. 5, question 2.a. The Postal Service 

attributes this increase to a 4.5 percent increase in window clerk wage rates and the 

continued decline in the overall number of window transactions, which result in higher 

unit window service costs for products like Media Mail/Library Mail that are not available 

through certain alternative channels, such as Click-N-Ship. Id.
Docket No. ACR2022 - 59 -

The Postal Service notes that inflationary pressure challenges its ability to make long-term 

reductions in unit costs. Id. question 2.b. The Postal Service states that more than 80 

percent of Media Mail/Library Mail costs are related to mail processing or transportation. 

Id. The Postal Service notes that it plans to shift Media Mail/Library Mail processing from 

the NDC to the local P&DC by the end of FY 2023, Quarter 3, which the Postal Service 

represents should lead to more efficient processing and better transportation utilization 

that may reduce costs. Id.

Comments on Media Mail/Library Mail

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

costs and contributed to institutional costs in FY 2022 for the first time in several years 

despite continued volume declines. PR Comments at 11. With regard to Media Mail/Library 

Mail, he states that cost coverage, per-piece loss, and per-piece revenue improved in 

FY 2022, while per-piece costs increased and volume declined. Id. at 11-12. He notes that 

the Media Mail/Library Mail product has received above-average price increases with 

additional recent price increases expected to have a more significant impact on cost 

coverage in FY 2023. Id. at 12. Based on these price increases, he expects Media 

Mail/Library Mail to fully cover its attributable costs in FY 2023. Id. He cautions, however, 

that the Postal Service must keep managing costs effectively. Id.

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 2022. Table III-6 contains the volume, unit 

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

Mail since FY 2018.

Table III-6

Media Mail/Library Mail Financial Results, FY 2018–FY 2022

Fiscal Year Volume 

(Millions)

Unit 

Revenue 

(Cents)

Unit 

Attributable 

Cost (Cents)

Unit 

Contribution 

(Cents)

Cost 

Coverage

FY 2018 79.0 350.1 456.4 -106.4 76.7%

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%

Source: Library Reference PRC-LR-ACR2022-6.

Although Media Mail/Library Mail covered only 91.3 percent of its attributable cost in 

FY 2022, as Table III-6 demonstrates, the product’s financial results have improved 

considerably over the last 5 fiscal years. Between FY 2018 and FY 2022, Media 

Mail/Library Mail’s unit revenue increased by 73.7 cents, which outpaced its unit cost 

increase of 7.8 cents over the same period, leading to an improved unit contribution of 65.9 

cents. This improved contribution is also reflected in the product’s cost coverage, which 

improved by 14.6 percentage points between FY 2018 and FY 2022. The Commission notes 
Docket No. ACR2022 - 60 -

that between FY 2021 and FY 2022 alone, unit contribution improved by 28.8 cents and 

cost coverage improved by 7.0 percentage points. The Commission also notes that although 

unit revenue, unit contribution, and cost coverage have all improved significantly since 

FY 2018, unit attributable costs have experienced more volatility over the same period and 

are an area where the Postal Service should focus efforts as it looks to improve the cost 

coverage for this product.

Table III-7 shows the history of price increases for Media Mail/Library Mail since the 

enactment of the PAEA. This table demonstrates that the Postal Service consistently 

increased the prices for Media Mail/Library Mail above the average price increase for the 

Package Services class. It also reflects that recent rate adjustments have resulted in larger 

price increases for the Media Mail/Library Mail product, which have substantially 

contributed to the recent increases in unit revenue, unit contribution, and cost coverage 

shown in Table III-6 above.

Table III-7

Media Mail/Library Mail Price Adjustment vs.

Package Services Price Adjustment

Docket No. Media Mail/Library Mail Price 

Adjustment

Package Services Price 

Adjustment

R2008-1 4.538% 2.875%

R2009-2 7.468% 3.800%

R2011-2 1.964% 1.740%

R2012-3 2.581% 2.115%

R2013-1 3.469% 2.567%

R2013-10 2.061% 1.453%

R2015-4 2.197% 1.787%

R2017-1 1.135% 0.973%

R2018-1 1.993% 1.960%

R2019-1 2.954% 2.522%

R2020-1 1.993% 1.892%

R2021-1 3.579% 1.460%

R2021-2 10.865% 8.804%

R2022-1 8.897% 8.511%

R2023-1 4.381% 4.197%

Source: Library Reference PRC-LR-ACR2022-6.

According to the Postal Service, it intends to continue applying above-average price 

increases to Media Mail/Library Mail. FY 2022 ACR at 44. The Commission notes that the 

Postal Service will be required to do so whenever it proposes price adjustments for the 

Package Services class, because Media Mail/Library Mail is now a non-compensatory 
Docket No. ACR2022 - 61 -

product in a compensatory class and is therefore subject to the requirements of 39 C.F.R. 

§ 3030.221.

The Commission finds that the FY 2022 revenue for Media Mail/Library Mail 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 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 2023 ACD.

Special Services

a. Introduction

As a class, Special Services covered its attributable cost in FY 2022 and had an overall cost 

coverage of 155.5 percent. Table III-8 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.88

Table III-8

Special Services Cost Coverage, FY 2018–FY 2022

Fiscal 

Year

Total 

Special 

Services 

Mail

Ancillary 

Services

International 

Ancillary 

Services

Address 

Management 

Services

Money 

Orders

Post 

Office 

Box 

Service

Stamp 

Fulfillment 

Services

FY 2018 131.0% 135.4% 114.9% 295.9% 108.1% 112.9% 87.4%

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%

Source: Library Reference PRC-LR-ACR2022-7.

As Table III-8 shows, the cost coverage for the Special Services class in FY 2022 was the 

highest it has been in the last 5 fiscal years, reflecting a trend of the class cost coverage 

improving year-over-year in most years. Table III-8 further illustrates that cost coverages 

for listed Special Services products except Money Orders are higher in FY 2022 compared 

to FY 2018, and that all listed products except Stamp Fulfillment Services had an increase 

in cost coverage between FY 2021 and FY 2022.

88 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-8 can be found in Library Reference PRC-LR-ACR2022-7.
Docket No. ACR2022 - 62 -

Money Orders is the sole Special Services product to fail to cover its attributable costs in 

FY 2022. Below, the Commission discusses the FY 2022 financial results for Money Orders 

in more detail.

b. Money Orders

Introduction

In FY 2022, the Money Orders product failed to cover its attributable cost. FY 2022 was the 

third consecutive year that Money Orders did not generate sufficient revenue to cover its 

attributable cost. See FY 2021 ACD at 69.

FY 2022 Results

In FY 2022, Money Orders had a cost coverage of 99.2 percent, an over 10 percentage point 

increase from the cost coverage of 88.5 percent in FY 2021. FY 2022 ACR at 46-47. The 

Postal Service states that although unit costs increased by 12.2 percent, unit revenue 

increased by 25.9 percent and unit contribution improved. Id. at 47. The Postal Service 

attributes the increase in unit contribution to price increases in Docket No. R2021-2 and 

Docket No. R2022-1 of 11.514 percent and 14.377 percent, respectively, as well as a 

reduction in debit card costs. Id.; Order No. 5937 at 123; Order No. 6188 at 97. The Docket 

No. R2021-2 and Docket No. R2022-1 price increases went into effect on August 29, 2021, 

and July 10, 2022, respectively. Order No. 5937 at 6; Order No. 6188 at 6. The Postal 

Service notes that Money Orders also received a price increase of 6.685 percent in Docket 

No. R2023-1, which went into effect on January 22, 2023, and which is expected to further 

decrease the gap between revenue and costs. FY 2022 ACR at 47; Order No. 6341 at 7, 99.

With respect to Money Orders’ unit costs increasing by 12.2 percent in FY 2022, the 

Commission notes that this increase occurred despite the fact that the Postal Service did 

not incur costs related to RHB in FY 2022. The Postal Service attributes the increase in unit 

costs to an increase in the total attributable cost of 4.3 percent and a decrease in volume of 

7.1 percent compared to FY 2021. Response to CHIR No. 3, question 1.a. The Postal Service 

states that Money Orders’ costs are primarily due to the cost of window service activities 

and debit card processing fees. Id. question 1.b. Window service activities costs increased 

by 6.7 percent in FY 2022 due in large part to a 4.5 percent increase in the wage rate for 

window clerks. Id. The Postal Service notes that in FY 2022, piggybacked window service 

costs were 73.2 percent of total Money Orders’ attributable costs and that these costs will 

continue to increase as wages rise. Id. The Postal Service further explains that supplies and 

services costs (e.g., the manufacturing and printing of Money Orders) and product specific 

costs attributed to Money Orders (e.g., software and compliance with the Bank Secrecy Act) 

increased in FY 2022 compared to FY 2021. Id.

The Postal Service notes that these cost increases were partially offset by an 11.7 percent 

decrease in unit debit card costs. Id. The Postal Service explains that debit card costs are 

the second largest contributor to Money Orders’ attributable costs, and that during 

FY 2022, the Postal Service entered into a new payment processor contract that would 

ensure transactions are routed to the lowest cost processing network. Id.
Docket No. ACR2022 - 63 -

The Postal Service states that because the attributable costs for Money Orders are 

primarily made up of window service costs and debit card costs, any effort to reduce costs 

should focus on these two cost drivers. Id. The Postal Service represents that it has agreed 

to explore initiatives to reduce window service costs by seeking opportunities to offer 

Money Orders more efficiently and will periodically negotiate debit card fees with debit 

card processing vendors. Id. However, the Postal Service also explains that it is challenged 

in its ability to reduce Money Orders’ unit costs by continued volume declines. Id. The 

Postal Service states that because Money Orders have “a material amount of product 

specific costs,” which are expected to rise with wages, declining volumes and higher 

product specific costs will likely cause future increases in unit costs. Id.

Comments on Money Orders

The Public Representative notes that the Money Orders product did not cover its 

attributable costs in FY 2022 although its cost coverage improved year-over-year. PR 

Comments at 12. He states that unit revenue, unit contribution, and unit costs for this 

product increased in FY 2022 while volumes declined. Id. at 12-13. He notes that based on 

the current trends for this product of revenue increases exceeding cost increases, Money 

Orders should fully cover its attributable costs in FY 2023. Id. at 13.

Commission Analysis

Money Orders provide customers with an instrument for payment of a specified sum of 

money, with a maximum value of $1,000. This product reliably covered costs until FY 2016 

but has exhibited inconsistent financial results in recent years. FY 2021 ACD at 70. Table 

III-9 shows the unit revenue, unit attributable cost, unit contribution, and cost coverage for 

the Money Orders product from FY 2018 through FY 2022.

Table III-9

Money Orders Financial Results, FY 2018–FY 2022

Fiscal 

Year

Unit 

Revenue 

(Cents)

Unit 

Attributable 

Cost (Cents)

Unit 

Contribution 

(Cents)

Cost 

Coverage

FY 2018 190.1 175.9 14.2 108.1%

FY 2019 200.5 190.1 10.4 105.5%

FY 2020 198.9 203.6 -4.8 97.7%

FY 2021 206.0 232.8 -26.8 88.5%

FY 2022 259.4 261.6 -2.2 99.2%

Source: Library Reference PRC-LR-ACR2022-7.

As Table III-9 shows, the FY 2022 cost coverage for Money Orders was 99.2 percent, a 

notable increase from the cost coverage of 88.5 percent in FY 2021. Between FY 2018 and 

FY 2021, unit contribution and cost coverage decreased every year with FY 2022 reversing 

those negative trends. Money Orders’ substantial improvement in FY 2022 was due 
Docket No. ACR2022 - 64 -

primarily to a 53.4 cent increase in unit revenue, which more than offset the 28.8 cent 

increase in unit attributable costs. Unit attributable costs increased year-over-year in each 

year between FY 2018 and FY 2022.

On October 20, 2022, the United States Postal Service Office of Inspector General (OIG) 

issued an audit report on Money Order trends and cost coverage with a particular focus on 

FY 2017 through FY 2021.89 In the report, the OIG describes several challenges for the 

Money Orders product. These include that customers can purchase Money Orders from 

other entities at lower prices, which may lead to further volume declines. OIG Report No. 

22-O57-R23 at 1, 3. As the Postal Service explained in the Response to CHIR No. 3, volume 

declines make reducing unit costs difficult, as product specific costs, such as the labor costs 

associated with complying with the Bank Secrecy Act continue to increase. Response to 

CHIR No. 3, question 1.b.

In addition, the OIG highlights that window service costs are the largest cost associated 

with Money Orders, ranging from 47.9 percent of total Money Orders cost in FY 2017 to 

55.7 percent of total Money Orders cost in FY 2021. OIG Report No. 22-O57-R23 at 5. In 

FY 2022, window service costs increased substantially to 73.2 percent of total Money 

Orders cost due primarily to a 4.5 percent increase in the wage rate for window clerks 

despite the fact that the Postal Service did not incur costs related to RHB in FY 2022. 

Response to CHIR No. 3, question 1.b. Given that window service costs will continue to 

increase with wages, the OIG recommended that the Postal Service develop initiatives to 

reduce window service costs. OIG Report No. 22-O57-R23 at 5. In response to the 

recommendation, the Postal Service agreed to explore initiatives to reduce window service 

costs and identify ways in which Money Orders could be more efficiently offered with a 

target implementation date of April 30, 2023. Id.

Although there was substantial improvement in the cost coverage for Money Orders in 

FY 2022, OIG Report No. 22-O57-R23 and the Response to CHIR No. 3, question 1.b. 

indicate that the Postal Service may face difficulties in continuing to drive improvements in 

the cost coverage of Money Orders.

The Commission finds that the FY 2022 revenue for Money Orders 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 increase the price of Money Orders by at least 2 percentage points 

above the class average in each Market Dominant rate adjustment affecting the Special 

Services class through the issuance of the FY 2023 ACD. The Commission encourages the 

Postal Service to continuously look for ways to reduce the unit costs of Money Orders. The 

Commission also directs the Postal Service to include a discussion of the initiatives identified 

in response to the OIG’s recommendation to reduce window service costs for Money Orders, 

including the current status of each initiative, in the FY 2023 ACR.

89 United States Postal Service, Office of Inspector General, Report No. 22-O57-R23, U.S. Postal Service Money Order Trends and Cost Coverage, 

October 20, 2022, available at https://www.uspsoig.gov/sites/default/files/reports/2023-01/22-057-R23.pdf (OIG Report No. 22-O57-R23).
Docket No. ACR2022 - 65 -

Fully Compensatory Class

First-Class Mail

a. Introduction

As a class, First-Class Mail covered its attributable costs in FY 2022 and had an overall cost 

coverage of 210.7 percent, which is an increase in cost coverage compared to 193.7 percent 

in FY 2021.

b. FY 2022 Results

Furthermore, each product within First-Class Mail covered its costs for FY 2022, which 

represents an improvement over FY 2021 when First-Class Mail Flats did not cover its 

attributable costs. Table III-10 provides the cost coverage for each First-Class Mail product 

as well as the overall class for the last 5 fiscal years.

Table III-10

First-Class Mail Cost Coverage, FY 2018–FY 2022

Source: Library Reference PRC-LR-ACR2022-3.

c. Comments

The Public Representative finds that First-Class Mail products overall covered their 

attributable costs in FY 2022. PR Comments at 5.

NAPM states that it would “like to see the Postal Service provide a description of initiatives 

specific to First-Class Mail Flats” since in many cases they “are processed separately from 

other types of flats, largely due to the service standards, and may have unique cost 

drivers[;] [hence,] [i]t is unclear how many of the initiatives laid out by the Postal Service 

for FY2023 apply to First-Class Mail operations.” NAPM Comments at 14. NAPM states that 

“there is a significant opportunity to reduce First-Class Mail Flats operational costs by 

making changes that move more pieces into the presort/commingle environment[,]” and it 

“encourages the Postal Service to work with the mailing industry to identify existing 

barriers and potential incentives that could be developed to move more [First-Class Mail] 

Flats into presort and reduce operating costs for those flats.” Id. As noted in Section 

Fiscal 

Year

First-Class 

Mail Overall

Single-Piece 

Letters/Postcards

Presorted 

Letters/Postcards Flats

Outbound 

Single-Piece 

International

Inbound 

Letter Post

FY 2018 205.1% 160.7% 309.8% 123.2% 142.0% 83.8%

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%
Docket No. ACR2022 - 66 -

III.C.1.a.(4), NAPM encourages the Postal Service to restart the Headquarters crossfunctional flats team as described above. Id. at 13; see Section III.C.1.a.(4), supra.

NPPC identifies specific First-Class Mail products for which it alleges that reported costs in 

FY 2022 are misleading due to the exclusion of RHB normal costs.90 NPPC notes that total 

First-Class Mail revenue increased in FY 2022 but asserts that this “occurred solely due to 

rate increases, as the Postal Service failed to encourage volume growth or even retention.” 

NPPC Comments at 12. NPPC highlights continued volume declines for First-Class Mail in 

FY 2022, including for Single-Piece Letters/Postcards, Presorted Letters/Postcards 

(including the 5-Digit Automation Letters price category), and First-Class Flats. Id. at 11-12. 

NPPC asserts that “[p]resort [m]ail continues to be the most efficiently prepared and lowcost mail in the system[,]” and “[t]he Postal Service should do more to encourage it to 

remain in the mailstream, not to drive it out through price increases or cuts in service 

standards.” Id. at 12.

PostCom, noting relatively high cost coverage levels for products such as First-Class 

Letters/Postcards, argues that users of these products are bearing an undue burden as a 

result of substantial rate increases, and suggests that “as the rate levels increasingly depart 

from the costs incurred in providing the[se] products, the question arises as to whether the 

Postal Service is maintaining a just and reasonable rate schedule.” PostCom Comments at 2.

d. Commission Analysis

The Commission finds that all First-Class Mail products covered their attributable costs in 

FY 2022.

As noted in Chapter I, there are significant challenges facing the Postal Service associated 

with the processing and delivery of flat-shaped mailpieces. The Commission is currently 

conducting a study concerning Flats operations in order to “comprehensively identify the 

causes of inefficiencies in the collection, sorting, transportation, and delivery of Flats” and 

allow the Commission to “quantify the effects of volume trends, investments decisions, 

excess capacity, and operational inefficiencies of the Postal Service on the direct and 

indirect costs of the Postal Service that are attributable to Flats.” See Chapter I, supra. The 

Commission findings must be submitted no later than April 6, 2023. Id. In addition, the 

Commission encourages the Postal Service to restart the Headquarters cross-functional 

flats team.

The Commission also noted that, to the extent that commenters discuss concerns related to 

the treatment of RHB normal costs in the FY 2022 cost data, those comments fall outside 

the scope of this proceeding. See id.

90 NPPC Comments at 4-5. These include First-Class Presorted Letters/Postcards, First-Class Single-Piece Letters/Postcards, and First-Class Flats. 

Id.
Docket No. ACR2022 - 67 -

The Commission encourages the Postal Service in future rate adjustment dockets to take into 

consideration the concerns expressed by mailers with respect to the effect of recent rate 

increases, particularly in regard to moving more mailpieces into presort categories.

e. Other Issues — First-Class Mail Non-Machinable 

Surcharge

In the FY 2021 ACD, the Commission addressed a request by the Greeting Card Association 

(GCA) that the Commission undertake further review pursuant to 39 C.F.R. § 3030.126(j) of 

the Commission’s approval of a 50 percent increase in the non-machinable surcharge for 

First-Class Mail Single-Piece Letters in Docket No. R2021-2. FY 2021 ACD at 72-75. The 

Commission balanced the relevant statutory objectives and factors from 39 U.S.C. § 3622(b) 

and (c) cited by GCA. These included objectives 2 (stable and predictable rates) and 8 (just 

and reasonable schedule for rates and classifications), as well as factor 3 (effect of rate 

increases). 39 U.S.C. § 3622 (b)(2), (b)(8), (c)(3). The Commission ultimately affirmed its 

decision from Docket No. R2021-2, concluding that there was no basis for finding the nonmachinable surcharge non-compliant with the relevant statutory provisions.91

In its comments in response to the Postal Service’s FY 2022 ACR, GCA continues to express 

concerns over the increase in the non-machinable surcharge for Single-Piece First-Class 

Letters. GCA contends that the non-machinable surcharge primarily affects personal 

correspondence. GCA Comments at 2-4. GCA invokes 39 U.S.C. § 101(a), which provides 

that “[t]he Postal Service shall have as its basic function the obligation to provide postal 

services to bind the Nation together through the personal, educational, literary, and 

business correspondence of the people.” (emphasis added). GCA argues that “[w]hen a 

postal rate impinges on personal correspondence alone, as the surcharge does, this basic 

obligation is not being observed.” GCA Comments at 3. GCA also continues to invoke 

objective 8 (39 U.S.C. § 3622(b)(8)), asserting that:

If one looks realistically at who the customer is—that is, if one does not 

define the customer solely by which operations (s)he requires the 

Postal Service to perform, but also considers the uses (s)he makes of 

the mail—it seems evident that the personal correspondence 

customer is being subjected to an unjust rate.

GCA Comments at 3-4 (emphasis on original).

Furthermore, GCA argues that “[a] tariff in which [p]ersonal [c]orrespondence is targeted 

by a surcharge bearing little relation to the cost the Commission accepts as justifying it is 

not an example of reasonably designed pricing.” Id. at 3. GCA asserts that in the FY 2022 

ACR, there has been a large decrease in the reported workshare-related mail processing 

cost for the Non-machinable Metered Letters price category, which “suggests that during 

the period when the non-machinable surcharge has been doubled, the cost of processing 

91 Id. For information related to the First-Class Mail non-machinable surcharge’s consistency with objectives 2 and 8 and factor 3, see FY 2021 

ACD at 73-75.
Docket No. ACR2022 - 68 -

non-machinable single-piece letters may have been substantially overestimated.” Id. at 4-5. 

GCA argues that “[s]ince the Commission found processing cost a significant factor in 

approving that surcharge, it seems necessary for the Commission to inquire into how this 

apparent overestimate came to occur and to view the current non-machinable surcharge 

(not to speak of any future increases in it) with considerable skepticism.” Id. at 5.

As an initial matter, the Commission does not accept the premise that the non-machinable 

surcharge “targets” “personal correspondence.” In FY 2022, non-machinable letters, 

meaning letters that could not be sorted on mail processing equipment due to irregular 

physical characteristics related to weight, rigidity, shape, or readability, and thus required 

manual handling, made up less than 1 percent of either stamped or metered Single-Piece 

First-Class Mail volume.92 Thus, no matter how one defines the portion of the First-Class 

mailstream constituting “personal correspondence,” the majority of it is machinable and 

hence not subject to the non-machinable surcharge. Furthermore, First-Class Mail is sealed 

against inspection, and the Postal Service would be unable to target the contents of a 

First-Class mailpiece as personal correspondence.

Moreover, in terms of assessing the cost to the Postal Service of handling non-machinable 

letters, the Commission finds that the relevant consideration is not simply the change in the 

reported unit processing cost for Non-machinable Metered Letters from year to year, but 

rather the difference between the total reported cost for handling Non-machinable Metered 

Letters compared to the total reported cost for handling Machinable Metered Letters. The 

only difference between these price categories is machinability, and the difference between 

them represents the cost of handling a non-machinable letter compared to a machinable 

letter. For FY 2022, the reported unit mail processing cost for Non-machinable Metered 

Letters was 31.099 cents higher than for Machinable Metered Letters.93 The reported unit 

delivery cost for Non-machinable Metered Letters was 13.555 cents higher than for 

Machinable Metered Letters.94 The reported unit collection cost was the same for both 

price categories.95 Thus, in total in FY 2022, Non-machinable Metered Letters cost on

average 44.654 cents more to process and deliver than Machinable Metered Letters.96 The 

non-machinable surcharge is currently 40 cents.97 This means that even with recent 

increases in the non-machinable surcharge, non-machinable letters still cost more to

92 Library Reference USPS-FY22-4, December 29, 2022, ZIP folder “FY22.4.MD.BD.Files.zip,” subfolder “Other MD BDs,” Excel file “FY2022 FCM 

BD.xlsx,” tab “A-1 Single-Piece Letters,” cells I12, I13, I20, I21.

93 Library Reference USPS-FY22-10, December 29, 2022, ZIP folder “FY22.10.Lttr.Model.Files.zip,” Excel file “USPS-FY22-10 FCM Letters.xlsx,” 

cells B11, B12.

94 Library Reference USPS-FY22-10, ZIP folder “FY22.10.Lttr.Model.Files.zip,” Excel file “USPS-FY22-10 FCM Letters.xlsx,” cells D11, D12.

95 Library Reference USPS-FY22-10, ZIP folder “FY22.10.Lttr.Model.Files.zip,” Excel file “USPS-FY22-10 FCM Letters.xlsx,” cells E11, E12.

96 For FY 2021, Non-machinable Metered Letters cost on average 50.553 cents more to process and deliver than Machinable Metered Letters. 

Docket No. ACR2021, Library Reference USPS-FY21-10, December 29, 2021, ZIP folder “FY21.10.Files.zip,” Excel file “USPS-FY21-10 FCM 

Letters.xlsx,” cells B11, B12, D11, D12. Prior to FY 2021, the Postal Service did not report separately on Non-machinable Metered Letters, so 

there are no relevant data to compare.

97 In Order No. 6341, the Commission approved the current non-machinable surcharge of 40 cents. Compare Single-Piece Machinable rates to 

Single-Piece Non-machinable rates, Order No. 6341, Attachment at 2-3. When GCA first raised this issue, the non-machinable surcharge was 30 

cents. Compare Single-Piece Machinable rates to Single-Piece Non-machinable rates, Order No. 5937, Attachment at 2-3.
Docket No. ACR2022 - 69 -

process and deliver than the Postal Service recovers after the non-machinable surcharge is 

applied. This undermines GCA’s contention that the non-machinable surcharge “bear[s] 

little relation to the cost the Commission accepts as justifying it.” GCA Comments at 3. 

Indeed, based on this analysis, the surcharge appears closely related to the cost of 

non-machinability, with the small difference between the two benefitting the nonmachinable letters customers.

More significantly, however, while the additional cost of handling non-machinable letters 

was certainly relevant to the Commission’s prior determinations with respect to the nonmachinable surcharge, it was far from the only consideration. As the Commission has 

explained, the modified system of ratemaking which the Commission adopted in Docket No. 

RM2017-3 was specifically designed to properly balance all of the statutory objectives and 

factors from 39 U.S.C. § 3622(b) and (c). Order No. 5763 at 260. As noted above, the 

Commission balanced certain objectives and factors raised by GCA related to the nonmachinable surcharge. FY 2021 ACD at 73-75.

GCA continues to maintain that the non-machinable surcharge is excessive and is targeted 

at “the personal correspondence customer;” thus, it is an unjust rate and inconsistent with 

objective 8. GCA Comments at 3-4. As demonstrated above, however, the non-machinable 

surcharge can hardly be said to be excessive in relation to the actual costs incurred by the 

Postal Service in processing non-machinable letters; nor can it be said to target personal 

correspondence, since the majority of personal correspondence is machinable and not 

subject to the surcharge. Moreover, there is no way to know with certainty if the majority 

of mail subject to the surcharge is actually personal correspondence since First-Class Mail 

is, by definition, sealed against inspection.

With respect to GCA’s invocation of 39 U.S.C. § 101(a), the Commission’s role in this 

proceeding is to determine “whether any rates or fees in effect...were not in compliance 

with applicable provisions of [chapter 36 of the United States Code] (or regulations 

promulgated thereunder).” 39 U.S.C. § 3653(b)(1). Section 101(a) does not fall within this 

scope of review of this proceeding. At most, section 101(a) could be considered as falling 

under factor 14 of the statutory objectives and factors for the Market Dominant ratemaking 

system (“the policies of this title,” 39 U.S.C. § 3622(c)(14)), but factor 14 is just one among 

many objectives and factors to be considered in conjunction with each other. The 

Commission does not find the general statement of policy contained in section 101(a) to 

outweigh the Commission’s detailed findings with respect to the other objectives and 

factors, including objectives 2 and 8, as well as factor 3.
Docket No. ACR2022 - 70 -

CHAPTER IV. COMPETITIVE PRODUCTS

Introduction

In this chapter, the Commission reviews Competitive products to determine whether any 

rates or fees in effect during FY 2022 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 2022 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 during 

FY 2022, thereby satisfying 39 U.S.C. § 3633(a)(1).

• Revenues for five Competitive products did not cover attributable costs and 

therefore did not comply with 39 U.S.C. § 3633(a)(2). The Competitive products that 

did not cover attributable costs are International Money Transfer Service—Inbound 

(IMTS—Inbound), International Money Transfer Service—Outbound (IMTS—

Outbound), Competitive International Ancillary Services, as well as two NSAs —

Priority Mail Contract 543 and Priority Mail Express International, Priority Mail 

International, First-Class Package International Service & Commercial ePacket 

Contract 5.

• Collectively, Competitive products satisfied the appropriate share requirement of 

39 U.S.C. § 3633(a)(3) during FY 2022.
Docket No. ACR2022 - 71 -

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, and compares 

those costs to the collective revenue generated by Competitive products. As long as the 

revenue from Competitive products exceeds those products’ incremental costs, the 

Commission can conclude that no cross-subsidization has occurred.98

Because the collective incremental costs of Competitive products are greater than the sum 

of the attributable cost of each product, using collective incremental costs raises the 

Competitive product cost floor when testing for cross-subsidization.99 Therefore, the 

incremental cost model applied at Competitive products’ group level provides a more 

rigorous test for determining compliance with 39 U.S.C. § 3633(a)(1) than the attributable 

cost coverage requirement of 39 U.S.C. § 3633(a)(2), which is applied at the product level.

Several commenters conclude that Competitive products were not subsidized by Market 

Dominant products in FY 2022, complying with 39 U.S.C. § 3633(a)(1).100 To the extent that 

commenters challenge Competitive product cost attribution,101 the Commission continues 

to note that the purpose of the ACD is to determine compliance with existing regulations 

using established methodology. See 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.102

In FY 2022, the incremental costs of Competitive products were $20.667 billion and the 

total revenues of Competitive products were $33.129 billion.103 Accordingly, in FY 2022, 

revenues from Competitive products exceeded incremental costs.

The Commission finds Competitive products satisfied 39 U.S.C. § 3633(a)(1) in FY 2022.

98 See Docket No. RM2007-1, Order Proposing Regulations to Establish a System of Ratemaking, August 15, 2007, at 65 (Order No. 26).

99 Docket No. RM2010-4, Order Accepting Analytical Principles Used in Periodic Reporting (Proposals Twenty-Two Through Twenty-Five), 

January 27, 2010, at 4-5 (Order No. 399).

100 See, e.g., Pitney Bowes Comments at 4-5; PR Comments at 24; NAPM Comments at 8.

101 See, e.g., TPA Comments at 1 (“According to TPA’s 2022 Postal Pricing Primer, “network travel” costs are correlated with increased package 

deliveries despite the agency’s refusal to attribute even a small share of these costs to parcels. Similar patterns can be seen across cost 

components evaluated by the USPS.”).

102 The Commission’s regulations permit any interested person to submit a petition to initiate a proceeding to “improve the quality, accuracy, or 

completeness of the data or analysis of data contained in the Postal Service’s annual periodic reports to the Commission[.]” 39 C.F.R. 

§ 3050.11(a).

103 See Library Reference PRC-LR-ACR2022-1, Excel file “FY22 Summary_NPLR-1.xlsx,” tab “Appendix A (Incremental Costs).”
Docket No. ACR2022 - 72 -

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 2022 financial performance for 

five separate Competitive product groupings:

• 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

• Competitive nonpostal services

Competitive Domestic Products with Rates of 

General Applicability

In FY 2022, there were 12 Competitive domestic products with rates of general 

applicability: Priority Mail Express; Priority Mail; Parcel Select; Parcel Return Service; 

First-Class Package Service; USPS Retail Ground; Address Enhancement Services; Greeting 

Cards, Gift Cards, and Stationery; Competitive Ancillary Services;104 Premium Forwarding 

Service; Post Office Box Service; and Shipping and Mailing Supplies.

The Commission finds that, in FY 2022, every Competitive domestic product with rates of 

general applicability covered its attributable cost105 and, thereby, satisfied the statutory 

requirements of 39 U.S.C. § 3633(a)(2).

Competitive Domestic Products Consisting of 

NSAs

As shown below in Figure IV-1, in FY 2022, there were 575 Competitive domestic products 

consisting of NSAs.106 Pursuant to 39 U.S.C. § 3633(a)(2), the Commission finds that all but 

one Competitive domestic NSA covered their attributable costs in compliance with this 

statutory requirement. The non-compliant Competitive domestic NSA in question, Priority 

Mail Contract 543, is being renegotiated with higher prices. FY 2022 ACR at 92. Although 

104 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 MCS § 2645, available at https://www.prc.gov/mail-classification-schedule.

105 See Library Reference PRC-LR-ACR2022-1, Excel file “FY22 Summary_NPLR-1.xlsx,” tab “Total All Mail Appendix A.”

106 The 575 products include agreements that were extended via amendment.
Docket No. ACR2022 - 73 -

four additional agreements had individual components that failed to cover attributable 

costs, each agreement covered its total attributable costs.107

Figure IV-1

Competitive Domestic NSA Products in Effect During FY 2022

a With the exception of NSAs entered into under the Priority Mail—Non-Published Rates (Priority Mail—NPR) product, each 

Competitive domestic NSA is a separate product.

b The Priority Mail—NPR product allows the Postal Service to enter into Priority Mail NSAs without filing the individual agreements with 

the Commission for pre-implementation review of each. Such contracts must comply with Commission classification and regulatory 

requirements, including preapproved pricing formulas, minimum cost coverage, and documentation.

Source: Library Reference USPS-FY22-NP27, December 29, 2022.

107 See Response to CHIR No. 6, question 2; Library Reference USPS-FY22-NP36, January 27, 2023.
Docket No. ACR2022 - 74 -

The Commission encourages the Postal Service to fully account for all of its active NSAs and 

remove inactive NSAs from the Competitive product list. The Postal Service continues to 

report financial data for NSAs utilizing observed data instead of projected data.108 The 

Commission notes that the Postal Service should increase the use of the most up-to-date 

observed data to estimate the costs of NSAs. The use of accurate data is essential to 

ensuring agreements are, and remain, in compliance with 39 U.S.C. § 3633(a)(2).

Multiple CHIRs were issued in this docket pertaining to domestic NSA Competitive 

products to clarify data. See, e.g., CHIR No. 4. The overall themes involved the need for 

further clarification of data due to insufficient source notes; reconciliation of values across 

various spreadsheets; and inquiries on several of the cost models that included new 

workbooks. See, e.g., CHIR No. 4, questions 5-10; CHIR No. 7, questions 8-10.

The Commission encourages the Postal Service to continue to improve the explanation of 

its NSA financial materials provided as part of its ACR. In particular, a detailed explanatory 

summary identifying any novel file, terminology, and methodology (or how an existing 

methodology was adapted or updated to suit current circumstances) should accompany all 

new workbooks filed in future ACRs to help facilitate and expedite the Commission’s 

review process by minimizing the need for additional CHIRs.

The need for additional CHIRs could be minimized by ensuring that the Commission has 

up-to-date records on active NSAs. The Commission regularly needs to resolve 

discrepancies between the list of NSAs for which the Postal Service reports financial 

performance in the ACR and the list of NSAs for which the Commission was expecting 

financial data to be filed. 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 in lists of docket numbers. See 

generally, e.g., Docket Nos. CP2013-45 and CP2020-52. To identify and correct such 

discrepancies more quickly, and to reduce the incidences of such discrepancies in future 

ACR filings, the Commission will require the Postal Service to file a quarterly summary 

spreadsheet listing active NSAs and noting all extensions, expirations, and early 

terminations. 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.

As it relates to new workbooks included by the Postal Service in Library Reference USPSFY22-NP27 that disaggregated costs for Priority Mail, Priority Mail—Non-Published Rates, 

& Parcel Select to finer levels, the Postal Service generally mentioned these new files in the 

preface to that library reference but, as described above, did not adequately explain the 

methodology used and how it was adapted. The Commission finds that the contents of the 

new files do not alter the final results of the FY 2022 cost files. Therefore, the Commission 

concludes that these new files do not represent a change in analytical principles and 

108 In the FY 2020 ACD, the Commission noted that “utilization of actual, rather than projected, data [would] lead to improved accuracy of the 

cost compliance calculations for these products.” FY 2020 ACD at 71 n.128.
Docket No. ACR2022 - 75 -

instead would be considered a change in quantification technique. The Commission 

reminds the Postal Service that, in accordance with 39 C.F.R. § 3050.2(a), the Postal Service 

is obligated, in its periodic reporting, to identify any input data or quantification techniques 

that changed from the prior year—including, but not limited to, the addition or deletion of 

files or tabs in library references.

The Commission finds that Priority Mail Contract 543 was not in compliance with 39 U.S.C. 

§ 3633(a)(2) in FY 2022. The Commission directs the Postal Service to renegotiate higher 

prices for that contract or terminate the contract.

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 such report due April 7, 2023, and the last such 

report due January 8, 2024. 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.

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); International Surface Air Lift (ISAL); Outbound SinglePiece First-Class Package International Service; Inbound Letter Post Small Packets and 

Bulky Letters; Inbound Parcel Post (at UPU rates); International Direct Sacks—Airmail MBags; IMTS—Outbound; IMTS—Inbound; and International Ancillary Services.

The Commission finds that three of these products, IMTS—Inbound, IMTS—Outbound, and 

International Ancillary Services, did not satisfy 39 U.S.C. § 3633(a)(2).109

a. International Money Transfer Service—Inbound

FY 2022 Results

In FY 2022, the IMTS—Inbound product110 did not cover its attributable cost. FY 2022 ACR 

at 95. The product likewise did not cover costs in FY 2021 and has been non-compensatory 

for more than a decade, except in FY 2013 when the Commission did not have sufficient 

information to determine its cost coverage.111 The Postal Service reports that the IMTS—

109 See FY 2022 ACR at 93-97. See also Library Reference USPS-FY22-NP2, December 29, 2022.

110 IMTS—Inbound provides a service to designated operators of foreign countries for payment of money orders to recipients in the United 

States. See MCS § 2625.

111 See FY 2012 ACD at 165; FY 2013 ACD at 84 (finding there was insufficient information to permit the Commission to determine whether the 

IMTS—Inbound product covered its attributable cost); FY 2014 ACD at 75; FY 2015 ACD at 84; FY 2016 ACD at 83; FY 2017 ACD at 86; FY 2018 

ACD at 108; FY 2019 ACD at 78; FY 2020 ACD at 73; FY 2021 ACD at 81.
Docket No. ACR2022 - 76 -

Inbound product’s reportable transactions and revenues declined between FY 2021 and FY 

2022. FY 2022 ACR at 97. The product earns revenue only from commissions paid by the 

foreign postal operator (FPO) that issued the IMTS—Inbound money order, and some 

agreements do not include a commission.112 The Postal Service acknowledges that the 

number of transactions were derived differently in FY 2022 than in FY 2021.113 In addition, 

the Postal Service reports that “[i]n FY 2022, there were increased costs in window 

services.” FY 2022 ACR at 95. Both of these factors affected the product’s cost coverage. Id.

As the Commission approved in Order No. 2825, costs are attributed to IMTS—Inbound 

through a hybrid methodology that uses a combination of IOCS costs to develop aggregate 

IMTS costs and a distribution of IMTS costs to IMTS—Inbound and IMTS—Outbound based 

on transaction volume.114 The Postal Service states that “IMTS aggregate cost estimates 

developed under either the strict IOCS or hybrid methods are subject to variation and wide 

confidence intervals” because there are few IOCS tallies due to IMTS’s low volume.115 The 

Postal Service states that in FY 2022 there were only seven IOCS tallies, two of which were 

for the IMTS—Inbound product. FY 2022 ACR at 95. The Postal Service represents that 

“achieving a robust number of IMTS tallies is expensive and unrealistic,” that “the hybrid 

model continues to be an improved costing method for IMTS compared to the strict IOCS 

method,” and that it “has not identified any alternative costing methods that could result in 

further improvements.” Response to CHIR No. 6, questions 1.a., 1.c. The Postal Service 

asserts that one clear benefit of the hybrid model is that “it ensures that separate volume

variable costs are estimated for both the separate MCS products – IMTS—Outbound and 

IMTS—Inbound.” Id. question 1.a.

The Postal Service states that it has attempted to address cost coverage issues by 

terminating or modifying IMTS—Inbound agreements. FY 2022 ACR at 96. For example, it 

highlights that it has taken steps towards terminating agreements with 13 FPOs.

116 In its 

Response to CHIR No. 11, the Postal Service confirms that it has not received any inbound 

international postal money orders since September 2022. Response to CHIR No. 11, 

question 2.

Comments

No comments were filed related to IMTS—Inbound.

112 IMTS—Inbound consists only of paper international postal money orders issued by certain FPOs. See FY 2022 ACR at 97. See also Response to 

CHIR No. 7, question 14.a.; Library Reference USPS-FY22-NP37.

113 See Response to CHIR No. 4, question 4.a.; Library Reference USPS-FY22-NP34, January 20, 2023.

114 See Docket No. RM2015-13, Order Approving Analytical Principles Used in Periodic Reporting (Proposal Five), November 19, 2015, at 10-12 

(Order No. 2825).

115 Response to CHIR No. 6, question 1.b. See FY 2022 ACR at 95 (citing Order No. 2825).

116 See FY 2022 ACR at 96-97. See also United States Postal Service, Postal Bulletin No. 22604, IMM Revision: Termination of International Postal 

Money Order Service, August 11, 2022, available at https://about.usps.com/postal-bulletin/2022/pb22604/html/updt_002.htm (Postal Bulletin

No. 22604); United States Postal Service, Postal Bulletin No. 22611, IMM Revision: Termination of International Postal Money Order Service for 

Trinidad and Tobago, November 17, 2022, available at https://about.usps.com/postal-bulletin/2022/pb22611/html/updt_005.htm (Postal 

Bulletin No. 22611).
Docket No. ACR2022 - 77 -

Previous ACD Directives

In its FY 2021 ACD, the Commission encouraged the Postal Service to continue its efforts 

towards terminating remaining agreements and directed the Postal Service to report the 

details of any agreement’s modifications, including the impact on the IMTS—Inbound 

product’s reportable transactions and revenues, as part of its filing in the instant docket. 

See FY 2021 ACD at 83. The Commission also directed the Postal Service to provide data on 

all foreign-issued money orders processed through the Federal Reserve Bank for payment 

in the United States in FY 2022, to the extent possible, as part of its FY 2022 ACR filing. Id. 

The data were to include details such as country of origin, number of paper and electronic 

money orders, whether they were issued by an FPO or other financial institution, the 

number of money orders cashed at Postal Service retail windows or at U.S. banks, and 

whether a fee or a commission was paid to the Postal Service. Id.

The Postal Service complied with these directives and provided these data with the FY 

2022 ACR. FY 2022 ACR at 97; see Library Reference USPS-FY22-NP2. The Postal Service 

did not provide information on money orders issued by other financial institutions because 

“IMTS—Inbound consists only of paper international postal money orders issued by 

certain foreign postal operators.” FY 2022 ACR at 97.

Commission Analysis

The Commission commends the Postal Service’s progress in terminating IMTS—Inbound 

agreements, including the latest termination of agreements with 13 FPOs that were 

announced or took effect in FY 2022.117 The Commission notes that as of January 2023, 

only Belize and Peru may issue international postal money orders destined for the United 

States.118

The Commission acknowledges the decreased number of reportable transactions that 

resulted in lower revenue in FY 2022 and notes that this decrease did not result in a 

decrease in the proportion of total IMTS costs distributed to the IMTS—Inbound product 

based on the approved methodology, which apportions total IMTS costs based on IMTS—

Inbound and IMTS—Outbound volume.119 However, the Commission reaffirms its 

conclusion that the approved methodology represents “a reasonable trade-off between the 

increased cost of expanded IOCS sampling to more reliably estimate attributable costs....”

120

The Commission notes that the low recorded revenue, coupled with a disproportionate 

increase in cost, results in IMTS—Inbound failing to achieve cost coverage.121

117 See FY 2022 ACR at 96-97. See also Postal Bulletin No. 22604; Postal Bulletin No. 22611.

118 See February 10 Response to CHIR No. 10, question 1.b. (citing United States Postal Service, Mailing Standards of the United States Postal 

Service, International Mail Manual, January 22, 2023, Exhibit 371.2, available at https://pe.usps.com/text/imm/immc3_018.htm).

119 This is due to the observed decrease in IMTS—Outbound pieces noted below.

120 Order No. 2825 at 10-11. See Response to CHIR No. 6, question 1.a. (quoting Order No. 2825 at 10-11).

121 See FY 2022 ACR at 95. See also Response to CHIR No. 4, question 4; Library Reference USPS-FY22-NP34.
Docket No. ACR2022 - 78 -

The Commission finds useful the additional data that the Postal Service provided in 

response to the FY 2021 ACD directives on all foreign-issued money orders processed 

through the Federal Reserve Bank for payment in the United States in FY 2022 as part of 

this filing.

The Commission finds that the IMTS—Inbound product was not in compliance with 39 U.S.C. 

§ 3633(a)(2) in FY 2022. The Commission encourages the Postal Service to continue its efforts 

towards termination of the remaining agreements comprising the IMTS—Inbound product 

during FY 2023. Should the progress towards this goal include modifications rather than 

terminations of international postal money order agreements, the Commission directs the 

Postal Service to report the details of any agreement’s modifications, including the impact on 

the IMTS—Inbound product’s reportable transactions and revenues, as part of its FY 2023 

ACR filing.

The Commission also directs the Postal Service to provide data on all foreign-issued money 

orders processed through the Federal Reserve Bank for payment in the United States in FY 

2023 as part of its FY 2023 ACR filing. These data shall include additional details, such as 

country of origin, number of paper and electronic money orders, and information on whether 

they were issued by an FPO or other financial institution (if any). These data shall also include 

information on the number of money orders cashed at Postal Service retail windows and those 

cashed at U.S. banks.

b. International Money Transfer Service—Outbound

FY 2022 Results

In FY 2022, the IMTS—Outbound product122 did not cover its attributable cost. FY 2022 

ACR at 95. This product also did not cover its attributable cost in FY 2021. FY 2021 ACD at 

86. In addition, this product has been compensatory in only 4 fiscal years during the last 

decade.123

The Postal Service reports an increase in window services costs for the entire IMTS 

product in FY 2022, but it again notes that the hybrid costing methodology for distributing 

IMTS costs to IMTS—Outbound and IMTS—Inbound approved in Order No. 2825 still 

results in cost variation. FY 2022 ACR at 95; see Order No. 2825 at 10-11.

The Postal Service notes that prices in the first quarter of FY 2022 predate the 15.8 percent 

increase for IMTS—Outbound implemented in January 2022.124 In addition, the Postal 

Service highlights that it increased prices for IMTS—Outbound by about 305 percent in July 

122 IMTS—Outbound enables customers in the United States to make payments or transfer funds to individuals or firms in foreign destinations. 

See MCS § 2620.

123 The IMTS—Outbound product did not cover its attributable cost in FY 2013, FY 2014, FY 2015, FY 2017, FY 2020, and FY 2021. See FY 2013 

ACD at 84; FY 2014 ACD at 75; FY 2015 ACD at 84; FY 2017 ACD at 86; FY 2020 ACD at 75; FY 2021 ACD at 86. It covered its attributable cost only 

in FY 2012, FY 2016, FY 2018, and FY 2019. See FY 2012 ACD at 165; FY 2016 ACD at 83; FY 2018 ACD at 104; FY 2019 ACD at 77.

124 FY 2022 ACR at 95 (citing Docket No. CP2022-22, Order Approving Changes in Rates of General Applicability for Domestic Competitive 

Products, December 21, 2021, at 4 (Order No. 6071)).
Docket No. ACR2022 - 79 -

2022, which it states “should lead to improvements in the financial performance of IMTSOutbound.”125

Comments

Only the Public Representative commented on the IMTS—Outbound product, noting that 

“[i]n response to the Commission’s directive in FY 2021 ACD (at 86) to address cost 

coverage, the Postal Service increased prices for IMTS-Outbound by about 305 percent in 

July 2022.” PR Comments at 25.

Previous ACD Directive

As part of the FY 2021 ACD, the Commission directed the Postal Service to propose price 

increases for the two components of the IMTS—Outbound product that more adequately 

reflect the impact that decreases in IMTS—Inbound transactions have on the proportions 

of total IMTS costs distributed to International Money Orders and Electronic Money 

Transfers, in its next request to adjust prices of general applicability for Competitive 

products. FY 2021 ACD at 86.

As noted by the Public Representative, the Postal Service complied with this directive in 

Docket No. CP2022-62 by increasing prices for IMTS—Outbound by about 305 percent. 

Order No. 6195 at 3.

Commission Analysis

The Commission observes a substantial decrease in IMTS—Outbound pieces from FY 2021 

to FY 2022.126 However, the magnitude of the decrease was not matched by an equally 

substantial decrease in volume-variable cost. See id. This underscores the shortcomings of 

the hybrid costing methodology and the Postal Service’s statement that “IMTS aggregate 

cost estimates developed under either the strict IOCS or hybrid methods are subject to 

variation and wide confidence intervals.”127

The Commission notes an improvement in IMTS—Outbound cost coverage from FY 2021 to 

FY 2022 and acknowledges the Postal Service’s assertion that the 15.8 percent price

increase for IMTS—Outbound that took effect in January 2022 was not in effect for the first 

quarter of FY 2022. However, the Commission points out that the 305 percent price 

increase for IMTS—Outbound, which took effect in July 2022, was in effect for most of the 

fourth quarter of FY 2022. While the Commission agrees that this price increase should 

have a positive impact on the product’s cost coverage in FY 2023, it is difficult to predict its 

impact given the high variation in IMTS costs.

125 FY 2022 ACR at 96 (citing Docket No. CP2022-62, Order Approving Changes in Rates and Classifications of General Applicability for 

Competitive Products, June 8, 2022 (Order No. 6195)).

126 See Docket No. ACR2021, Library Reference USPS-FY21-NP2, ICRA Core files, Excel file “Reports Unified.xlsx,” tab “A pages (c)”; Library 

Reference USPS-FY22-NP2, ICRA Core files, Excel file “Reports.xlsx,” tab “A pages (c).”

127 Response to CHIR No. 6, question 1.b. The Postal Service further notes that “the hybrid methodology does introduce stability to the estimate 

of volume variable costs for Sure Money that results in a material reduction in the variation of the cost estimate for IMTS – Outbound. The 

primary source of the reduction stems from applying a fixed transaction time to all Sure Money transactions. However, significant variation in 

IMTS product costs remain because of its reliance on a less than robust number of IOCS tallies that historically experience large percentage 

changes annually.” Id.
Docket No. ACR2022 - 80 -

The Commission finds that the IMTS—Outbound product was not in compliance with 39 U.S.C. 

§ 3633(a)(2) in FY 2022. The Commission encourages the Postal Service to monitor the 

impact of the price increases that took effect in July 2022 on the product based on information 

available before the Postal Service files its next request to adjust prices of general 

applicability for Competitive products and encourages the Postal Service to request further 

price increases as necessary based on its continued assessment of the impact of the July 2022 

price increases on the cost coverage of the IMTS—Outbound product.

c. International Ancillary Services

In FY 2022, the International Ancillary Services product did not cover its attributable 

cost.128 This product did not cover costs in 4 out of the 5 preceding fiscal years.129 More 

specifically, Inbound Competitive International Registered Mail did not cover its 

attributable cost in FY 2022, causing the International Ancillary Services product to be noncompensatory.130

Inbound Competitive International Registered Mail

(a) FY 2022 Results

The Postal Service attributed the continued negative contribution of Inbound Competitive 

International Registered Mail to an increase in cost combined with only a modest increase 

in pieces and revenue associated with Competitive International Registered Mail from 

FY 2021 to FY 2022. FY 2022 ACR at 93.

The Postal Service notes that the remuneration that it receives for the provision of 

registered mail service under Inbound Competitive International Registered Mail is 

governed by the Universal Postal Convention.131 In its discussion of cost coverage for 

Inbound Competitive International Registered Mail, the Postal Service lists current and 

future per-item UPU rates that increase each calendar year and initially states that these 

scheduled calendar year rate increases “should help to improve cost coverage.” FY 2022 

ACR at 94. However, in response to an information request, the Postal Service later

acknowledges that the scheduled rate increases “are probably not sufficient to mitigate any 

future increases in costs that may occur similar to increases in costs seen in FY 2022.”

128 FY 2022 ACR at 93. 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.

129 See FY 2017 ACD at 88; FY 2018 ACD at 108; FY 2020 ACD at 77; FY 2021 ACD at 88.

130 FY 2022 ACR at 93. The Competitive International Registered Mail component (MCS section 2615.2) of the International Ancillary Services 

product includes Inbound Competitive International Registered Mail and Outbound Competitive International Registered Mail. 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.

131 See FY 2022 ACR at 94 (citing Universal Postal Union (UPU), Second Additional Protocol to the Universal Postal Convention, Geneva 2019 

(Second Additional Protocol), Article 1 (Article 28 Amended), paragraph 8, available at 

https://www.upu.int/UPU/media/upu/files/aboutUpu/acts/08-

actsAndOtherDecisionsPreviousCongresses/actsOfTheExtraordinaryCongressGenevaEn.pdf). See also Acts of the Abidjan Congress 2021, August 

2021 (Acts of the Abidjan Congress), Article 28, paragraph 8, available at https://www.upu.int/UPU/media/upu/files/aboutUpu/acts/07-

actsAndOtherDecisions2021AbidjanCongress/actsAndOtherDecisions2021AbidjanCongressEn.pdf.
Docket No. ACR2022 - 81 -

Response to CHIR No. 4, question 1.b. The Postal Service explains that the scheduled annual 

rate increases average roughly 4.5 percent for the next several years, while the costs for 

Inbound Competitive International Registered Mail increased by about 6 percent in 

aggregate between FY 2021 and FY 2022. Id. The Postal Service further states that cost 

increases are highly dependent on inflation, which is difficult to predict. Id.

The Postal Service explains that it is reviewing various alternatives with the underlying 

objective to migrate registered items to the lower cost tracked offering. Id. question 1.a.

The Postal Service asserts that, if successful, “migration would not improve the cost 

coverage for Inbound Competitive Registered Mail, but it would improve its contribution 

due to lower volume.” Id.

The Postal Service suggests that the Commission should take a more holistic view of all 

inbound registered items, including items not under MCS section 2615.2 Competitive 

International Registered Mail, Inbound Competitive International Registered Mail. See FY 

2022 ACR at 94; see also Response to CHIR No. 4, question 1.c. The Postal Service provides 

a table in Library Reference USPS-FY22-NP2 demonstrating such a holistic approach, which 

includes information about MCS section 2615.2 Competitive International Registered Mail, 

Inbound Competitive International Registered Mail, as well as inbound registered items 

that were attributed to certain MCS section 2515.10 Inbound Competitive International 

Multi-Service Agreements with Foreign Postal Operators that were in effect in FY 2022.132

This table is similar to a table provided by the Postal Service in two filings in Docket No. 

ACR2021.133 The Postal Service notes that for cost calculations concerning inbound 

registered items, Postal Service data systems do not make any distinction among the 

various docket numbers offering inbound registered service. Response to CHIR No. 4, 

question 1.a. However, despite the usefulness of the holistic view in providing “a complete 

picture of cost coverage for inbound registered mail items,” the Postal Service states that it 

is not inclined to propose a reclassification of MCS section 2615.2 or any other agreements 

associated with inbound registered mail. Id. question 1.c.

(b) Comments

Only the Public Representative commented on Inbound Competitive International 

Registered Mail, noting the Postal Service’s discussion of the planned increases in per-item 

remuneration as a way to improve the cost coverage of Inbound Competitive International 

Registered Mail. PR Comments at 25. The Public Representative explains that the rates are 

set in Special Drawing Rights (SDR), which is a basket of currencies that the International 

Monetary Fund’s (IMF) Board of Directors reviews every 5 years. Id. He states that because 

the weight of the U.S. dollar in the SDR’s basket increased 1.65 percent in 2022, he 

anticipates that the Postal Service’s price increases for FY 2023 through FY 2025 will more 

effectively help Inbound Competitive International Registered Mail to cover its costs 

132 See FY 2022 ACR at 94-95. See also Library Reference USPS-FY22-NP2, ICRA Core Files, Excel file “Reports.xlsx,” tab “Registered Mail 

Summary.”

133 See Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-3 of Chairman’s Information Request No. 10, 

February 9, 2022, question 3.i. See also Docket No. ACR2021, Third Response of the United States Postal Service to Commission Requests for 

Additional Information in the FY 2021 Annual Compliance Determination, June 27, 2022, question 1.
Docket No. ACR2022 - 82 -

completely and suggests that the Postal Service consider the devaluation or revaluation of 

the U.S. dollar compared to the SDR to find a more effective price increase. Id. at 26.

The Postal Service responded that it does not have discretion to devalue or revalue the U.S. 

dollar compared to the SDR because the determination of exchange rates for Inbound 

Competitive International Registered Mail is governed by the UPU Convention 

Regulations.134 According to the Postal Service, it must use the data published by the IMF, 

and thus cannot deliberately suppress the exchange value of the U.S. dollar for purposes of 

improving the financial performance of inbound products. Postal Service Reply Comments 

at 19.

(c) Previous Commission Directives

As part of the FY 2021 ACD, the Commission directed the Postal Service to provide a 

detailed analysis of the current attribution of costs and revenues for inbound registered 

items that entered the Postal Service’s mail stream in FY 2021 under applicable MCS 

sections within 90 days of issuance of this ACD. FY 2021 ACD at 88.

The Postal Service complied with the Commission’s directive on July 27, 2022.135

(d) Commission Analysis

The Commission observes that the Postal Service has expressed its expectation for 

improved cost coverage for Inbound Competitive International Registered Mail based on 

calendar year increases in per-item UPU rates since at least FY 2017.136 Despite this 

expectation, the Commission notes that the cost coverage for Inbound Competitive 

International Registered Mail has been declining since FY 2018.137

Although the Commission finds the details provided in the table in Library Reference USPSFY22-NP2 referenced by the Postal Service as presenting a more holistic view to be useful 

as background information, the Postal Service has provided no explanation for why the 

Commission should consider revenue received under a separate product on the MCS to 

evaluate the financial performance of Inbound Competitive International Registered Mail. 

Ultimately the holistic view does not change the fact that the product at issue—i.e., MCS 

134 Postal Service Reply Comments at 18-19 (citing Regulations of the Universal Postal Convention, Article 17-002).

135 See Docket No. ACR2021, Library Reference USPS-FY21-NP45, July 27, 2022; Docket No. ACR2021, Responses of the United States Postal 

Service to Questions 1-3 of Chairman’s Information Request No. 33, July 27, 2022 (Docket No. ACR2021, Response to CHIR No. 33).

136 In FY 2017 through Postal Quarter 1 of FY 2020, Inbound International Registered Mail was included on the Market Dominant product list 

(MCS section 1510.2). Starting in Postal Quarter 2 of FY 2020 through the present, Inbound Competitive International Registered Mail is 

included on the Competitive product list (MCS section 2615.2). 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.

137 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; Library Reference PRC-LRACR2022-NP2.
Docket No. ACR2022 - 83 -

section 2615.2 (Competitive International Registered Mail, Inbound Competitive 

International Registered Mail)—does not cover its costs.

Relatedly, in Docket No. ACR2021, Response to CHIR No. 33, the Postal Service presented a 

new approach for distributing costs related to inbound registered items between MCS 

section 2615.2 (Competitive International Registered Mail, Inbound Competitive 

International Registered Mail) and certain agreements under MCS section 2515.10 

(Inbound Competitive International Multi-Service Agreements with Foreign Postal 

Operators). See Docket No. ACR2021, Response to CHIR No. 33, questions 1-2. The 

Commission views this approach as reasonable and encourages the Postal Service to 

continue with this approach until the Postal Service can identify a new methodology that 

would improve the accuracy of cost and revenue attribution for inbound registered items 

included under the applicable MCS sections.

The Commission confirms that rates for Inbound Competitive International Registered Mail 

are set in the UPU Convention and agrees with the Postal Service that it does not have the 

discretion to change the value of the U.S. dollar as compared to the SDR. Furthermore, the 

Commission finds it uncertain that the 1.65 percentage point increase noted by the Public 

Representative in the weight of the U.S. dollar in the SDR currency basket alone will make a 

material difference in cost coverage for Inbound Competitive International Registered Mail, 

as the value of the U.S. dollar is subject to variation.138 The Commission is interested in the 

Postal Service’s plans to migrate registered items to the lower-cost tracked offering and 

encourages the Postal Service to pursue this objective.

The Commission finds that the International Ancillary Services product was not in compliance 

with 39 U.S.C. § 3633(a)(2) in FY 2022 because one of its sub-components, Inbound 

Competitive International Registered Mail, did not cover cost. The Commission directs the 

Postal Service to produce in the FY 2023 ACR and in all future ACRs a table that includes 

revenue, pieces, volume-variable costs, product-specific costs, total costs, contribution, and 

cost coverage of inbound registered items under MCS section 2615.2 (Competitive 

International Registered Mail, Inbound Competitive International Registered Mail), as well as 

inbound registered items that were attributed to other products, including MCS section 

2515.10 (Inbound Competitive International Multi-Service Agreements with Foreign Postal 

Operators), that are in effect during the relevant fiscal year.

139

The Commission further directs the Postal Service to file an update on its efforts to move 

registered mail to a tracked offering within 180 days of the issuance of this ACD and in the FY 

2023 ACR. This filing should include a specific description of the Postal Service’s plan, 

including anticipated major milestones and progress toward achieving them.

138 The IMF described the increase in the weight of the U.S. dollar in the SDR currency basket in 2022 as modest and highlights that the ranking 

by weight of the five currencies in the SDR currency basket did not change from the 2015 valuation. International Monetary Fund, IMF Policy 

Paper: Review of the Method of Valuation of the SDR, May 16, 2022, at 19, available at file:///I:/PPEA2022020.pdf.

139 This would be an updated version of Library Reference USPS-FY22-NP2, ICRA Core Files, Excel file “Reports.xlsx,” tab “Registered Mail 

Summary.”
Docket No. ACR2022 - 84 -

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 

understanding that the Commission would evaluate whether each NSA covers its 

attributable cost.140 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-FY22-NP2. For FY 2022, the Postal Service provided data for 372 

international NSAs, 347 of which include negotiated rates for outbound mail and 25 of 

which include negotiated rates for inbound mail.141

The financial results for Competitive outbound and inbound international products 

consisting of NSAs are discussed below.

a. Competitive Outbound International Products Consisting 

of NSAs

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.142 Additional postal services may be available for products 

with rates and fees not of general applicability.143 Figure IV-2 shows the FY 2022 product 

category for each of these products for which the Postal Service reports FY 2022 financial 

results.

140 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).

141 Library Reference USPS-FY22-NP2; Library Reference PRC-LR-ACR2022-NP2. The Commission counts each serial-numbered agreement 

included under the Global Expedited Package Services—Non-Published Rates (GEPS—NPR) product as one NSA in this summary value.

142 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 minimums.

143 See, e.g., MCS section 2510.7.5 for additional services available to products included in the Global Reseller Expedited Package Contracts 

category.
Docket No. ACR2022 - 85 -

Figure IV-2

Competitive Outbound International Products by Category, FY 2022144

Source: See Library Reference USPS-FY22-NP2.

144 This figure includes outbound international products by product category for which the Postal Service reports financial results, for which 

there is a total of 293 agreements. It also includes 54 agreements with no recorded activity.
Docket No. ACR2022 - 86 -

The Postal Service reports financial results for each outbound international NSA within 

these product categories.145 In FY 2022, all but one outbound Competitive international 

NSA product covered their attributable costs. The only outbound Competitive international 

NSA product that did not cover its attributable cost was Priority Mail Express International, 

Priority Mail International, First-Class Package International Service & Commercial ePacket 

Contract 5. FY 2022 ACR at 97. The Postal Service states that this agreement expired on 

May 31, 2022, with no renewal. Id. The Postal Service highlights that this NSA had only a 

very small number of pieces in FY 2022, all in Postal Quarter 1, and fell short of covering its 

costs by only a trivial amount. Id.

The Commission finds that Priority Mail Express International, Priority Mail International, 

First-Class Package International Service & Commercial ePacket Contract 5 did not cover 

its attributable cost and thus did not comply with 39 U.S.C. § 3633(b) in FY 2022. No 

further action is needed, as the agreement expired on May 31, 2022 and was not renewed.

While all other Competitive outbound international NSAs covered their attributable cost, 

the Postal Service confirmed that it used provisional 2021 UPU quality-linked terminal 

dues rates for FY 2022 quarter 1 in its workpapers, instead of final 2021 quality-linked 

terminal dues rates that the UPU published on September 19, 2022. Response to CHIR No. 

4, question 2. The Postal Service explained that it did not use the final 2021 terminal dues 

rates because they were issued on September 19, 2022, and they had not been entered or 

billed at the time of closing the FY 2022 accounting books on September 30, 2022. Id.

The Commission understands that there was a short window of time between when the 

UPU issued the final 2021 terminal dues rates on September 19, 2022, and the closing of 

the Postal Service’s accounting books on September 30, 2022. However, the Commission 

notes that these final terminal dues rates were available for more than 3 months before the 

FY 2022 ACR was filed on December 29, 2022. The Commission acknowledges that the

difference between provisional and final terminal dues rates should not have resulted in 

any additional NSAs becoming non-compensatory. However, it is a long-standing practice 

in dockets before the Commission to use the most updated information.

The Commission also notes that the Postal Service included a file in Library Reference 

USPS-FY22-NP32 that altered ICRA unit costs used as input to the financial models for 

NSAs as a result of changes to zone-based pricing for PMI destined to Canada approved in 

Docket No. CP2023-42, but made no mention of the relevant computational change in the 

preface.146 The Commission finds that the content of the new file affects projections of cost 

coverage for certain NSAs filed in FY 2023 and therefore does not alter the results of the FY 

2022 ACD. The Commission reminds the Postal Service that before it can use the data 

145 In FY 2022, the Postal Service reports financial results for 293 outbound international NSAs and serial-numbered agreements. For the 

remaining 54 outbound international NSAs and serial-numbered agreements, the Postal Service reports no activity. See Library Reference USPSFY22-NP2.

146 See Library Reference USPS-FY22-NP32, January 12, 2023; Docket No. CP2023-42, Order Approving Price Adjustments for Competitive 

Products, December 22, 2022 (Order No. 6384).
Docket No. ACR2022 - 87 -

developed from this or another file in a manner that affects the data required in reporting 

on any product, it will need to request a change to the appropriate analytical principle(s). 

In addition, the Commission reminds the Postal Service that, in accordance with 39 C.F.R. 

§ 3050.2(a), in its periodic reporting it is obligated to identify any input data or 

quantification techniques that changed from the prior year—including, but not limited to, 

the addition or deletion of files or tabs in library references. In particular, a detailed 

explanatory summary identifying any novel file, terminology, and methodology (or how an 

existing methodology was adapted or updated to suit current circumstances) should 

accompany all new workbooks or changes to workbooks filed in future ACRs to help 

facilitate and expedite the Commission’s review process by minimizing the need for 

additional CHIRs.

The Commission concludes that Competitive outbound international products consisting of 

NSAs satisfied 39 U.S.C. § 3633(a)(2), except for one Competitive outbound international NSA 

in Docket No. CP2020-193 that did not cover its attributable cost. The Commission 

recommends that the Postal Service continually monitor the financial performance of each 

outbound international NSA and take steps to terminate or renegotiate agreements that are 

non-compensatory. The Commission also urges the Postal Service to update its accounting 

processes to ensure that the FY 2023 ACR includes all latest available terminal dues and other 

international delivery rates.

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 such report due April 7, 2023, and the last such 

report due January 8, 2024. 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 2022 financial results.
Docket No. ACR2022 - 88 -

Figure IV-3

Competitive Inbound International Products by Category, FY 2022147

Source: See Library Reference USPS-FY22-NP2.

The Postal Service reports financial results for each inbound Competitive NSA within these 

products.148 In FY 2022, each inbound Competitive international product and each inbound 

Competitive NSA within these products covered its attributable cost.

The Commission concludes that Competitive inbound international products consisting of 

NSAs satisfied 39 U.S.C. § 3633(a)(2) because revenue exceeded attributable cost for each 

product. The Commission recommends that the Postal Service continually monitor the 

financial performance of each inbound international NSA and take steps to terminate or 

renegotiate agreements that are non-compensatory.

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 such report due April 7, 2023, and the last such 

report due January 8, 2024. 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.

147 This figure includes inbound international products by product category for which the Postal Service reports financial results, for which there 

is a total of 16 agreements. For the remaining 9 inbound international NSAs, the Postal Service reports no activity. See Library Reference USPSFY22-NP2.

148 In FY 2022, the Postal Service reports financial results for 16 inbound international NSAs. See Library Reference USPS-FY22-NP2.
Docket No. ACR2022 - 89 -

Competitive Nonpostal Services

In FY 2022, Competitive Nonpostal Services149 generated $168.506 million in revenue and 

incurred $58.775 million in expenses, which resulted in contribution of $109.732 

million.150 This figure represents a 22 percent increase in contribution compared to FY 

2021 and an overall cost coverage of 286.7 percent.

The Commission concludes that Competitive Nonpostal Services satisfied 39 U.S.C. 

§ 3633(a)(2) because revenue exceeded the attributable cost for each product.

Appropriate Share 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.” 39 U.S.C. § 3633(b). 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 

2020 ACD that the appropriate share for FY 2022 would be 10.0 percent. FY 2020 ACD at 

93-95.

Order No. 4963 was appealed to the United States Court of Appeals for the District of 

Columbia Circuit, which, on April 14, 2020, remanded it to the Commission for clarification 

of particular aspects of the Commission’s interpretation of 39 U.S.C. § 3633. On November 

18, 2021, the Commission issued a Supplemental Notice of Proposed Rulemaking 

addressing the remanded issues, re-proposing the formula-based approach to determining 

149 The nine Competitive nonpostal products are: (1) Advertising; (2) Licensing of Intellectual Property other than Officially Licensed Retail 

Products (OLRP); (3) Mail Service Promotion; (4) Officially Licensed Retail Products (OLRP); (5) Passport Photo Service; (6) Photocopying Service; 

(7) Rental, Leasing, Licensing or other Non-Sale Disposition of Tangible Property; (8) Training Facilities and Related Services; and (9) USPS 

Electronic Postmark (EPM) Program. MCS § 2700.2.

150 Library Reference USPS-FY22-NP27, file “USPS_FY22_NP27_Preface.pdf.”

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).
Docket No. ACR2022 - 90 -

the appropriate share, and initiating the Commission’s third review of the appropriate 

share requirement. See generally Order No. 6043. 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 a final rule had been 

issued. FY 2020 ACD at 91. However, because the formula is recursive, the Commission 

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 the remand was being addressed. Id.

On January 9, 2023, the Commission issued a final order addressing the remanded issues, 

completing its third review of the appropriate share requirement, and re-adopting the 

formula-based approach to determining the appropriate share.152 On January 10, 2023, UPS 

filed a petition for review of Order No. 6399 in the United States Court of Appeals for the 

District of Columbia Circuit.153 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 2022. However, the 

Commission will continue to perform the relevant calculations to avoid any disruption in 

the formula’s operation while the appeal of Order No. 6399 is ongoing.

Comments on Appropriate Share Provision

The Postal Service asserts that the total Competitive product contribution for FY 2022 was 

$12.462 billion, or 38.1 percent of total institutional costs, an amount that complies with 

the requirements of 39 U.S.C. § 3633(a)(3).154

The Public Representative, Pitney Bowes, GCA, and NAPM all concur that Competitive 

products were in compliance with 39 U.S.C. § 3633(a)(3) for FY 2022.155

However, TPA, “express[ing] concern that parcel pricing does not fully account for 

attributable and institutional costs[,]” asserts that the Postal Service “fails to explain why 

38.1 percent coverage is adequate when competitive products comprise roughly 55 

percent of total mail weight and recent fleet purchases are specifically designed to 

accommodate large parcels.” TPA Comments at 1.

In reply, the Postal Service asserts that TPA’s arguments have been rejected previously and 

that TPA “fails utterly to offer any serious basis to question the sufficiency of the magnitude 

152 See 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).

153 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.

154 FY 2022 ACR at 98-100. The FY 2022 ACR originally reported a negative institutional cost. However, in Docket No. RM2023-2, the Commission 

approved a change in analytical principles that impacted the calculation of institutional cost for FY 2022. See generally Order No. 6459. The 

resulting change yielded a positive institutional cost value of $32.706 billion. FY 2022 ACR at 100; see Library Reference PRC-LR-ACR2022-1, 

Excel file “FY22 Summary LR-1.xlsx,” tab “Total All Mail (Appendix A).”

155 See, e.g., Pitney Bowes Comments at 4-5; GCA Comments at 7; NAPM Comments at 7-8.
Docket No. ACR2022 - 91 -

of the contribution to institutional cost recovery made by competitive products in FY 

2022.” Postal Service Reply Comments at 9-10.

Commission Analysis

a. FY 2022 Appropriate Share

In FY 2022, the total institutional costs of the Postal Service were $32.706 billion. FY 2022 

ACR at 100. In FY 2022, the total contribution made by Competitive products collectively to 

institutional costs was $12.462 billion (approximately 38.1 percent of total institutional 

costs), which would have met either the 5.5 percent requirement or the formula-derived 

10.0 percent requirement.156 Therefore, the Postal Service was compliant with 39 U.S.C. 

§ 3633(a)(3).

Assertions like the one made by TPA were thoroughly addressed in Docket Nos. RM2017-1 

and RM2022-2, in which the Commission explained why it finds such assertions regarding 

the formula-based appropriate share requirement unpersuasive. Order No. 6399 at 177-

225. Additionally, pursuant to 39 U.S.C. § 3633(a)(3), the minimum amount that 

Competitive products must contribute to the Postal Service’s institutional costs is 

determined by the Commission. See 39 U.S.C. § 3633(a)(3). The Postal Service is not 

required to justify Competitive product contribution in relation to other factors such as 

Competitive products’ percentage of total weight or recent fleet purchases. Pursuant to 

39 U.S.C. § 3633(a)(3) and 39 C.F.R. § 3035.107(c), the Postal Service’s Competitive 

products need only contribute more than the minimum contribution requirement 

prescribed by the rules.

The Commission finds that in FY 2022 Competitive products satisfied 39 U.S.C. 

§ 3633(a)(3) by covering an appropriate share of the Postal Service’s institutional costs.

b. FY 2023 Appropriate Share

The formula-based approach to determining the appropriate share is recursive. Each year

when conducting its 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 2021, which was carried out during FY 2022, the 

Commission applied the formula and determined that the appropriate share for FY 2023 

would be 10.4 percent. FY 2021 ACD at 97-100.

c. FY 2024 Appropriate Share

In this section, the Commission applies the formula to determine that the appropriate share 

for FY 2024 under the formula-based approach would be 9.9 percent. The formula and the 

calculation are explained in greater detail below.

156 See Library Reference PRC-LR-ACR2022-1, Excel file “FY 22 Summary LR-1.xlsx,” tab “Total All Mail (Appendix A).”
Docket No. ACR2022 - 92 -

The first component of the formula is the Competitive Contribution Margin, which is 

calculated as follows:

Competitive Contribution Margin =

Total Revenue − Total Attributable Cost

Total Revenue

Order No. 4963 at 23. “Total attributable cost” refers to the cost incurred by the Postal 

Service in producing Competitive products collectively. Id. at 23-24. “Total revenue” refers 

to the total amount of revenue that the Postal Service is able to realize from its Competitive 

products collectively. Id. at 24.

The second component of the formula is the Competitive Growth Differential, which is 

calculated as follows:

Competitive Growth Differential = Market ShareUSPS ∗ (%∆RevenueUSPS − %∆RevenueC&M)

Order No. 4963 at 25. “Market ShareUSPS” refers to the Postal Service’s share of the overall 

parcel delivery market, expressed as a percentage. It “is determined by dividing the Postal 

Service’s total competitive product revenue by the sum of the Postal Service’s total 

competitive product revenue” and the total revenue earned by the Postal Service’s 

competitors collectively, as represented in the following equation:

Market ShareUSPS =

RevenueUSPS

RevenueUSPS + RevenueC&M

Id. at 25 n.54. “%∆RevenueUSPS” refers to the percentage change in the Postal Service’s total 

real Competitive product revenue compared to the previous year. Id. at 25. 

“%∆RevenueC&M” refers to the percentage change in the total real revenue earned by the

Postal Service’s competitors collectively compared to the previous year. Id.

With the forgoing component values, the appropriate share for a given fiscal year can be 

calculated using the formula re-adopted by the Commission in Order No. 6399. Specifically, 

the formula is:

ASt+1 = ASt ∗ (1 + %∆CCMt−1 + CGDt−1

)

If t = 0 = FY 2007, AS = 5.5%

Where,

AS = Appropriate Share

CCM = Competitive Contribution Margin

CGD = Competitive Growth Differential

t = Fiscal Year

Id. at 26. “ASt” refers to the appropriate share value for the fiscal year during which an ACD 

proceeding is being conducted. Since the ACD is conducted after the close of each fiscal 
Docket No. ACR2022 - 93 -

year, this will always be the fiscal year immediately following the fiscal year under review. 

For example, this ACD evaluates compliance for FY 2022 but is being conducted in FY 2023 

and, as it relates to the formula, is being used to determine what the appropriate share will 

be in FY 2024. “ASt−1” refers to the appropriate share value from the fiscal year being 

evaluated during an ACD proceeding (for purposes of the present analysis, this is FY 2022). 

“ASt+1” refers to the appropriate share value for the fiscal year after the fiscal year during 

which an ACD proceeding is being conducted (for purposes of the present analysis, this is 

FY 2024).

For the Competitive Contribution Margin, in FY 2022, the total Competitive product 

revenue was $33.129 billion. The FY 2022 total attributable cost incurred in producing 

Competitive products was $20.667 billion. Therefore, the Competitive Contribution Margin 

value was:

$33.129 billion−$20.667 billion

$33.129 billion

= 0.376,

representing a 2.4 percent decrease from FY 2021.157

For the Competitive Growth Differential, the Commission calculates the revenue growth 

rates for both the Postal Service and its competitors in FY 2022. In FY 2021, the Postal 

Service’s total real Competitive product revenue was $26.194 billion, while in FY 2022 it 

was $23.472 billion. The percentage change from FY 2021 to FY 2022 was negative 10.4 

percent. In FY 2021, the total real revenue earned by the Postal Service’s competitors 

collectively was $102.469 billion, while in FY 2022 it was $104.964 billion. The percentage 

change from FY 2021 to FY 2022 was 2.4 percent. The Postal Service’s market share in the 

base year was 20.4 percent. The Competitive Growth Differential value for FY 2022 was 

thus:

20.4% ∗ (−10.4% − (2.4%)) = −2.6%.

See Library Reference PRC-LR-ACR2022-8.

When the component values are plugged into the formula, the result is:

10.4% ∗ (1 + (−2.4%) + (−2.6%)) = 9.9%.

Therefore, the appropriate share requirement for FY 2024 would be 9.9 percent under the 

formula-based approach.

157 The following calculations can also be found in a library reference accompanying this Report. See Library Reference PRC-LR-ACR2022-8, Excel 

file “PRC-ACR2022-Appropriate Share Calculation.xlsx,” tab “Competitive Contribution Margin,” cells B17, C17.
Docket No. ACR2022 - 94 -

Pilot Program – Gift Cards

In FY 2021, the Postal Service initiated a pilot program (Pilot Program) to allow postal 

retail customers to use payroll and business checks to purchase stored value Gift Cards.158

The Pilot Program began on September 13, 2021, at four Post Office retail locations in 

response to a request from a postal union that identified the program as “an initiative that 

could potentially be useful for a segment of consumers...."159 Under the program, a 

customer is charged a fee of $5.95 for a variable Gift Card up to $500 (or $5.95 per Gift 

Card, if the customer elects to put the value on multiple cards). See id. questions 1.d., 1.h. 

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. From September 13, 2021, to 

September 30, 2022, a total of seven Gift Cards were purchased under the Pilot Program, 

generating a total fee revenue of $41.65. Response to CIR No. 1, questions 1.a.-b. The last 

sale occurred in FY 2022 Quarter Two (January 1, 2022 to March 31, 2022).160

The Commission first inquired about the Pilot Program in the FY 2021 ACD.161 The Postal 

Service represented that no new products or services were involved in the program and 

that the focus of the program was the limited acceptance of an additional form of 

payment.162 The Postal Service asserted that the Pilot Program was intended to “assess 

consumer usage and hence whether there is a benefit to the communities involved, 

operational capacities, number of business and payroll checks cashed, and funds 

transferred to a gift card.” Docket No. ACR2021, Response to CIR No. 1, question 1.l. 

However, the Postal Service stated that it did not track whether Gift Cards are mailed, 

regardless of the payment type. Id. question 2.b. In addition, it ascertained that all 

transactions at that point had been solely for the purchase of Gift Cards using business and 

payroll checks and did not involve the sale of other items such as postage, stationery, or 

greeting cards. Docket No. ACR2021, Response to CIR No. 2, question 2.

The Postal Service also provided that no plans had been made regarding potential surveys 

or other means to determine whether a customer purchasing a Gift Card under the Pilot 

Program would be likely to mail it. Id. question 3.a. The Postal Service further stated that it 

158 Gift Cards is a price category within the Greeting Cards, Gift Cards, and Stationery product. See MCS § 2610. The Commission and the Postal 

Service have both referred to Gift Cards as a product in multiple filings, and for the purposes of this discussion, the Commission will continue to 

do so throughout this section to avoid confusion.

159 See Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-2 of Commission Information Request No. 1, January 

14, 2022, questions 1.a.-b. (Docket No. ACR2021, Response to CIR No. 1). The four locations are: Baychester Post Office, 1525 E Gun Hill Road, 

Bronx, NY 10469; Bailey Crossroads Post Office, 6021 Leesburg Pike, Falls Church, VA 22041; National Capital (Dorthey Height) Post Office, 2 

Massachusetts Avenue NE, Washington, DC 20002; and Baltimore Post Office, 900 E Fayette Street, Baltimore, MD 21233. Docket No. ACR2021, 

Response to CIR No. 1, question 1.a.

160 See Docket No. ACR2021, Second Response of the United States Postal Service to Commission Requests for Additional Information in the FY 

2021 Annual Compliance Determination, May 10, 2022, at 11.

161 Docket No. ACR2021, Commission Information Request No. 1, January 7, 2022; Docket No. ACR2021, Commission Information Request No. 2 

and Notice of Filing Under Seal, January 28, 2022 (Docket No. ACR2021, CIR No. 2).

162 Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-7 of Commission Information Request No. 2, February 4, 

2022, question 6 (Docket No. ACR2021, Response to CIR No. 2).
Docket No. ACR2022 - 95 -

would continue to monitor the program and noted that its decisions or plans regarding 

terminating, changing, or expanding the program were pending evaluation of the program, 

even though the original schedule proposed an end date in March 2022. See id. questions 

1, 7.

Although the Postal Service asserted that no new products or services are involved in the 

Pilot Program, market research suggested that the program was targeted specifically at a 

market looking for financial services. Docket No. ACR2021, Response to CIR No. 1, question 

1.b. In addition, the Postal Service’s own promotional materials marketed the program 

using the language “Need to ‘cash’ a check?”163 The Commission previously approved the 

Postal Service’s sale of Gift Cards as a product that was “likely to be mailed, similar to 

greeting cards and stationery” and was often involved in the sale of other postal retail 

products such as greeting cards.164 In the FY 2021 ACD, the Commission explained that 

changes in the marketing and planned usage of the product have the potential to change 

the nature of the product, and noted that questions remained as to whether the Pilot 

Program represented a change in the use or nature of the Gift Cards product that may 

require additional classification action. FY 2021 ACD at 102-03.

The Commission directed the Postal Service to report quarterly information on the Pilot 

Program, including updates on volume and revenue, as well as future plans for the Pilot 

Program as long as it remained in effect. Id. at 103. The Commission also directed the Postal 

Service to file a notice of termination with the Commission when the Pilot Program ends, 

including notification no later than 14 days after the publication of the ACD whether the 

Postal Service is continuing the Pilot Program past its initially anticipated end date of 

March 2022. Id. The Commission stated that if the Pilot Program remained in effect after 

March 2022, the Commission would initiate a Mail Classification proceeding to explore and 

review the issues related to the Pilot Program. Id.

In response to the directive, the Postal Service stated that it continued the Pilot Program 

and “[n]o final determinations have been reached with regard to ending the pilot, or with 

regard to any other potential steps that might be taken to modify the pilot.”165 The Postal 

Service further stated that it “remains of the view that the pilot program is an appropriate 

and limited test of an alternative payment method for the established gift card product, 

which does not implicate the current Mail Classification Schedule, and that no further 

regulatory action is warranted at this time.” Id. The Postal Service filed four quarterly 

reports concerning the Pilot Program in Docket No. ACR2021, with the most recent filing 

163 See Docket No. ACR2021, Response to CIR No. 2, PowerPoint file “CIR.2.Q.4.Pictures of Promo Items.pptx.”

164 See Docket No. MC2014-26, Request of the Postal Service to Add Gift Cards as a New Price Category in the Greeting Cards and Stationery 

Product, June 9, 2014, Attachment B at 7. See also Docket No. MC2014-26, Order Granting Request to Add Gift Cards to the Competitive 

Product List, August 8, 2014 (Order No. 2145).

165 Docket No. ACR2021, First Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2021 

Annual Compliance Determination, April 12, 2022, at 2.
Docket No. ACR2022 - 96 -

on February 9, 2023.166 The Postal Service reported fee revenue for one gift card under the 

Pilot Program in March 2022 and continuously stated that no determinations for future 

plans had been made concerning the Pilot Program.

On May 16, 2022, the Commission initiated Docket No. MC2022-60.167 In Order No. 6174, 

the Commission sought to further explore whether the Pilot Program changed the nature of 

the Gift Card product to the degree that the product (or an undefined sub-component of the 

product) may be categorized as a non-postal product. Order No. 6174 at 2. The Commission 

appointed a Public Representative to represent the interests of the general public and 

invited comments from interested parties. Id. at 6. The American Bankers Association, the 

American Postal Workers Union, AFL-CIO, Mailers Hub, the Association for Postal 

Commerce, the Postal Service, and the Public Representative provided comments.168 As 

part of that proceeding, the Postal Service asserted that a new payment method does not 

change the nature of the product and there was no need for the Commission to conduct 

further proceedings on this matter. Docket No. MC2022-60, Postal Service Comments at 1-

2. Although some commenters agreed with the Postal Service, one commenter stated that 

the Postal Service conducted a market test without necessary regulatory authority and 

others argued that the Pilot Program was a test of a new nonpostal service which should be 

terminated.169

In its FY 2022 ACR, the Postal Service did not provide any information about the Pilot

Program. However, in response to CIRs, the Postal Service states, “there have been no 

modifications made to the pilot program” and confirms that Gift Cards can still be 

purchased under the Pilot Program as of February 2023. Response to CIR No. 1, question 7; 

Response to CIR No. 3, question 3. The Postal Service further states that it has not 

considered expanding the testing of this form of payment to any other Postal Service 

product and it “has not implemented testing of other payment acceptance methods,” but it 

“will continue to explore alternative payment options.” Response to CIR No. 1, question 8.

The Commission also learned that, in February 2022, the Postal Service developed a 

product roadmap for the Pilot Program that included “lessons learned, potential expansion 

166 Docket No. ACR2021, Second Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2021 

Annual Compliance Determination, May 10, 2022, at 11; Docket No. ACR2021, Fourth Response of the United States Postal Service to 

Commission Requests for Additional Information in the FY 2021 Annual Compliance Determination, August 9, 2022, at 11; Docket No. ACR2021, 

Fifth Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2021 Annual Compliance 

Determination, November 9, 2022, at 11; Docket 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, at 12.

167 Docket No. MC2022-60, Notice and Order Concerning Potential Modification of Special Services on the Competitive Product List, May 16, 

2022 (Order No. 6174).

168 Docket No. MC2022-60, Comment of American Bankers Association (ABA), June 30, 2022 (Docket No. MC2022-60, ABA Comments); Docket 

No. MC2022-60, American Postal Workers Union, AFL-CIO’s Public Comment, July 7, 2022 (Docket No. MC2022-60, APWU Comments); Docket 

No. MC2022-60, Comments of Mailers Hub, July 7, 2022 (Docket No. MC2022-60, Mailers Hub Comments); Docket No. MC2022-60, Comments 

of the Association for Postal Commerce, July 7, 2022 (Docket No. MC2022-60, PostCom Comments); Docket No. MC2022-60, Comments of the 

United States Postal Service, July 7, 2022 (Docket No. MC2022-60, Postal Service Comments); Docket No. MC2022-60, Public Representative 

Comments, July 7, 2022 (Docket No. MC2022-60, PR Comments).

169 See Docket No. MC2022-60, ABA Comments; Docket No. MC2022-60, APWU Comments; Docket No. MC2022-60, Mailers Hub Comments; 

Docket No. MC2022-60, PostCom Comments; Docket No. MC2022-60, PR Comments.
Docket No. ACR2022 - 97 -

into target markets, location, price, and alternative verification processes.”170 The roadmap 

raises further questions about whether the Pilot Program changes the nature of the Gift 

Card product.171

In response to questions about the evaluation of the Pilot Program, the Postal Service 

asserts that the initiation of Docket No. MC2022-60 has created “uncertainty” for the 

program and that a “regulatory framework” is needed to evaluate the future of the 

program. Response to CIR No. 1, question 3.c. This assertion is a departure from the Postal 

Service’s prior stance that it intended to assess consumer usage of the program and 

benefits to relevant communities served by the Pilot Program. See Docket No. ACR2021, 

Response to CIR No. 1, question 1.l. In addition, the Postal Service previously stated that the 

Commission’s review of its Pilot Program was “unnecessary” because the Pilot Program is 

merely testing a new form of payment for an established postal product and is not a new or 

experimental product itself. Id. question 1.c.

The Commission finds the Postal Service’s change in position perplexing. The Commission 

notes that neither the FY 2021 ACD directive noted above nor Order No. 6174, both of 

which simply seek information, preclude the Postal Service from filing a proper request 

with the Commission. If the Postal Service requires a clear “regulatory framework” to 

continue the Pilot Program, it may seek it from the Commission using the appropriate 

proceeding. Therefore, the Postal Service is encouraged to submit a filing, with robust 

specificity as to its plans for the Pilot Program and the regulatory framework it requires, in 

either Docket No. MC2022-60 or through the initiation of a new docket.

Furthermore, the development of a “product” roadmap, which includes plans for further 

geographic expansion as well as other proposed changes to the Pilot Program, coupled with 

the prior marketing materials that advertised the Pilot Program as a way “to ‘cash’ a check” 

raise a question as to whether the Pilot Program is merely a test of an alternative payment 

method. To better understand the Pilot Program as well as understand whether there has 

been a change in the use or nature of the Gift Card product beyond its intended use, the 

Commission will continue to monitor the Pilot Program while it remains in operation.

The Commission also will further explore the Gift Card product to assess customer usage 

and its nexus to the mail (i.e., whether Gift Cards are likely to be mailed or involved in the 

sale of other postal retail products). In seeking the addition of Gift Cards to the Competitive 

product list, the Postal Service provided periodic reports and survey results regarding 

purchasers’ use of Gift Cards. See Order No. 2145 at 12. Specifically, these tools confirmed 

expectations that a majority of Gift Cards are mailed and sales of Gift Cards fostered the use 

of the mails. Id. In the order, the Commission also noted the similarity of Gift Cards to Postal 

170 Response to CIR No. 1, question 7. Despite a January 2022 inquiry regarding expansion of the Pilot Program and the FY 2022 ACD directive 

requiring the Postal Service to report “future plans for the Pilot Program as long as it remains in effect,” the Commission only learned of the 

product roadmap in response to its recent information request. See Docket No. ACR2021, CIR No. 2, question 1; Docket No. ACR2021, Response 

to CIR No. 2, question 1; FY 2021 ACD at 103.

171 See Library Reference USPS-FY22-NP40, February 15, 2023.
Docket No. ACR2022 - 98 -

Service money orders, which were long regarded as a postal service on the basis that 

money orders are likely to be mailed. Id.

In response to inquiries about the Pilot Program, the Postal Service stated that it does not 

track whether Gift Cards, regardless of payment type, are mailed. Because it is unclear 

whether Gift Cards are likely to be mailed or are otherwise involved in the sale of other 

postal retail products, the Commission will seek further information about the Gift Card 

product as a whole to evaluate whether there has been a change in the use or nature of the 

Gift Card product beyond its intended use.

The Commission reiterates that changes that have an impact on a product’s use or 

classification must be filed with the Commission because the Commission regulates what 

products may be offered and the Commission controls the addition and removal of 

products through the MCS. See FY 2021 ACD at 103. The Postal Service should not be 

making unilateral decisions on what is, or is not, a new or experimental product. Pursuant 

to 39 C.F.R. part 3045 and 39 U.S.C. § 3641, any market test for an experimental product, 

including services ancillary to only Competitive products, must be first reviewed and 

approved by the Commission at least 30 days before initiating such tests. See 39 C.F.R. 

pt. 3045; 39 U.S.C. § 3641.

The Commission directs the Postal Service to report quarterly information on the Pilot 

Program and the Gift Card product as a whole.172 The report shall be filed in Docket No. 

MC2022-60 and shall 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. The 

report 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). Finally, 

the report must include any plans for modifications or other future plans of the Pilot Program 

or Gift Card product, including any plans for termination of the Pilot Program.

172 Chairman Kubayanda and Commissioner Poling do not agree with including the Gift Card product as a whole in this directive.
Docket No. ACR2022 - 99 -

Interagency Agreements

Pursuant to a new requirement enacted by the PSRA, the Postal Service must submit a 

report to the Commission demonstrating that any nonpostal services in effect during the 

fiscal year under review comply with the requirements of chapter 37 of Title 39 of the 

United States Code. See 39 U.S.C. § 3705(a)(1). Because the PSRA was enacted on April 6, 

2022 (during FY 2022 Quarter 3), the Postal Service’s first report responsive to this new 

statutory requirement was due December 29, 2022, covering FY 2022.

Specifically, 39 U.S.C. § 3703 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. 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 no agreements with state, local, or 

tribal governments were in effect in FY 2022. FY 2022 ACR at 102.

Additionally, the PSRA 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[173], 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 service174 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 2022 

under 39 U.S.C. chapter 37] were with federal agencies under preexisting Section 411 

authority.” FY 2022 ACR at 102.

As required by 39 U.S.C. § 3705, the Postal Service reported on costs and revenue for the 

interagency agreements (IAAs) that were in effect during FY 2022.175 The Postal Service 

provided rate information required by 39 U.S.C. § 3705(a)(1) in response to CHIR No. 5. 

Response to CHIR No. 5, questions 5-7; Library Reference USPS-FY22-NP35. In response to 

CHIR No. 10, the Postal Service publicly reported the number of agreements, revenue, costs, 

and contribution for the program in FY 2022.176 As shown in Figure IV-4, in total, there 

173 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 U.S. Government, as those terms are defined in 5 U.S.C. 

chapter 1. 5 U.S.C. § 105.

174 See infra Section V.A.5. regarding quality of service.

175 Id.; Library Reference USPS-FY22-NP27, file “USPS_FY22_NP27_Preface.pdf,” at 5.

176 See February 10 Response to CHIR No. 10, questions 8, 11; id. Excel file “FY22.IAA.Table.ChIR.10.Q.8.Redacted.xlsx.”
Docket No. ACR2022 - 100 -

were 114 IAAs in effect in FY 2022. The program as a whole brought in $1.463 billion in 

revenue and incurred $873 million in costs, for a contribution of $590 million.

Figure IV-4

Interagency Agreements in Effect During FY 2022

Source: February 10 Response to CHIR No. 10, question 11.

Given that reporting requirements applied to IAAs were new for FY 2022, the Commission 

expects that, in the future, all information required by 39 U.S.C. § 3705(a)(1)177 will be 

provided along with the ACR and that fewer information requests will need to issue to 

obtain the statutorily mandated information.

In response to CHIR No. 5, the Postal Service provided disaggregated and agreementspecific information under seal. See Response to CHIR No. 5, questions 5-7; Library 

Reference USPS-FY22-NP35. Subsequently, in response to CHIR No. 10, the Postal Service 

explained its rationale for requesting non-public treatment of that information.178 The 

Postal Service asserts that disaggregated cost, revenue, and contribution information 

should remain under seal, consistent with 39 U.S.C. § 410(c)(2), which protects the Postal 

Service from having to disclose “information of a commercial nature, including trade 

secrets, whether or not obtained from a person outside the Postal Service, which under 

good business practice would not be publicly disclosed.” See id.

The Postal Service explains that each category of the IAAs is “vulnerable to actual or 

potential competition and is the subject of arms-length negotiations with the other 

agencies as each agreement is pursued.” February 10 Response to CHIR No. 10, questions 

177 See infra Section V.A.5. regarding quality of service.

178 See February 10 Response to CHIR No. 10, questions 8.b.i.-iii.; February 24 Supplemental Response to CHIR No. 10, question 9.b.; March 6 

Supplemental Response to CHIR No. 10, question 9.b. (amplifying rationale for requesting non-public treatment specific to each category of 

agreement).
Docket No. ACR2022 - 101 -

8.b.i.-iii. Thus, “if [this] information...were to be disclosed publicly, the Postal Service 

considers it quite likely that it would suffer commercial harm.” Id. Additionally, some 

information may also constitute proprietary information of the third-party agencies with 

whom the Postal Service has entered into the agreements. Id. questions 9.b.i.-iv. Upon 

request, the Postal Service provided redacted (public) versions of the IAAs that were in 

effect during FY 2022, as well as the top-line figures concerning the total revenue, cost, and 

contribution associated with all IAAs in the aggregate displayed above.179

Whenever the Postal Service seeks non-public treatment of information appearing in future 

filings related to IAAs, the Commission expects that Postal Service will file a fully supported 

application for non-public treatment along with redacted (public) versions of the nonpublic materials at issue, consistent with the Commission’s rules. See 39 C.F.R. §§ 3011.200 

et seq. If filing a redacted (public) version of each IAA is impracticable due to the quantity 

of substantially similar agreements, the Postal Service may file a motion seeking to submit 

a sample redacted (public) version for each category.

As noted above, 39 U.S.C. § 3704 requires that the IAA program as a whole provide 

contribution to the Postal Service, i.e., reimbursement that covers at least 100 percent of 

the costs attributable.180 Through several CHIRs, the Commission sought information in 

order to better understand the underlying cost models and methodologies used by the 

Postal Service in calculating and distributing costs to IAAs.181 Based on the Postal Service’s 

responses,182 it appears that the underlying cost models and methodologies employed by 

the Postal Service are, in some instances, underdeveloped. Nevertheless, for purposes of 

the first 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 2022 exceeded the 

total estimated cost associated with providing such services, which complies with 39 U.S.C. 

§ 3704.

Consistent with 39 U.S.C. § 3705(b)(2), as the Commission works to implement the 

provisions of new chapter 37 of Title 39 of the United States Code, the Commission 

recognizes that there is a need to establish an accepted methodology (or methodologies) 

for calculating the revenue and attributable costs associated with IAAs entered into by the 

Postal Service as authorized under 39 U.S.C. §§ 3703 and 3704 in the future.

179 See February 24 Supplemental Response to CHIR No. 10, question 9.b.; March 6 Supplemental Response to CHIR No. 10, question 9.b. For 

two categories, lease agreements and contracting services, the Postal Service submitted one redacted sample version of an agreement that is 

representative of the category as a whole. See 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) (approving the Postal Service’s request to submit 

one redacted sample version of an agreement for these categories).

180 39 U.S.C. § 3704. The Commission notes that agreements with any agency of any state, local, or tribal government entered into pursuant to

39 U.S.C. § 3703(a) must also provide a net contribution to the Postal Service. 39 U.S.C. § 3703(a)(2).

181 See CHIR No. 2, question 7; CHIR No. 5, question 7; CHIR No. 10, questions 11-21.

182 See Response to CHIR No. 2, question 7; Response to CHIR No. 5, question 7; February 10 Response to CHIR No. 10, questions 11-21.
Docket No. ACR2022 - 102 -

Consistent with 39 U.S.C. § 3705(b)(2), the Commission directs the Postal Service to develop a 

proposed methodology (or methodologies) for calculating and attributing costs and revenue 

to interagency agreements authorized under 39 U.S.C. §§ 3703 and 3704. The Postal Service 

shall initiate a rulemaking proceeding (or proceedings) concerning such methodology (or 

methodologies) in accordance with 39 C.F.R. § 3050.11 no later than May 31, 2023.
Docket No. ACR2022 - 103 -

CHAPTER V. SERVICE PERFORMANCE

Service Performance Results

Introduction

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.183 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). These service 

standards were to be established “by regulation” and “in consultation with the Postal 

Regulatory Commission.” Id. The Postal Service was permitted “from time to time 

thereafter by regulation [to] revise” these standards.184 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 2007.185 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.”186 The Postal Service has since revised these standards several 

times, including by lengthening the service standards for First-Class Mail and end-to-end 

Periodicals by up to two days, effective October 1, 2021 (the beginning of FY 2022)187 and 

183 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).

184 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).

185 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).

186 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.

187 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 
Docket No. ACR2022 - 104 -

most recently by changing the critical entry times (CETs) for certain categories of 

Periodicals, effective January 29, 2023 (Quarter 2 of FY 2023).188

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.189 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 explains 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.”190

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 Delivering for America (DFA) 

plan. See Library Reference USPS-FY22-29 Preface at 4-5. 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 95 percent target goal. Id. However, it notes that some targets are already set at 

95 percent while others will reach this level over the next few years. Id. at 5.

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. Previously, the Postal Service requested that the Commission render an advisory opinion regarding the “Mail 

Processing Network Rationalization” initiative beginning in FY 2012 and the “Standard Mail Load Leveling” initiative beginning in FY 2014. See

Docket No. N2012-1, Advisory Opinion on Mail Processing Network Rationalization Service Changes, September 28, 2012 (Docket No. N2012-1,

Advisory Opinion) (analyzing the Postal Service’s proposed changes to the service standards for multiple Market Dominant mail classes); Docket 

No. N2014-1, Advisory Opinion on Service Changes Associated with Standard Mail Load Leveling, March 26, 2014 (Docket No. N2014-1, Advisory 

Opinion) (analyzing the Postal Service’s proposed changes to the manner of processing and dispatching Standard Mail (now referred to as 

“USPS Marketing Mail”) dropped off at Destination Sectional Center Facilities on Fridays and Saturdays).

188 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).

189 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[]”).

190 Library Reference USPS-FY22-29, December 29, 2022, PDF file “PREFACE folder FY22-29.pdf,” at 5 (Library Reference USPS-FY22-29 Preface).
Docket No. ACR2022 - 105 -

Figure V-1 categorizes Market Dominant products according to whether or not they 

achieved their annual service performance targets for FY 2022.

Figure V-1

Market Dominant Products Service Performance Results, FY 2022

Source: Library Reference USPS-FY22-29, PDF file “FY22-29 Service Performance Report.pdf,” at 3-4, 9, 17, 30 (FY 2022 Service Performance 

Report).

To put these results into context, this chapter begins with an overview of the factors in 

FY 2022 that affected the service performance of all Market Dominant products. Next, the 

Commission describes the systems the Postal Service uses to measure service performance 

for Market Dominant products. Then, the Commission discusses the Postal Service’s 

FY 2022 service performance results by class of mail.

M r c ar 

 r a Ma 

 Single Piece Le ers/Postcards 

(2 Day)

 Presort Le ers/Postcards 

(Overnight; 2 Day; 3 5 Day)

 Mar Ma 

 High Density and Satura on Le ers

 Carrier Route

 Le ers

 Parcels

 r ca 

 In County

 Outside County

 ac a r c 

 Bound Printed Ma er Parcels

 c a r c 

 Interna onal Ancillary Services

 Money Orders

 Stamp Ful llment Services

 a M ar 

 r a Ma 

 Single Piece Le ers/Postcards 

(3 5 Day)

 Flats 

(Overnight; 2 Day; 3 5 Day)

 Outbound Single Piece Interna onal 

(Combined)

 Inbound Le er Post 

(Combined)

 Mar Ma 

 High Density and Satura on Flats/Parcels

 Flats

 Every Door Direct Mail Retail

 ac a r c 

 Bound Printed Ma er Flats

 Media Mail/Library Mail

 c a r c 

 Ancillary Services

 Post O ce Box Service
Docket No. ACR2022 - 106 -

Issues Affecting Service Performance for All 

Market Dominant Products in FY 2022

a. Overview

During FY 2020 and FY 2021, 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 FY 2021 ACD at 

108. While the worst of these impacts abated in FY 2022, these factors continued to have 

some effect on the Postal Service’s Market Dominant service performance results. 

Moreover, as in previous years, because these issues in large part overlapped, their 

combination exacerbated the extent and duration of the individual impacts. Each of these 

factors are discussed in detail below.

b. Reduced Employee Availability

The Postal Service explains generally that the impact of the COVID-19 pandemic on 

employee availability has lessened in FY 2022 when compared to FY 2021. Response to 

CHIR No. 3, question 12.b. Moreover, it states that, because of “conversions and hiring,” 

mail processing staffing was greater for most months in FY 2022.191 Nevertheless, 

according to the Postal Service, “[a]lthough the employee availability shortages caused by 

the coronavirus omicron variant began to subside after Q1 of FY 2022,” staffing 

challenges—particularly an inability to hire part-time workers—have persisted due to the 

national labor shortage.192

Figure V-2 presents overall employee availability by month for FY 2020, FY 2021, and 

FY 2022.

191 Id. “Conversions” refers to the process under which the Postal Service allows pre-career employees who remain employed for two years to 

be automatically transitioned to career status. See Response to CHIR No. 7, questions 29 a.-b.

192 See FY 2022 ACR at 54-55; FY 2022 Service Performance Report at 6.
Docket No. ACR2022 - 107 -

Figure V-2

Employee Availability, by Month, FY 2020–FY 2022

Source: Response to CHIR No. 3, question 3, Excel file “ChIR.3.Q.3.FY22_EmployAvailblty.xlsx;” 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 (Docket No. ACR2021, Response 

to CHIR No. 6), Excel file “ChIR.6 Q.4_Data_ChIR.1 Q.13b.xlsx” (Docket No. ACR2021, Response to CHIR No. 6); Docket No. ACR2020, Responses 

of the United States Postal Service to Questions 1-7, 10-20 of Chairman’s Information Request No. 6, February 4, 2021, question 2, Excel file 

“Q.2 Employee Availability Data.xlsx” (Docket No. ACR2020, February 4 Response to CHIR No. 6).

On average, employee availability decreased in FY 2022 compared to both FY 2020 and FY 

2021. In FY 2022, the Postal Service reported average employee availability of 75.95 

percent, 1.61 percentage points less than in FY 2020, and 0.2 percentage points less than in 

FY 2021. However, in FY 2022, employee availability improved compared to FY 2021 in 7 

months out of the year. For all 3 years, the maximum employee availability occurred in 

March, with employee availability at approximately 80 percent. In FY 2022, the minimum 

employee availability occurred in January at 71.39 percent, while in both FY 2020 and FY 

2021, the minimum employee availability occurred in July, at 73.63 percent and 72.95 

percent availability, respectively. Id.

Figure V-3 displays employee availability in FY 2022 by function: mail processing (Function 

1), delivery services (Function 2), and customer service (Function 4).
Docket No. ACR2022 - 108 -

Figure V-3

Employee Availability, by Function, by Month, FY 2022

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: Response to CHIR No. 3, question 3, Excel file “ChIR.3.Q.3.FY22_EmployAvailblty.xlsx.”

Figure V-3 provides insight into the fluctuation of employee availability, at the national 

level, throughout FY 2022. 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), delivery services 

(Function 2) and customer service (Function 4) were most challenged during January 

2022.

In addition to this national reduction in employee availability, the Postal Service refers to 

“numerous pockets of hot spots at different times.” Response to CHIR No. 6, question 3. The 

Postal Service explains that if one geographic hot spot has insufficient employee availability 

to clear the mail, mail destined for any number of downstream facilities will be delayed. Id. 

However, the Postal Service notes that “the prevalence of employee availability hot spots 

has abated as the effects of COVID-19 have lessened.” Id.

The Postal Service has previously explained that monthly employee availability of less than 

70 percent can be “empirically [ ] most effective [in] distinguishing particularly-challenged 

Districts....”193 Figure V-4 presents districts that experienced more than 1 month of 

employee availability below 70 percent during FY 2022.

193 Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-16 of Chairman’s Information Request No. 11, February 

11, 2021, question 13.b.
Docket No. ACR2022 - 109 -

Figure V-4

Districts with Multiple Months of Employee Availability Below 70 Percent, FY 2022

WESTSHORES DISTRICT PUERTO RICO DISTRICT

Processing

January 2022 - 67.46% January 2022 - 69.98%

July 2022 - 68.74% July 2022 - 67.72%

WESTPAC DISTRICT NEW YORK METRO DISTRICT

Logistics

January 2022 - 53.85%

Processing

January 2022 - 63.78%

October 2021 - 52.38% July 2022 - 68.02%

SOUTHWEST DISTRICT LAKESHORES DISTRICT

Logistics

January 2022 - 67.70%

Processing

January 2022 - 67.75%

February 2022 - 68.51% July 2022 - 69.27%

SOUTHERN DISTRICT CHESAPEAKE DISTRICT

Retail & Delivery

July 2022 - 67.91%

Processing

January 2022 - 65.78%

October 2021 - 62.38% July 2022 - 69.87%

SOUTHEAST DISTRICT

Logistics

January 2022 - 63.93%

Processing

January 2022 - 65.72% November 2021 - 68.62%

July 2022 - 69.43%

Source: Response to CHIR No. 3, question 4.a., Excel file “ChIR.3 Q4 – Available by Month.xlsx.”

In FY 2022, fewer districts experienced monthly employee availability below 70 percent 

than in FY 2021. Nine districts experienced multiple months of employee availability below 

70 percent, but no district experienced more than 2 months of employee availability below 

70 for any function. The WestPac District experienced the lowest employee availability 

during FY 2022 with January availability at 53.85 percent and October availability at 52.38 

percent. January was a particularly challenging month for the Postal Service with 8 districts 

reporting employee availability below 70 percent.

The Postal Service is unable to quantify the impact of employee availability on service 

performance. Response to CHIR No. 6, question 4. 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.”194 It states 

that, though staffing levels for pre-career employees remained consistent in most areas of 

194 Response to CHIR No. 7, questions 29.a.-b. “Through the collective bargaining process, the Postal Service negotiated a provision that 

provides a path to career employment for all pre-career employees who remain in [the Postal Service’s] employ for 24 months. The current 

agreements allow pre-career employees, who stay employed with the Postal Service for two years, to be automatically converted to career 

status.” Id.
Docket No. ACR2022 - 110 -

the country, some regions experienced local staffing shortages “where the labor market for 

temporary workers were impacted by factors such as low unemployment, high cost of 

living, and low labor force participation.” Id. In order to mitigate these shortages, the Postal 

Service asserts that it attempted to stabilize its career workforce by negotiating a collective 

bargaining agreement under which pre-career employees who remain employed for 24 

months are automatically converted to career status, including 48,000 such employees in 

FY 2022. Id. The Postal Service also explains that it worked with the National Association of 

Letter Carriers to identify “‘pockets’ of hard to hire” in 237 locations, after which the 

parties negotiated joint Memoranda of Understanding allowing for the external hire of 

3,500 new employees to career positions. Id. Additionally, the Postal Service asserts that it 

increased its recruitment efforts generally. Id.

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.195 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.196 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.197 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 2022 ACR at 49. As such, the Postal Service 

asserts that it is working to optimize “surface transportation to increase service reach, 

enable efficient surface routes, increase capacity utilization, and achieve operating plans.” 

FY 2022 Service Performance Report at 6. In this vein, in order to promote a shift from air 

to surface transportation, it implemented new service standards for certain First-Class Mail 

and Periodicals. Id. It states that it is also “focus[ed] on merging letter and flat products into 

streamlined, shape-based mailflows as opposed to class-based mailflows” in an effort to 

“increase density in containers and trucks and facilitate greater use of ground 

transportation.”198 The Postal Service also explains that local Divisions have been working 

with Headquarters Logistics to optimize surface transportation schedules, including by 

195 See, e.g., FY 2021 ACD at 112-17; FY 2020 ACD at 108-16; FY 2019 ACD at 106-12, 119-21.

196 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. Postal Service Glossary of Postal Terms.

197 United 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."); see also 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).

198 Library Reference USPS-FY22-29, PDF file “Division Reports – December 2022.pdf,” at 2 (FY 2022 Division Report).
Docket No. ACR2022 - 111 -

identifying “opportunities to create new service-responsive surface lanes to reduce 

reliance on the air network.” FY 2022 Division Report at 3-4. Additionally, according to the 

Postal Service, “[t]rue transit-related root cause[] failures such as contractor failures are 

shared by the Divisions in order to develop mitigation plans.” Id. at 3.

Though the Postal Service states that the COVID-19 pandemic challenged the Postal 

Service’s ability “to secure highway contract routes,” it maintains that the driver shortage 

in early FY 2022 did not actually impact its attempts to shift volume from air to surface 

transportation. See FY 2022 ACR at 54-55; Response to CHIR No. 7, question 29.c. The 

Postal Service notes that air volume was reduced by approximately 50 percent in FY 2022, 

primarily by shifting it to existing surface transportation. Response to CHIR No. 7, question 

29.c. It also explains that “Freight auction”—a system in which the Postal Service can 

digitally retain ad hoc transportation—was “used to backfill omitted service and 

supplement in cases where suppliers required additional time to acquire assets or staffing 

needed to support new or modified contracts.” Id. question 29.c.ii.

The Postal Service tracks surface trips that arrive more than 4 hours late, referred to as 

Critically Late Trips (CLTs).199 “The CLT is identified by [comparing] the actual arrival scan 

[to the] scheduled arrival scan at the destination facility.”200

Figure V-5 illustrates the number of CLTs for First-Class Mail on Highway Contract Routes 

(HCRs) on an annual basis for FY 2020, FY 2021, and FY 2022.

199 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.

200 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.; see 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. ACR2022 - 112 -

Figure V-5

First-Class Mail CLTs for HCRs, by Area and Nation, FY 2020–FY 2022

Source: Library Reference USPS-FY22-29, Excel file “CLT FY22 11.20.2022.xlsx;” Library Reference USPS-FY21-29, December 29, 2021, Excel 

file “FY21 FCM Q3 CLT.xlsx,” tab “FY21;” Library Reference USPS-FY20-29, December 29, 2020, Excel file “FY20 FCM Q3 CLT Natl Area 

Dist.xlsx,” tab “4.c.3 CLT;” Docket No. ACR2019, Library Reference USPS-FY19-29, December 27, 2019, Excel file “FY19 ACR FCM Q1-2-4-5 

EOY.xlsx,” tab “Q4;” see also 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.

The number of nationwide First-Class Mail CLTs for HCRs has fluctuated significantly over 

the last several years, increasing from 8,955 CLTs in FY 2020 to 30,070 CLTs in FY 2021, 

then decreasing slightly to 28,478 in FY 2022. The Capital Metro and Southern Districts 

reported the most of these CLTs with approximately 5,600 CLTs each in FY 2022. 

Compared with FY 2021, half the districts experienced fewer CLTs, while the other half 

experienced an increase in CLTs.

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.201 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.”202 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.

201 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.

202 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.”
Docket No. ACR2022 - 113 -

Figure V-6 shows the number of total CLTs for all products, disaggregated by responsible 

party for FY 2021 and FY 2022.

Figure V-6

Total CLTS, by Responsible Party, FY 2021–FY 2022

Source: Response to CHIR No. 3, question 5, Excel file “ChIR.3.Q.5.CLT.FY2022.xlsb.”

While total CLTs increased between FY 2021 and FY 2022, Postal Service-caused CLTs 

decreased. Contractor-caused CLTs increased 14.4 percent in FY 2022, from 331,808 CLTs 

in FY 2021 to 379,424 CLTs in FY 2022. CLTs caused by outside factors (e.g., weather 

delays) increased from 77,210 in FY 2021 to 101,546, which represents an increase of 31.5 

percent.

Figure V-7 presents the distribution of causes as a percent of total annual CLTs for FY 2021 

and FY 2022.
Docket No. ACR2022 - 114 -

Figure V-7

Total CLTS and Proportional Representation, by Responsible Party, FY 2021–FY 2022

Source: Response to CHIR No. 3, question 5, Excel file “ChIR.3.Q.5.CLT.FY2022.xlsb.”

These data illustrate that the distribution of CLT causes remained relatively consistent 

between FY 2021 and FY 2022, 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 Response to CHIR No. 6, question 5. 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 Response to CHIR No. 3, question 5.b.

In terms of CLTs caused by late processing and containers that were not ready to load, the 

Postal Service states that it retains the additional processing employees that were added in 

the past two years and “continues to increase package sort capacity and adjust and refine 

each facility’s operating plan in order to ensure that each facility meets necessary clearance 

times to depart trips to meet service standards.” Id. According to the Postal Service, it 

measures “Operating Plan Precision” in an effort to understand how each facility is 

Cause FY 2021 Cause FY 2022

Contractor 331,808 Contractor 379,424

Outside 77,210 Outside 101,546

USPS 218,400 USPS 194,342

Total 627,418 Total 675,312

% of FY 2021 Total % of FY 2022 Total

52.90%

12.30%

34.80%

Contractor Outside USPS

56.20%

15.00%

28.80%

Contractor Outside USPS
Docket No. ACR2022 - 115 -

completing distribution operations in a timely manner. Id. It has also undertaken daily 

review of all routings in an effort to increase “insight into routing, labeling, and dispatching 

of mail, which has further streamlined and improved the overall routing and service 

performance.” Id.

In terms of CLTs related to supplier performance, the Postal Service states that it has 

continued to utilize Silver Track Training (STT) sessions for field personnel. Id. According 

to the Postal Service, these training sessions are for all logistics professionals and are 

designed to increase their knowledge of how to improve and manage supplier 

performance. Id. The Postal Service states that since March of 2022, 480 employees have 

completed this STT, with the result that the number of cancelled trips has decreased. Id.

The Postal Service also continues to assert that it intends to implement liquidated damage 

contract clauses to address supplier-caused CLTs and it explains that it is developing a new 

transportation management system that “will provide a robust measuring tool to identify 

late shipments and begin to perform a root cause analysis on the failure” in order to 

address supplier responsibility. Response to CHIR 3, question 6.b.

As CLTs can result in delayed inventory, negatively impacting service performance, the

Commission examines monthly inventory delays. Figure V-8 shows the delayed inventory 

by month for FY 2021 to FY 2022.203

Figure V-8

Delayed Inventory, by Month, FY 2021–FY 2022

Source: Response to CHIR No. 4, question 27.a., Excel file “ChIR.4.Q27.FY22 Delayed Inventory.xlsx.”

203 “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. ACR2022 - 116 -

As Figure V-8 illustrates, the severe delays in inventory experienced at the beginning of FY 

2021 did not recur in FY 2022. Nonetheless, delays in inventory in the first quarter of FY 

2022 were higher than the remainder of the fiscal year. In both years, December was the 

most challenging month for First-Class Letters and Flats, but the number of inventory 

delays were 56 percent lower in December 2021 compared with December 2020.

In FY 2022, for Marketing Mail, the most significant delays in inventory occurred in October 

and November, each with approximately 600 million delays. For comparison, in FY 2021, 

delayed inventory for Marketing Mail peaked in October 2020, with nearly one billion 

inventory delays experienced in that month. For Periodicals, inventory delays ranged from 

a low of 59 million pieces in August 2022 to a high of 81 million pieces in March 2022.

d. Operational Changes by the Postal Service

In the previous years in which the COVID-19 pandemic impacted the Postal Service, 

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 mail-ordering, 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.

As a result of these and other challenges, the Postal Service began to implement a variety of 

operational changes. For instance, the Postal Service reports initiating “extensive efforts to 

plan for the FY 2022 peak season” and to handle increased package volume through 

“facility space upgrades and procurement of new processing equipment.” FY 2022 ACR at 

49-50. 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 2022 Division Report at 1. The Postal Service explained that, while these 

strategies were driven by the influx of packages, they have benefitted 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 2022 Service Performance Report at 13. 

Specifically, this involved removing excess FSS machines that were not needed for the 

current Flats volume. Id. The Postal Service asserts that “throughputs improved modestly 

in sites that removed one or more FSS machine and continued FSS processing” and 

“[a]cross these sites, average throughput improved from 13,123 pieces per hour in the first 

four weeks of FY 2021 to 13,480 pieces per hour in the same period of FY 2022.” Response 

to CHIR No. 3, question 8.

The Postal Service also states that it attempted to improve service performance by 

adhering to site-specific operating plans (SSOPs). See FY 2022 Service Performance Report 
Docket No. ACR2022 - 117 -

at 12. In FY 2021, the Postal Service worked with each site that processes letters and flats 

to create a SSOP that could “streamline operations and set predictable, service-responsive, 

achievable goals for operational clearance times.” Id. According to the Postal Service, this 

represented a change from its previous adherence to network-wide operating plans and 

clearance goals. FY 2022 Division Report at 2. The Postal Service notes that in FY 2022, it 

exceeded its nationwide target for Operating Plan Precision (OPP), which it associates with 

an increase in service performance.204 It explains that by improving OPP, “sites were able 

to meet clearance times and transportation needs more efficiently in FY 2022.” FY 2022 

Service Performance Report at 12.

In the materials provided by the Postal Service along with its FY 2022 ACR, it generally 

describes a number of other initiatives aimed at improving service performance. See, e.g., 

FY 2022 Service Performance Report at 12-16; FY 2022 Division Report at 2-5.

The Postal Service reports that it generally cannot quantify the impact that any individual 

initiative has on service performance. Response to CHIR No. 11, question 12.a.; id. CHIR No. 

7, question 30.a. As in previous years, the Commission finds the Postal Service’s inability to 

quantify the impact of any of its improvement initiatives problematic. For an improvement 

initiative to be successful, it must be possible to identify its impact and determine whether 

or not 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).

205 Generally, the Postal Service indicates that it uses key performance 

indicators (KPIs) to monitor the efficacy of its strategies to achieve its service performance 

targets for Market Dominant products.206 The Commission, therefore, finds that additional 

reporting regarding the KPIs established for specific improvement initiatives is necessary. 

The Commission also continues to find that narrative reporting and quantifiable data 

regarding the Postal Service’s FY 2023 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.

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 2022 are 

organized by topic, summarized, and responded to below.

204 FY 2022 Service Performance Report at 12. OPP is “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.” FY 2022 Division Report 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.

205 See, e.g., Response to CHIR No. 11, question 12.a.; see also CHIR No. 7, question 30.a.

206 See Docket No. ACR2021 Response to CHIR No. 5, question 15.f.i.; see also Library Reference USPS-FY22-29 Preface at 8 (identifying the KPIs 

that are related to improvement in on-time performance for First-Class Mail); FY 2022 Division Report at 2 (explaining that “Operating Plan 

Precision” is the main KPI “use[d] to measure the effectiveness of its mail processing initiatives relating to operating plans and clearance 

times.”).
Docket No. ACR2022 - 118 -

General. In its comments, NAPM commends the Postal Service for improving service 

performance in FY 2022 and encourages the Postal Service to continue to identify areas of 

improvement. NAPM Comments at 19. The Postal Service, for its part, emphasizes “the 

enormous improvements achieved” while stating that it “understands that its work is 

ongoing as it seeks to meet its targets and achieve year-over-year improvement in on-time 

performance towards the ultimate goal of 95 percent performance across all product 

categories.” Postal Service Reply Comments at 10.

The Commission commends the Postal Service for achieving significant improvements in 

service performance scores in FY 2022. The Postal Service must continue to focus on 

service performance to ensure all categories of products meet their on-time targets in the 

future. The Commission will closely monitor the Postal Service’s efforts to implement its 

DFA plan and the consequent impacts that these efforts have on service performance going 

forward.

FY 2022 Service Performance Targets and Service Standards. The Public Representative 

points out that the Postal Service has amended its service performance targets from FY 

2020 through FY 2022. PR Comments at 29. 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 30. 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. The Public Representative asserts that in any case, the Postal Service 

should identify the target’s purpose and supporting basis. Id.

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.

PostCom notes that, because of the impacts of the COVID-19 pandemic, year-to-year 

comparisons of service performance are problematic. PostCom Comments at 9. According 

to PostCom, the Postal Service has instead “place[d] great emphasis on performance 

relative to its self-determined targets, while seemingly neglecting to mention that those 

targets were not set until the third quarter of the fiscal year” and that service standards 

have been reduced. Id.

NPPC commends the work of postal employees, encourages improvements in service, and 

notes that compared to the service performance in prior years, FY 2022 represented a 

“significant and welcome improvement.” NPPC Comments at 13. NPPC asserts that, 

nevertheless, the Commission must keep in mind that the Postal Service is comparing its 

performance with prior years and its self-announced targets, rather than its service 

standards, which are the metrics that the Postal Service “advertises as ‘the level of service 

that the USPS[] strives to provide to customers.’” Id. Though acknowledging that the 
Docket No. ACR2022 - 119 -

Commission and the United States Court of Appeals for the District of Columbia Circuit (D.C. 

Circuit) have allowed the Postal Service to set targets below 100 percent on-time delivery, 

NPPC believes that the Postal Service should use that as its service performance 

benchmark. Id. at 13-14.

NAPM commends the Postal Service for providing its FY 2023 service performance targets 

60 days prior to the start of the fiscal year and establishing higher targets for certain 

products than in FY 2022.

207

The Postal Service disputes any implication that service performance targets (or service 

standards) were changed in order to inflate its service performance scores. Postal Service 

Reply Comments at 11. It emphasizes that, as dictated by statute, targets are benchmarks 

against which service performance can be compared and that the Postal Service sought to 

establish realistic on-time targets based on operational considerations. Id. at 11-12.

The Commission reiterates its expectation that the Postal Service identify targets that are 

both operationally realistic and promote continuous improvement. The Commission also 

notes that greater clarity from the Postal Service regarding the purpose and basis behind 

changed targets would help the Commission evaluate the reasonableness of such targets 

and would promote public transparency. Similarly, in order to determine change in service 

performance over time, the Commission encourages the Postal Service to develop a method 

to analyze the impact that a given change in service standards or measurement has on ontime service performance scores. The Commission also reiterates, in regard to NPPC’s

comments, that the suggestion that only 100 percent compliance by the Postal Service with 

its service standards would be sufficient for legal compliance has been considered and 

rejected by the D.C. Circuit.208

Other subjects. The Public Representative observes that the Postal Service reported a 

successful election season in terms of the total ballots delivered and the speed of their 

delivery. PR Comments at 43. Thus, the Public Representative asserts, “the Postal Service 

certainly appears capable of achieving a relatively high degree of service performance 

when it is called for.” Id. He concludes that it should make the kind of efforts noted above 

on a daily basis across all areas of the country. Id.

NAPM generally encourages the Postal Service to explore the benefits of commingled mail 

and states that service performance for commingled mail is better than that experienced by 

other mail. NAPM Comments at 5. NAPM also asserts that “[c]omminglers also provide the 

Postal Service with extensive mailing data that supports many programs and initiatives and 

allows the Postal Service to improve workload planning, monitor and improve service 

performance, gain intelligence into its delivery network and much more.” Id.

207 NAPM Comments at 20. NAPM also requests that the Postal Service’s website be updated to reflect these targets. Id. In response, the Postal 

Service notes that targets are periodically posted on both the Postal Service and Commission website. Postal Service Reply Comments at 14-15.

208 See Am. Postal Workers Union, AFL-CIO v. Postal Regul. Comm'n, 842 F.3d 711, 718 (D.C. Cir. 2016).
Docket No. ACR2022 - 120 -

The Commission appreciates the efforts taken, and results achieved, by the Postal Service 

during election season. The Commission also encourages the Postal Service to work with 

NAPM and other stakeholders to determine what, if any, benefits can be achieved by an 

increased focus on commingled mail. Regarding the Public Representative’s suggestion to 

generalize the extraordinary measures currently applied to ballot mail, the Commission 

expects that such a proposition could come with significant tradeoffs. The costs and 

service-performance impacts of the extraordinary measures used for ballot mail are 

currently unknown.209 During FY 2023, the Postal Service is evaluating whether to create a 

dedicated mail product or products for ballot mail, which could entail the development of 

methodologies to measure the attributable costs and service performance of ballot mail. 

See Response to CHIR No. 15, question 5.b. Pending the development of any such 

methodologies, it would be premature to offer any view on whether the extraordinary 

measures used for ballot mail can feasibly be applied more broadly. All the same, the 

Commission encourages the Postal Service to consider lessons learned from ballot mail 

when exploring the feasibility of measures for improving service performance for other 

types of mail.

f. Commission Analysis of Overall FY 2022 Impacts and 

FY 2023 Outlook

The Commission appreciates the strides made by the Postal Service to achieve significant 

service performance improvement from FY 2021 to FY 2022. As the Postal Service 

acknowledges, “FY 2021 was a year that exemplified the negative service performance 

impacts of the COVID-19 pandemic.” FY 2022 ACR at 50. Specifically, three primary 

challenges—reduced employee availability, contract transportation disruptions, and 

changes in the mail mix—had significant negative impacts on service performance. 

Moreover, the combination of the challenges increased the extent and duration of their 

impact. More information on these difficulties is available in the Commission’s FY 2021 

ACR. See FY 2021 ACR at 108-20.

As discussed above, these challenges abated somewhat in FY 2022. Moreover, the Postal 

Service undertook a number of initiatives aimed at combating the impacts of the COVID-19 

pandemic and improving service performance generally. Further, as described above, the 

Postal Service revised its service standards for First-Class Mail and certain Periodicals. The 

Postal Service represents that these three occurrences resulted in increased on-time 

service performance results in FY 2022. Because the Postal Service remains unable to 

measure the impact of any given improvement initiative, the Commission cannot 

specifically attribute the improved on-time results to either the lessening of the impacts of 

the COVID-19 pandemic or the initiatives instituted by the Postal Service. The Commission 

recommends that the Postal Service reevaluate its KPI system and/or 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 

209 See Response to CHIR No. 13, question 15; Response to CHIR No. 15, questions 4.b.-e.
Docket No. ACR2022 - 121 -

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 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 2022 ACR at 55. 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 2023 and has increased its service 

performance targets accordingly. Id.

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). The PSRA also mandates that the 

Commission provide reporting requirements for this Postal Service dashboard as well as 

“recommendations for any modifications to the Postal Service’s measurement systems 

necessary to measure and publish the performance information” located on the dashboard. 

39 U.S.C. § 3692(b)(2). In Docket No. RM2022-7, the Commission issued final regulations 

codifying the reporting requirements for this dashboard. See Order No. 6439. The 

Commission expects that the Postal Service will fully comply with these requirements going 

forward, which should increase public transparency of the state of service performance at any 

given time.

g. Commission Findings and Directives

Of the 27 Market Dominant products/categories measured, 13 products/categories did not 

meet their targets in FY 2022, a substantial improvement from FY 2021, when 21 

products/categories missed their applicable targets. See Figure V-1, supra. Moreover, 

service performance results for all products/categories were higher than in FY 2021. 

Although the Postal Service continued to suffer some COVID-19-related impacts in FY 2022, 

much of the disruption caused by the pandemic had resolved before the beginning of the 

fiscal year, contributing to increased service performance. However, of the 

categories/products measured, 5 out of 8 domestic First-Class Mail categories,210 2 out of 7 

USPS Marketing Mail products, both Periodicals products, and 1 out of 3 Package Services 

products still had lower performance than before the pandemic (i.e., compared with FY 

2019).211 Nevertheless, Postal Service has made reasonable efforts to respond to any 

lingering effects of the COVID-19 pandemic. The Commission will continue to monitor 

these efforts through its class- and product-specific directives. The exact requirements of 

these directives are discussed in Sections V.A.4.a.6., b.6., c.6., d.6., and e.6., infra.

210 Outbound Single-Piece First-Class Mail International and Inbound Letter Post service performance was measured through the SPM system in 

FY 2022. No comparable service performance data exists for prior years.

211 See FY 2021 ACD at 141, 171, 185, 191.
Docket No. ACR2022 - 122 -

FY 2022 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-9 identifies the systems used by the Postal Service during 

FY 2022 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-9

Service Performance Measurement Systems, FY 2022

Source: Library Reference USPS-FY22-29, PDF file “FY22-29 Methodologies Report.pdf” (FY 2022 Methodologies Report).

Internal Service Performance 

Measurement (SPM) System 

Single-Piece First-Class Mail 

Presort First-Class Mail 

Periodicals 

USPS Marketing Mail 

Bound Printed Matter Flats 

International First-Class Mail 

Product Tracking and Reporting 

(PTR) 

USPS Marketing Mail Parcels 

Bound Printed Matter Parcels 

Media Mail/Library Mail 

System Internal Custom 

Designed Measurement 

Systems

Ancillary Services (Excluding 

Return Receipt – Green Card) 

International Ancillary Services 

Address List Services 

Money Order Inquiries 

Post Office Box Service 

Stamp Fulfillment Services 

Ancillary Services (Return 

Receipt – Green Card)
Docket No. ACR2022 - 123 -

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 of products within domestic First-Class Mail, 

Periodicals, USPS Marketing Mail, and Package Services.

212 Accordingly, service 

performance results for these mailpieces are comparable for FY 2019 through FY 2022. 

Beginning in FY 2021, First-Class Mail Outbound Single-Piece International, Inbound Letter 

Post, and Return Receipt-Green Card (a component of Ancillary Services) have also been 

measured by Internal SPM.213

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 2022 Methodologies Report at 1; Order No. 

4697 at 17-19. Processing Duration measures the time between the first processing 

operation and the last processing operation.214 Last Mile measures the time between the 

last processing operation and final delivery. FY 2022 Methodologies Report at 1; Order No. 

4697 at 17-19.

The Commission requires the Postal Service to continue its external auditing program and 

file quarterly audit reports regarding Internal SPM.215

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, BPM Parcels, and 

Media Mail/Library Mail with a trackable service feature. FY 2022 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.216 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.

212 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); FY 2022 Methodologies Report at 1; 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.

213 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).

214 FY 2022 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.

215 See Order No. 4697 at 67. This requirement has been codified by regulation in 39 C.F.R. § 3055.31(i).

216 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. ACR2022 - 124 -

c. Intelligent Mail Barcode (IMb)

In Quarter 3 of FY 2011, the Postal Service began using IMbs to measure service 

performance for USPS Marketing Mail, Periodicals, BPM Flats, and some First-Class Mail 

products. Full-Service IMb generates Informed Visibility electronic scan data that can be

used to track mailpieces as they pass through automated scan operations.217 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.

Figure V-10 displays the percentage of total mailpieces entered into the mailstream that 

are measured by Full-Service IMb for FY 2020 through FY 2022.

Figure V-10

Nationwide Market Dominant Mail Measured by Full-Service IMb,

by Percentage, by Quarter,

FY 2020–FY 2022

Note: BPM Flats is the only Package Services product measured using IMb; the remaining Package Services products are measured using PTR. FY 

2022 Service Performance Report at 23.

Source: Response to CHIR No. 3, question 10.

217 See United States Postal Service, Mailing Standards of the United States Postal Service, Domestic Mail Manual, January 24, 2021, 

§ 507.10.1.1 (DMM).
Docket No. ACR2022 - 125 -

With the exception of Package Services, the percentage of mailpieces measured by IMb has 

remained relatively consistent since FY 2020. In terms of Package Services, although the 

Postal Service achieved a higher percentage in FY 2022 relative to the same point in FY 

2021 at each quarterly measurement point, the percentage of mailpieces measured by IMb 

is still relatively low compared with FY 2020. In FY 2022, for Package Services, the 

percentage of mailpieces measured by IMb peaked in the second quarter at 40 percent, 

significantly below the FY 2020 peak of 64 percent in Quarter 3. The Commission will 

continue to monitor trends in Full-Service IMb measurement.

Generally, the more mailpieces that are measured, the more representative, accurate, and 

reliable service performance measurements will be. The Commission continues to monitor 

mailpieces excluded from measurement.218 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.219

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 2020.

218 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.

219 See Order No. 6439 at 17-21, Attachment at 3-5, 11-13; see also Docket No. PI2016-1, Order Enhancing Service Performance Reporting 

Requirements and Closing Docket, August 26, 2016, at 28-35 (Order No. 3490).
Docket No. ACR2022 - 126 -

Table V-1

Mail in Measurement and Excluded from Measurement, by Percentage, FY 2020–FY 2022

Class/Product(s)

Percent of Mail Entered at FullService IMb Prices and Included 

in Measurement

Percent of Mail Processed as 

Full-Service IMb, but Excluded 

from Measurement

FY

2020

FY 

2021

FY 

2022

FY

2020

FY 

2021

FY 

2022

First-Class Mail

Presorted 

Letters/Postcards 71.95 66.10 65.82 28.05 33.90 34.18 

Flats 66.50 62.20 64.59 33.50 37.80 35.41 

USPS Marketing 

Mail

High Density and 

Saturation Letters 79.87 79.63 79.95 20.13 20.37 20.05 

High Density and 

Saturation 

Flats/Parcels 

63.92 53.68 39.75 36.08 46.32 60.25 

Carrier Route 75.41 72.62 76.77 24.59 27.38 23.23 

Letters 81.83 80.47 82.24 18.17 19.53 17.76 

Flats 75.45 71.49 76.51 24.55 28.51 23.49 

Every Door Direct 

Mail–Retail Not Applicable 

Parcels Data Not Available 

Total USPS 

Marketing Mail 80.00 78.23 80.14 20.00 21.77 19.86 

Periodicals

In-County 

Data Not Available 

11.87a

Data Not Available 

88.13a

Outside County 79.46a 20.54a

Class 70.73a 29.27a

Package 

Services

Bound Printed 

Matter Flats 48.05 26.39 33.47 51.95 73.61 66.53

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.

Source: Response to CHIR No. 3, question 11, Excel file “ChIR No 3 - Response to Questions 10 and 11.xlsx;” Docket No. ACR2021 Response to 

CHIR No. 1, question 23; Docket No. ACR2020, Response to CHIR No. 1, question 35; 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 22; Responses of the United States Postal 

Service to Questions 1-2 of Chairman’s Information Request No. 16, March 9, 2023, question 1.b. (Response to CHIR No. 16).

In previous fiscal years, the Postal Service did not provide the proportion of mail in 

measurement and not in measurement for In-County Periodicals and Outside County 

Periodicals. The Postal Service explained that some mailpieces are missing the information 

necessary to distinguish between the two Periodicals products.220 Therefore, while the 

Postal Service knows that these pieces were excluded from measurement, it does not know 

how to allocate those pieces between the two products. The Postal Service did provide the 

220 See Docket No. PI2016-1, Responses of the United States Postal Service to Questions 1 Through 5 of Chairman’s Information Request No. 1, 

question 2, May 3, 2016.
Docket No. ACR2022 - 127 -

proportion of mail in measurement and the proportion of mail not in measurement for the 

Periodicals class as a whole. Response to CHIR No. 16, question 1.b. In FY 2022, 70.73 

percent of Periodicals entered at Full-Service IMb prices were included in measurement. 

Response to CHIR No. 16, question 1.b. The Postal Service also provided an estimate of the 

proportion of mail in measurement and the proportion of mail not in measurement for 

each of the two Periodical products, by assigning the undifferentiated pieces to each 

product based on their proportions of volume. Id. questions 1.c.-d. The resulting estimates 

of the proportion of mail in measurement for Outside County Periodicals and In-County 

Periodicals were 79.46 percent and 11.87 percent, respectively. Id. The Postal Service 

cautions that the results may be “over inclusive or under inclusive.” Id. With respect to InCounty Periodicals, the Commission finds 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. With respect to Outside County 

Periodicals, the Commission finds that while the estimates are not as reliable as the actual 

proportions reported for products in other classes, the results for Outside County 

Periodicals, in conjunction with the results for the Periodicals class, provide a reasonably 

accurate picture of the extent to which Outside County Periodicals paying Full-Service IMb 

prices are included in measurement. The proportion of mail in measurement for Outside 

County Periodicals falls between those of other flat-shaped products, and likely exceeds the 

proportion of mail in measurement for In-County Periodicals.

Given that the Commission has been closely monitoring mail included and excluded in 

measurement for several fiscal years, the Commission expects that the Postal Service shall file 

the information responsive to CHIR No. 3, question 11 and CHIR No. 16, question 1 in table 

form, including detailed descriptions for data that are not available or not applicable, for FY 

2023 along with the FY 2023 ACR. 

After declining from FY 2020 to FY 2021, the percentage of mail entered at Full-Service IMb 

and included in measurement increased for nearly all categories measured. The two 

exceptions were First-Class Mail Presorted Letters and Postcards, with a small decline of 

0.28 percentage points, and High Density and Saturation Flats/Parcels, with a decline of 

13.93 percentage points.

Figure V-11 displays the top two reasons that a mailpiece was excluded from measurement 

in FY 2022, 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. ACR2022 - 128 -

Figure V-11

Reasons for Mailpiece Exclusions, by Percentage, by Quarter, FY 2022

Source: United States Postal Service, Quarterly Service Performance Report, Quarter 4, November 9, 2022, Excel file 

“AttachA_ExclusionReasonBreakdown_FY22_Q4.xlsx,” tab “Exclusions” (FY 2022 Postal Service Q4 Service Performance Report).

The most common reason for mailpiece exclusion for First-Class Mail and USPS Marketing 

Mail 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.

 a r r 

 c a a 

 ar h c 

 c ca 

 ac a r c 

Q1: 5.27 

Q2: 5.18 

Q3: 4.62 

Q4: 4.81 

 r a Ma 

Q1: 35.31 

Q2: 38.53 

Q3: 35.39 

Q4: 21.17 

 r a Ma 

Q1: 41.88 

Q2: 35.52 

Q3: 32.47 

Q4: 49.42 

 Mar Ma 

Q1: 43.47 

Q2:45.03 

Q3: 39.23 

Q4: 43.19 

 r ca 

Q1: 20.77 

Q2: 18.79 

Q3: 16.06 

Q4: 17.18 

 Mar Ma 

Q1: 26.60 

Q2: 24.43 

Q3: 28.28 

Q4: 29.50 

 r ca 

Q1: 47.79 

Q2: 48.49 

Q3: 51.73 

Q4: 53.07 

 ac a r c 

Q1: 88.82 

Q2: 86.29 

Q3: 87.73 

Q4: 82.84 

Entry Point for Entry 

Discount claimed in 

eDoc is invalid for the 

entry point and 

des na on of the mail.

Mail veri ed at a 

Detatched Mail Unit 

(DMU), then transported 

by USPS to a mail 

processing facility in a 

di erent district than the 

DMU

Lack of a container unload 

scan or inability to iden fy 

the Facility Access and 

Shipment Tracking (FAST) 

appointment associated 

to the container

No automa on scan 

observed for the mail 

piece
Docket No. ACR2022 - 129 -

For First-Class Mail, “Long Haul” was also a significant cause of exclusion throughout FY 

2022. 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 2022. 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.

Figure V-12

Non-Compliance as an Exclusion Reason, FY 2021–FY 2022

Source: FY 2022 Postal Service Q4 Service Performance Report, Excel file “AttachA_ExclusionReasonBreakdown_FY22_Q4.xlsx,” 

tab “Exclusions;” United States Postal Service, Quarterly Service Performance Report, Quarter 4, November 10, 2021, Excel file 

“AttachA_ExclusionReasonBreakdown_FY21_Q4.xlsx,” tab “Exclusions” (FY 2021 Postal Service Q4 Service Performance 

Report).

Figure V-12 shows the trend of “Non-Compliant” as an exclusion reason for FY 2021 and FY 

2022. “Non-Compliant” is defined by the Postal Service as “Mail identified as non-compliant 

due to inaccuracies in mail preparation.” In its FY 2021 ACD, the Commission observed that 

for the Periodicals and Package Services mail classes, non-compliance became a major 

contributing factor for exclusion in FY 2021 Quarters 3 and 4. Pieces are considered non-
Docket No. ACR2022 - 130 -

compliant when they do not meet the requirements for “Full-Service.”221 The Postal Service 

asserted that a single mailer contributed approximately 99 percent of the non-compliant 

volumes between February 2021 and September 2021, and indicated that it was due to a 

temporary situation. Response to CHIR No. 16, question 2.b. The Postal Service explained 

that because the mailer used a new Customer Registration Identification (CRID), the 

volumes associated with that CRID were initially placed on a temporary non-compliant 

status so that the Postal Service could evaluate compliance with Full-Service requirements. 

Id. questions 2.a.-b. As the Figure V-12 illustrates, “Non-Compliant” was no longer a 

significant reason for exclusion in FY 2022.

Comments and Related Commission Analysis. NAPM states that it appreciates the changes 

that the Postal Service has implemented regarding mail excluded from measurement but 

“continue[s] to urge the Postal Service to implement a reporting solution that allows 

commingle mailers and others to obtain visibility at a level that helps them identify the 

specific mail being excluded.” NAPM Comments at 20.

NAPM also states that its members have been receiving increasingly frequent 

correspondence from their local postal plants to discuss perceived issues with these 

members’ mail entry; specifically, NAPM asserts that the local plant managers appear to 

misunderstand how the CETs and Customer Supplier Agreements (CSAs) impact their 

service performance scores. NAPM Comments at 21. NAPM encourages the Postal Service 

to “educate both local operations and acceptance/Business Mail Entry Unit personnel on 

how mail is measured for service performance measurement.” Id. In response, the Postal

Service notes that service performance training is provided to all plant managers and states 

that it will continue to take appropriate steps to ensure that local employees understand 

service performance issues. Postal Service Reply Comments at 13-14.

PostCom asserts that a significant volume of Market Dominant mail is excluded from 

measurement and, because of “business rules that exclude mail pieces that have been in the 

network for an inordinate amount of time, pieces excluded from measurement would likely 

exhibit service performance that is inferior to the Postal Service’s published results.” 

PostCom Comments at 9. The Postal Service explains that this exclusion only applies to 

approximately 0.01% of volume and “is necessary so that the measurement system is not 

updating the piece information indefinitely.” Postal Service Reply Comments at 15.

The Commission encourages the Postal Service to reach out to NAPM to better address the 

cause of any miscommunications with its members and to continue to communicate to its 

field personnel how to properly follow the SPM Plan.

As explained above, the Commission recognizes that the percentage of mail in 

measurement continued the largely unpredictable trend of increasing by several 

percentage points for some products while decreasing several percentage points for others.

221 Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-2 of Chairman’s Information Request No. 16, February 18, 

2022, question 2.a. (Docket No. ACR2021, Response to CHIR No. 16).
Docket No. ACR2022 - 131 -

The Commission will continue to monitor trends in measurement and the reasons for 

exclusions and has recently codified reporting requirements for mail included and 

excluded from measurement in Docket No. RM2022-7. See Order No. 6439 at 17-21, 

Attachment at 3-5 and 11-13. The Commission recommends that, as the impacts to the Postal 

Service caused by the COVID-19 pandemic continue to abate, the Postal Service renew its 

focus on increasing the percentage of mail in measurement and analyzing and improving its 

mail in measurement program.

FY 2022 Service Performance Results by Class

a. First-Class Mail

FY 2021 Directives

Finding that no First-Class Mail products met their FY 2021 service performance targets, 

the Commission directed the Postal Service to improve service performance. FY 2021 ACD 

at 164. Noting that the Postal Service had longstanding issues meeting their service 

performance targets for First-Class Mail and that every category of First-Class Mail missed 

its service performance target in FY 2021 even after the targets had been revised 

substantially downwards, the Commission determined that all First-Class Mail products 

were out of compliance in FY 2021. Id. Therefore, the Commission issued a series of 

directives to monitor the progress and efficacy of the Postal Service’s service performance 

improvement initiatives. See id. at 180-85.

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 165-66.

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 166-67.

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: 

the top five root cause point impacts for First-Class Mail; air carrier capacity; the number of 

CLTs; the performance for each national operating plan target; and the 10 facilities with the 

most failures in meeting each national operating plan target during FY 2021. See id. at 167.

Fourth, to monitor the Postal Service’s initiatives to improve service performance results 

for Inbound Letter Post and Outbound Single-Piece 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 167-68.

Fifth, to monitor the Postal Service’s initiatives to remediate service performance declines 

from FY 2020 to FY 2021, the Commission directed the Postal Service to provide national 
Docket No. ACR2022 - 132 -

service performance results, disaggregated by month, for each First-Class Mail product (all 

service standards and combined). See id. at 169.

FY 2022 Results

Figure V-13 shows the FY 2022 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 2022

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. 

In the legend, “Points from Target” represents the difference between the Postal Service’s stated service performance target and the FY 2021 

service performance result. “SPLC 2-Day” and “SPLC 3-5-Day” refer to the 2-Day and 3-5-Day service standards for the Single-Piece 

Letters/Postcards product, respectively. “Presorted Overnight,” “Presorted 2-Day,” and “Presorted 3-5-Day” refer to the 1-Day, 2-Day, and 3-5-

Day service standards for the Presorted Letters/Postcards product, respectively. “Flats Overnight,” “Flats 2-Day,” and “Flats 3-5-Day” refer to 

the 1-Day, 2-Day, and 3-5-Day service standards for the Flats product, respectively. “Outbound Int” refers to the combined result for the 

Outbound Single-Piece International product. “Inbound Int” refers to the combined result for the Inbound Letter Post product.

Source: FY 2022 Service Performance Report at 3-4.

Table V-2 summarizes service performance results compared to the annual targets for all 

First-Class Mail products for FY 2020, FY 2021, and FY 2022.
Docket No. ACR2022 - 133 -

Table V-2

First-Class Mail

Service Performance Results, by Percent, FY 2020–FY 2022

Product FY 

2020 Target FY 2021 Target FY 2022 Target

SinglePiece 

Letters/P

ostcards

2-Day 92.0 96.50 87.4 87.81 91.6 90.25

3-5-Day 79.7 95.25 64.6 68.64 83.8 90.50

Presorte

d 

Letters/P

ostcards

Overnight 95.0 96.80 93.7 93.99 95.1 94.75

2-Day 93.0 96.50 88.5 89.20 93.4 93.00

3-5-Day 90.2 95.25 81.0 84.11 91.4 90.50

Flats

Overnight 80.3 96.80 75.2 93.99 82.0 94.75

2-Day 77.5 96.50 71.7 89.20 80.1 93.00

3-5-Day 73.34 95.25 61.1 84.11 78.6 90.50

Outboun

d SinglePiece 

Internati

onal

Combined 71.9 94.00 58.0 82.43 77.5 90.18

Inbound 

Letter 

Post

Combined 66.2 94.00 73.8 82.43 81.2 90.18

Note: Red text indicates service performance was below target. Green text indicates service performance was above target. 

Postal Service Report

The Postal Service explains that all First-Class Mail products, mail shape categories, and 

service standards saw improved service performance from FY 2021 to FY 2022. FY 2022 

Service Performance Report at 5. Specifically, the Postal Service notes that targets were 

met in four categories: 2-Day Single-Piece Letters/Postcards, Overnight Presorted 

Letters/Postcards, 2-Day Presorted Letters/Postcards, and 3-5-Day Presorted 

Letters/Postcards. Id. On the other hand, 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 several initiatives, including the discontinuance of FSS processing and the 

change in CET for Periodicals, discussed in more detail above, will improve Flats service 

performance. Id. at 5-6.

As directed in the FY 2021 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 2022 to improve service performance and address the 

top root causes of failure to deliver First-Class Mail on time, and plans for further 
Docket No. ACR2022 - 134 -

improvement in FY 2023.222 In addition, the Postal Service filed monthly service 

performance results for each First-Class Mail product during FY 2022.223

Comments and Related Commission Analysis

Comments concerning First-Class Mail service performance are organized by topic, 

summarized, and responded to below.

Domestic products: Initially, the Public Representative notes that, as measured by the Postal 

Service, 2-Day Single-Piece Letters/Postcards and all the Presorted Letter/Postcard 

categories, exceeded their targets. PR Comments at 32. He also notes that, under the 

current service standards, most Single-Piece Letters/Postcards and Presorted 

Letters/Postcards categories met their targets for each quarter in FY 2022. Id. at 32-33. On 

the other hand, disaggregating the Flats product into multiple subcategories, he explains 

that, of all the First-Class Mail Single-Piece and Presorted Flats categories, only 5-Day, 

Presorted Flats met their targets in any quarters. Id. at 33-34. However, the Public 

Representative recognizes that the change in service standards for First-Class Mail 

complicates year-over-year comparisons.

Also, noting that “the service standards for 39 percent of First-Class Mail...were reduced in 

FY2022 compared to FY2021 due to the changes described in Docket No. N2021-1,” NPPC 

states that these reduced service standards mask whether service was truly improved in FY 

2022. NPPC Comments at 14-15. NPPC asserts that because the Postal Service has not set 

service performance targets at 95 percent for most First-Class Mail products, “First-Class 

mailers still have not received the benefit promised in Docket No. N2021-1.” Id. at 15. NPPC

also urges the Commission to modify service performance reporting requirements to 

include a report on the service quality accorded to remittance mail. Id. at 16.

The Postal Service notes that it did not change the service standards for First-Class Mail in 

order to improve service performance scores, but rather as “a necessary part of improving 

service reliability over the long run as they enable better operational precision and 

improve the Postal Service transportation and processing networks.” Postal Service Reply 

Comments at 12. It asserts that service performance improvement in FY 2022 

demonstrates that these changes have already begun to have their intended effect. Id.

Moreover, in regards to NPPC’s suggestions relating to remittance mail, the Postal Service 

notes that the Commission determined (and the Postal Service agreed) that Reply Mail 

should be reported on the Postal Service’s online dashboard. Id. at 16-17; see also 39 C.F.R. 

§ 3055.102(h).

The Commission acknowledges that the changes in service standards for some First-Class 

Mail categories complicates the comparability of year-over-year on-time service 

222 See, e.g., Library Reference USPS-FY22-29 Preface; FY 2022 Division Report; Library Reference USPS-FY22-29, December 29, 2022, Excel files 

“FY22 FCM Root Cause.xlsx;” “24 hr clock FY2022.xlsx;” “CLT FY22 11.30.2022.xlsx.”

223 See, e.g., Docket No. ACR2021, Second Response of the United States Postal Service to Commission Requests for Additional Information in 

the FY 2021 Annual Compliance Determination, May 10, 2022 (Docket No. ACR2021, Second Response to Directives), Excel file “FY 2022 

Monthly Data 5-10-2022.xlsx.”
Docket No. ACR2022 - 135 -

performance results for these mailpieces. In response to information requests on this 

subject, the Postal Service confirmed that it has not undertaken an investigation to 

determine the service performance scores for First-Class Mail when calculated using the 

service standards in place prior to the changes made as a result of Docket No. N2021-1 and 

cannot do so because “the piece-level data necessary to properly perform [such 

calculations] do not exist.” Response to CHIR No. 7, questions 30.b.-c. 

Flats. The Public Representative notes that, while service performance for First-Class Mail 

generally improved in FY 2022, “flats mail performance continues to trail letter mail in 

service performance as has been the case historically.” PR Comments at 42. The Public 

Representative notes that the Postal Service cites several potential reasons for this issue 

and proposes several initiatives to improve Flats service performance. Id.

NPPC agrees that service performance for First-Class Mail Flats remains low and states that 

this fact is particularly egregious considering the rates were raised twice in the past year. 

NPPC Comments at 15-16. The Postal Service acknowledges the existing challenges with 

First-Class Mail Flats, asserts that it has several initiatives designed to improve service 

performance for these categories, and notes that the Commission is already conducting a 

study specifically on Flats issues. Postal Service Reply Comments at 16. The Postal Service 

cautions that comments addressed to Flats specifically are better left to the Commission’s 

Flats Study. Id.

NAPM suggests that the Postal Service and the Commission separate the evaluation of Flats 

service performance into single-piece and presorted categories. NAPM Comments at 7. In 

response, the Postal Service notes that it does separately report results for First-Class Mail 

Presort Flats and First-Class Mail Single-Piece Flats in conjunction with its Quarterly 

Reports, which are available on the Commission website. Postal Service Reply Comments at 

14.

With respect to NAPM’s suggestion to separate the evaluation of Flats service performance 

into the single-piece and presorted categories, the ACD evaluation is at the product-level 

and therefore includes both categories. Consistent with previous years, the Commission 

continues to evaluate sub-categories within products to determine the best practices for 

remedial action. For Flats, the Commission requests and receives point-impact data 

disaggregated by the single-piece and presorted categories.

As described above in Section I.E., further analysis on Flats will appear in detail in the 

Commission’s Flats Study.

Commission Analysis

(a) Overview

After seven consecutive years in which all First-Class Mail product categories missed their 

service performance targets, four First-Class Mail product categories exceeded their targets 

in FY 2022. See Figure V-13, supra. The best indicator of improvement (or decline) in 

service performance is to compare service performance results from one period to the 
Docket No. ACR2022 - 136 -

same period in the prior fiscal year. See FY 2019 ACD at 105, 117. While the Commission is 

cognizant that the change in service standards for First-Class Mail makes year-over-year 

comparisons more complicated, the FY 2022 results for each domestic product category 

increased compared to results for the prior fiscal year, including the categories that were 

unaffected by the service standard changes. Below, the Commission provides further 

analysis for the three domestic and two international products.

(b) Domestic Products

Figure V-14 displays quarterly results for FY 2022, disaggregated by shape, service 

standard, and whether the mailpiece was presorted or single-piece, for Domestic FirstClass Mail products.

Figure V-14

Domestic First-Class Mail

Service Performance Results, by Quarter, FY 2022

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); 

see also Docket No. N2021-1, Advisory Opinion

Source: Library Reference USPS-FY22-29, Excel file “FY22 ACR First-Class Mail.xlsx.”

Service performance improved for all domestic product categories in the second half of 

FY 2022 relative to the first half of the fiscal year. This trend reflects the pattern observed 

in most previous fiscal years that results in the second half of the fiscal year have tended to 

outperform the first half of the fiscal year, largely due to seasonal trends. See, e.g., FY 2020 

SPLC

2-Day

SPLC

3-5-Day

Presorted

Overnight

Presorted

2-Day

Presorted

3-5-Day

Flats

Overnight

Flats

2-Day

Flats

3-5-Day

Q1 90.7 78.9 95.0 92.4 90.2 80.2 77.9 75.5

Q2 90.5 78.2 94.3 92.3 87.7 78.6 78.7 72.5

Q3 92.9 88.3 95.6 94.7 94.2 84.2 81.5 82.0

Q4 92.6 89.2 95.5 94.5 94.0 85.1 82.4 82.3

FY 2022 Target 90.25 90.50 94.75 93.00 90.50 94.75 93.00 90.50

0

10

20

30

40

50

60

70

80

90

100

On-Time (%)

Q1 Q2 Q3 Q4 FY 2022 Target
Docket No. ACR2022 - 137 -

ACD at 165. Nonetheless, all First-Class Mail products (or shape or service standard 

categories) that failed to meet annual service performance targets in FY 2022 also failed to 

achieve target-level service performance on a quarterly basis, even in the second half of the 

year.

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 as to 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.

The various narrative reports submitted by the Postal Service indicate the issues that have 

the most impact on delivering First-Class Mail on time.224 The data show that failures in 

transit and “Unable to Assign” are the known root causes that had the most impact on 

service performance results for First-Class Mail in FY 2022.225

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. See FY 2019 ACD 

at 101-02, 119 (summarizing past ACD findings); FY 2020 ACD at 180-85; FY 2021 ACD at 

148-52.

In FY 2022, there were two service standard categories for this product: 2-Day and 3-5-

Day.226 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) and destination ADC is 3 hours or less.227 This 

represents a change from FY 2021, when the drive time to qualify for a 2-Day service 

224 FY 2022 Service Performance Report at 5-7; Library Reference USPS-FY22-29 Preface at 7-11; FY 2022 Division Report.

225 Library Reference USPS-FY22-29, Excel file “FY22 FCM Q1 Point Impact for Nation.xlsx.”

226 See FY 2022 Service Performance Report at 3; 39 C.F.R. § 121.1(b)(2), (c), (d), (e). 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 3-day to 4-, or 5-day standard 

depending on the distance between origin and destination. See Revised Service Standards for Market-Dominant Mail Products, 86 Fed. Reg.

43941, 43954 (August 11, 2021) (codified at 39 C.F.R. pt. 121); see also Docket No. N2021-1, Advisory Opinion at 12-13.

227 See 39 C.F.R. § 121.1(b)(2); see also 86 Fed. Reg. 43952, 43954. With respect to the non-continental United States, the 2-Day standard also 

applies to Single-Piece Letters/Postcards that originate and destinate within Puerto Rico, the U.S. Virgin Islands, American Samoa or specific 3-

Digit ZIP Code areas in Alaska. 39 C.F.R. § 121.1(b)(2).
Docket No. ACR2022 - 138 -

standard was 6 hours,228 resulting in an estimated 8.2 percent of mail shifting from a 2-Day 

to a 3-5-Day service standard.229 Additionally, the Postal Service estimated that 30.3 

percent of mailpieces within the contiguous United States formerly subject to the 3-Day 

service standard in FY 2021 would shift to a 4- or 5-Day service standard in FY 2022. 

Docket No. N2021-1 Advisory Opinion at 1. From FY 2021 to FY 2022, service performance 

results for 2-Day Single-Piece Letters/Postcards and 3-5-Day Single-Piece 

Letters/Postcards increased by 4.2 and 19.2 percentage points, respectively.230

Of the two, only 2-Day Single-Piece Letters/Postcards met its FY 2022 target, even though 

FY 2022 on-time service performance results did not reach its pre-pandemic service 

performance level. While 3-5-Day Single-Piece Letters/Postcards service performance 

reached levels not seen since before the COVID-19 pandemic, it did remain below target, 

and therefore the discussion will focus on service performance results for this category.

Postal Service data illustrate that the top five root causes of failures to meet service 

standards for 3-5-Day Single-Piece Letters/Postcards remained similar in FY 2021 and 

FY 2022; however, Last Mile failures replaced Transit Missing Destination Primary Scans 

failures in the top five root causes.231 Figure V-15 displays the top five root causes for the 

failure of 3-5-Day Single-Piece Letters/Postcards to be delivered on time in FY 2022, along 

with the corresponding point impact and percent change from FY 2021.

228 Docket No. N2021-1, Advisory Opinion at 124, n.107. Effective October 1, 2021 (the beginning of FY 2022), the Postal Service revised its 

service standards. 86 Fed. Reg. 43,941, 43,951 (Aug. 11, 2021) (codified at 39 C.F.R. pt. 121).

229 During the advisory opinion process, the Postal Service estimated that its proposed changes would increase the service standard for 8.2 

percent of mailpieces formerly subject to the 2-Day service standard. Docket No. N2021-1, Advisory Opinion at 1.

230 Compare FY 2022 Service Performance Report at 3-4, with Docket No. ACR2021, Library Reference USPS-FY21-29, December 29, 2021, PDF 

file “FY21-29 Service Performance Report.pdf,” at 4 (FY 2021 Service Performance Report).

231 Compare Library Reference USPS-FY22-29, Excel file “FY22 FCM Root Cause.xlsx” with Library Reference USPS-FY21-29, Excel file “FY21 FCM 

Q1 Point Impact for Nation.xlsx,” tab “SPFC.”
Docket No. ACR2022 - 139 -

Figure V-15

3-5-Day First-Class Mail Single-Piece Letters/Postcards

FY 2022 National Top 5 Root Causes and Point Impact

Note: Point impact refers to the amount (number of percentage points) by which on-time performance decreased due to each specific root 

cause of failure. Docket No. ACR2021, Responses of the United States Postal Service to Questions 1-36 of Chairman’s Information Request No. 

2, January 25, 2022, question 23.a. (Docket No. ACR2021, Response to CHIR No. 2).

Source: Library Reference USPS-FY22-29, Excel file “FY22 FCM Root Cause.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, Excel file 

“FY21 FCM Q1 Point Impact for Nation.xlsx.”

Although Transit Late Destination Primary Scan remains the top root cause for 3-5-Day 

Single-Piece Letters/Postcards in FY 2022, it decreased 64.28 percent in point impact, from 

14.61 in FY 2021 to 5.22 in FY 2022. 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.232 The second highest root cause category, Unable to Assign, 

decreased 61.02 percent in point impact from 5.76 in FY 2021 to 2.25 in FY 2022. This 

indicator is applied to mailpieces for which there is insufficient information to determine 

the root cause. FY 2022 Division Report at 5. Among root causes, only First Mile failures 

increased compared with FY 2021. First Mile failures increased 6.28 percent in point 

impact from 1.80 in FY 2021 to 1.91 in FY 2022.

232 Docket No. ACR2021, Response to CHIR No. 2, question 23.b., Excel file “ChIR.2.Q.23.RootCause.DefintnHier.xlsx.”

ROOT CAUSE

Transit Late 

Destination 

Primary Scan

Unable to Assign First Mile Last Mile Origin Missent

POINT IMPACT

FY 2022

5.22

FY 2021

14.61

FY 2022

2.25

FY 2021

5.76

FY 2022

1.91

FY 2021

1.80

FY 2022

1.85

FY 2021

NA

FY 2022

1.85

FY 2021

4.26

CHANGE %

-64.28% -61.02% 6.28% NA -64.32%
Docket No. ACR2022 - 140 -

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 2022 

Service Performance Report at 3; 39 C.F.R. § 121.1(a)(2), (b)(2), (c), (d), (e).

Each of the service standard categories for Presorted Letters/Postcards met its service 

performance targets and achieved their highest results since FY 2019. Results increased 

from FY 2022 by 1.44, 4.88, and 10.36 percentage points for the overnight, 2-Day, and 3-5-

Day categories, respectively.

The Postal Service’s data illustrate that the rankings for the top five root causes of failures 

to meet service standards for each service standard category of Presorted 

Letters/Postcards changed slightly from FY 2021 to FY 2022. Figure V-16 displays the top 

five root causes for Presorted Letters/Postcards in FY 2022 nationwide, along with 

corresponding data for FY 2021.
Docket No. ACR2022 - 141 -

Figure V-16

First-Class Mail Presorted Letters/Postcards

FY 2022 National Top 5 Root Causes and Point Impact

Source: Library Reference USPS-FY22-29, Excel file “FY22 FCM Root Cause.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, Excel 

file “FY21 FCM Q1 Point Impact for Nation.xlsx.”

1-DAY SERVICE STANDARD

ROOT CAUSE

Last Mile

Transit Late

Secondary 

Scan

Transit 

Missing 

Outgoing Scan

Unable to 

Assign

DPS Delay -

Non-Standard 

Flow

POINT

IMPACT

FY 

2022 2.43 0.90 0.65 0.23 0.18

FY 

2021 2.27 2.01 1.13 0.40 NA

CHANGE % 7.04% -55.04% -42.38% -42.61% NA

2-DAY SERVICE STANDARD

ROOT CAUSE

Last Mile

Transit Late

Secondary 

Scan

Transit 

Missing 

Outgoing Scan

Unable to 

Assign

DPS Delay -

Non-Standard 

Flow

POINT

IMPACT

FY 

2022 2.57 1.72 1.27 0.43 0.17

FY 

2021 2.40 4.57 2.77 1.29 NA

CHANGE % 7.00% -62.28% -54.19% -66.69% NA

3-5-DAY SERVICE STANDARD

ROOT CAUSE Transit 

Missing 

Outgoing 

Scan

Transit Late 

Secondary 

Scan

Last Mile Unable to 

Assign

DPS Delay -

Non-Standard 

Flow

POINT

IMPACT

FY 

2022 2.63 2.57 1.70 0.77 0.18

FY 

2021 6.04 7.28 1.97 2.61 NA

CHANGE % -56.52% -64.71% -13.77% -70.68% NA
Docket No. ACR2022 - 142 -

Figure V-16 illustrates that Presorted Letters/Postcards experienced similar trends to the 

point impact results for Single-Piece Letters/Postcards from FY 2021 to FY 2022. All 

FY 2022 point impacts decreased from the levels observed in FY 2021 for Presorted 

Letters/Postcards, with two exceptions. The point impact related to Last Mile increased by 

7.0 percent for both the Overnight and the 2-Day service standards from FY 2021 to FY 

2022. Table V-3 compares the point impacts reported for this indicator disaggregated by 

fiscal quarter for FY 2021 and FY 2022.

Table V-3

Presorted Letters/Postcards

FY 2022 Point Impact for Last Mile

Quarter 

Service 

Standard 

Point Impact for Last Mile

FY 2021 FY 2022 % Change 

Q1

1-Day 2.36 2.21 -6.36%

2-Day 2.33 2.34 0.43%

3-5-Day 1.91 1.53 -19.90%

Q2

1-Day 2.39 2.67 11.72%

2-Day 2.67 2.93 9.74%

3-5-Day 2.11 1.88 -10.90%

Q3

1-Day 2.03 2.27 11.82%

2-Day 2.22 2.37 6.76%

3-5-Day 1.86 1.56 -16.13%

Q4

1-Day 2.28 2.56 12.28%

2-Day 2.36 2.64 11.86%

3-5-Day 1.97 1.8 -8.63%

Source: Library Reference USPS-FY22-29, Excel file “FY22 FCM Root Cause.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, Excel file 

“FY21 FCM Q1 Point Impact for Nation.xlsx.”

For the 1-Day standard, the point impact of Last Mile decreased by 6.36 percent compared 

with Quarter 1 of FY 2021. For the remaining three quarters, the point impacts were 

approximately 12 percent higher than in FY 2021. For the 2-Day service standard, point 

impacts of Last Mile were higher for every quarter of FY 2022 than for the corresponding 

quarter in FY 2021. The point impact in the first quarter of FY 2022 was only marginally 

higher than in FY 2021. For Quarters 2, 3, and 4, the increase from the corresponding 

quarter in FY 2021 was more significant, 9.74 percent, 6.76 percent, and 11.86 percent, 

respectively.
Docket No. ACR2022 - 143 -

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 FY 2015, the Commission has 

separately evaluated the long-standing cost and service issues for flat-shaped 

mailpieces.

233 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.234 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 2022 Service Performance Report at 2; see also MCS 

§ 1115.

The Postal Service’s data illustrate that point impact results decreased for most root causes 

associated with both retail and commercial categories of Flats. Figures V-17 and V-18 

display point impacts for the top five root causes of failures to meet service standards for 

Flats in FY 2022, along with corresponding data for FY 2021, disaggregated for single-piece 

and presorted mailpieces, respectively.

233 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.

234 See Docket No. RM2018-1, Order Adopting Final Rules on Reporting Requirements Related to Flats, May 8, 2019 (Order No. 5086).
Docket No. ACR2022 - 144 -

Figure V-17

First-Class Mail Single-Piece Flats

FY 2022 National Top 5 Root Causes and Point Impact

Source: Library Reference USPS-FY22-29, Excel file “FY22 FCM Root Cause.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, Excel file 

“FY21 FCM Q1 Point Impact for Nation.xlsx.”

2-DAY SERVICE STANDARD

ROOT CAUSE

Last Mile First Mile Unable to 

Assign

Transit 

Missing 

Destination 

Primary Scan

Transit Late 

Destination 

Primary Scan

POINT

IMPACT

FY 

2022 7.94 4.47 1.53 1.46 1.39

FY 

2021 8.80 6.55 2.42 NA 2.97

CHANGE % -9.77% -31.76% -36.78% NA -53.20%

3-5-DAY SERVICE STANDARD

ROOT CAUSE

First Mile Last Mile Origin Missent

Transit Late 

Destination 

Primary Scan

Unable to 

Assign

POINT

IMPACT

FY 

2022 2.57 1.72 1.27 0.43 0.17

FY 

2021 2.40 4.57 2.77 1.29 NA

CHANGE % 7.00% -62.28% -54.19% -66.69% NA
Docket No. ACR2022 - 145 -

Figure V-18

First-Class Mail Presorted Flats

FY 2022 National Top 5 Root Causes and Point Impact

Source: Library Reference USPS-FY22-29, Excel file “FY22 FCM Root Cause.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, 

Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx.”

1-DAY SERVICE STANDARD

ROOT CAUSE

Last Mile

Transit 

Missing 

Outgoing Scan 

Transit Late

Secondary 

Scan

Unable to 

Assign

Transit Late 

Destination 

Primary Scan

POINT

IMPACT

FY 

2022 6.69 3.35 2.23 2.02 1.37

FY 

2021 7.18 6.08 4.33 2.69 2.30

CHANGE % -8.22% -44.90% -48.50% -24.91% -40.43%

2-DAY SERVICE STANDARD

ROOT CAUSE

Last Mile

Transit 

Missing 

Outgoing Scan

Unable to 

Assign

Transit Late 

Secondary

Scan

AADC 

Processing 

Delay- Non 

Standard Flow

POINT

IMPACT

FY 

2022 6.63 4.19 2.98 2.83 0.42

FY 

2021 7.03 9.47 5.38 5.06 NA

CHANGE % -5.69% -55.76% -44.61% -44.07% NA

3-5-DAY SERVICE STANDARD

ROOT CAUSE Transit 

Missing 

Outgoing 

Scan

Last Mile Unable to 

Assign

Transit Late 

Secondary 

Scan

Transit 

Missing 

Destination 

Primary Scan

POINT

IMPACT

FY 

2022 5.33 4.72 2.91 2.76 0.81

FY 

2021 10.91 5.94 7.06 6.01 3.56

CHANGE % -51.15% -20.54% -58.78% -54.08% -77.25%
Docket No. ACR2022 - 146 -

As Figures V-17 and V-18 show, with few exceptions, the root causes that the Postal Service 

identified in the top five for categories of Flats in FY 2022 were the same ones as those it 

identified in FY 2021. As with First-Class Mail letter-shaped products, generally, the point 

impacts of the top root causes decreased from FY 2021 to FY 2022.

Last Mile failures remain the top root cause for Single-Piece 2-Day Flats. However, Last Mile 

failures decreased in point impact from 8.80 in FY 2021 to 7.94 in FY 2022, which amounts 

to a decrease of 9.77 percent. The second highest root cause failure was First Mile, the 

point impact of which decreased from 6.55 in FY 2021 to 4.47 in FY 2022, an annual 

decrease of 31.76 percent. For Single-Piece 3-5-Day Flats, the top root cause was First Mile, 

the point impact of which increased from 2.40 in FY 2021 to 2.57 in FY 2022, an increase of 

7.00 percent.

The top root causes in FY 2022 for presorted Flats were Last Mile failures and Transit 

Missing Outgoing Scan. For both the Overnight and 2-Day service standard, the top root 

cause was Last Mile failures. In FY 2022, presorted Overnight Flats had a point impact of 

6.69, compared to 7.18 in FY 2021, which represents a decrease of 8.22 percent. For the 2-

Day standard, the point impact in FY 2022 was 6.63, compared to a point impact of 7.03 in 

FY 2021, a decrease of 5.69 percent. For the 3-5-Day service standard, the top root cause 

was Transit Missing Outgoing Scan. However, the point impact decreased by 51.15 percent 

from FY 2021.

(c) International Products

Outbound Single-Piece 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, aerograms, and lettershaped mailpieces, which originate outside of the United States, contain only documents, 

and are intended for delivery inside of the United States.

235

235 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).
Docket No. ACR2022 - 147 -

Annual results for Inbound Letter Post and Outbound Single-Piece International have 

remained below their applicable service performance targets since FY 2009.236However, 

the on-time service performance score for Inbound Letter Post increased by 7.4 percentage 

points from FY 2021 to FY 2022. Outbound Single-Piece International experienced an even 

larger improvement in service performance in FY 2022, with an increase of 19.5 

percentage points. In FY 2022, the on-time service performance scores for Outbound 

Single-Piece International and for Inbound Letter Post were 81.2 percent and 77.5 percent, 

respectively, higher even than scores from pre-pandemic FY 2019.

Commission Findings and Directives

The following First-Class Mail products/categories did not achieve their service performance 

targets in FY 2022: 3-5-Day Single-Piece Letters/Postcards, Flats, Inbound Letter Post, and 

Single-Piece Outbound International. Considering this, the Commission finds Single-Piece 

Letters/Postcards, Flats, Inbound Letter Post, and Single-Piece Outbound International were 

each out of compliance in FY 2022. Specifically for Single-Piece Letters/Postcards, the 

Commission notes that the 2-Day service standard category did exceed its target whereas the 

3-5-Day service standard category did not achieve its target in FY 2022. The Commission

directs the Postal Service to improve service performance results to achieve the applicable ontime percent target level for these First-Class Mail products in FY 2023. 

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. ACR2022, if necessary. Where 

appropriate, the Postal Service shall explain the reasons for any differences in the calculation 

of data in FY 2023 versus FY 2022 and shall propose a method for comparing the data.

(a) FY 2022 Nationwide Transit and Last Mile 

Improvement Initiatives

First, the Commission directs the Postal Service to evaluate the efficacy of its FY 2023 

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.

236 Prior to FY 2009, the Postal Service provided an aggregate on-time percent result for both products without a target. See Docket No. 

ACR2008, Annual Compliance Determination, March 30, 2009, at 42 (FY 2008 ACD) (displaying an on-time percent result, aggregated for both 

products, for FY 2007 and FY 2008). For FY 2009 and FY 2010, the Postal Service set a target for the aggregate annual result of both products 

across all service standard categories. See Docket No. ACR2010, Annual Compliance Determination, March 29, 2011, at 61 (FY 2010 ACD) 

(comparing an aggregate result for both products to the 94.0 percent target); Docket No. ACR2009, Annual Compliance Determination, March 

29, 2010, at 52 (FY 2009 ACD) (same for FY 2009). From FY 2011 to FY 2020, the Postal Service set separate (but equal to 94.0 percent on-time) 

targets for Inbound Letter Post across all service standards as well as for Outbound Single-Piece International across all service standards. See, 

e.g., Docket No. ACR2011, Annual Compliance Determination, March 28, 2012, at 71 (FY 2011 ACD) (comparing FY 2011 Combined Inbound 

Letter Post result to the 94.0 percent target and FY 2011 Combined Outbound Single-Piece International result to the 94.0 percent target); 

Docket No. ACR2012, Annual Compliance Determination, March 28, 2013, at 54 (FY 2012 ACD) (same for FY 2012); FY 2018 ACD at 164 (same 

for FY 2013-FY 2018); FY 2019 ACD at 116 (same for FY 2019); FY 2020 Service Performance Report at 4 (same for FY 2020). In FY 2021, the 

Postal Service lowered targets for both international products to 82.43 percent on-time. FY 2021 Service Performance Report at 4.
Docket No. ACR2022 - 148 -

1. The transit evaluation shall explain how the progress made in FY 2023 (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 2023. 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 KPI(s) used to measure and evaluate progress 

toward completion. 

2. The Last Mile evaluation shall explain how the progress made in FY 2023 (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 2023. 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 2023 Quarter 1 to FY 2022 Quarter 1) and provide a narrative explaining the 

practices employed to remediate the underlying problem(s) in FY 2023. 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,

237 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 27, 

2023). An updated evaluation and plan shall be filed at the time of the FY 2023 ACR (by 

December 29, 2023).

(b) FY 2022 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.

237 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. ACR2022 - 149 -

1. For each Division, the Postal Service shall evaluate the efficacy of its FY 2023 

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 2023. This evaluation shall 

include quantitative comparisons of the same period last year (e.g., compare 

FY 2023 Quarter 1 to FY 2022 Quarter 1) and provide a narrative explaining 

the practices employed to remediate the underlying problem(s) in FY 2023.

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.238 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 27, 2023). An updated report from each 

Division shall be filed at the time of the FY 2023 ACR (by December 29, 2023).

(c) Consistent Data

Third, to facilitate the consistent monitoring of First-Class Mail service performance, the 

Commission directs the Postal Service to provide the following data, described in items 1 and 

2. Data shall be provided for FY 2023 Quarter 1, Quarter 2, and “mid-year”239 within 90 days 

of the issuance of this ACD (by June 27, 2023). Data shall be provided for FY 2023 Quarter 3, 

Quarter 4, “second-half”240 and annualized for the fiscal year, in the FY 2023 ACR (by 

December 29, 2023). The Commission continues to direct the Postal Service to provide Areaand District-level data to allow comparability to prior fiscal years.

1. The air carrier capacity requested, air carrier capacity received, and air 

capacity gap calculated, using daily cubic feet volume.241

238 See generally FY 2022 Division Report; FY 2022 Division Report - Attachment A.

239 Mid-year refers to the aggregation of the data for Quarters 1 and 2 of FY 2023.

240 Second-half refers to the aggregation of the data for Quarters 3 and 4 of FY 2023. Annualized refers to the aggregation of the data for all four 

quarters of FY 2023.

241 See, e.g., Library Reference USPS-FY22-NP30, December 29, 2022, Excel file “NONPUBLIC Air Capacity FY2022.xlsx.”
Docket No. ACR2022 - 150 -

2. The number of CLTs (any HCR that is late by more than 4 hours), presented for 

the nation, each Area, and each District.242

(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 International, the Commission directs the 

Postal Service to provide information from each ISC (and the Honolulu, Hawaii facility 

responsible for processing Outbound Single-Piece 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 2023 

initiatives to improve on-time service performance results for Inbound Letter 

Post and Outbound Single-Piece 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 2023.

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 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 

International volume it processed each Quarter and provide corresponding 

quantification for the same period during FY 2022. The report for each facility 

shall be filed within 90 days of the issuance of this ACD (by June 27, 2023). An 

updated report from each facility shall be filed at the time of the FY 2023 ACR 

(by December 29, 2023).

b. USPS Marketing Mail

FY 2021 Directives

Finding that five USPS Marketing Mail products did not meet their FY 2021 service 

performance targets (High Density and Saturation Flats/Parcels, Parcels, Carrier Route, 

Flats, and Every Door Direct Mail—Retail (EDDM-R)), the Commission found that each 

242 See, e.g., Library Reference USPS-FY22-29, Excel file “CLT FY22 11.30.2022.xlsx.”
Docket No. ACR2022 - 151 -

product was out of compliance. FY 2021 ACD at 179. The Commission directed the Postal 

Service to provide the Commission the top five root cause point impacts for below-target 

USPS Marketing Mail products for each quarter and annually in FY 2022. Id. Additionally, it 

required the Postal Service to evaluate the efficacy of its FY 2022 initiatives to improve 

service performance and provide a detailed plan to improve performance. See id. at 179-80. 

The Commission also directed the Postal Service to file national service performance 

results, disaggregated by month, for under-target USPS Marketing Mail products in 

FY 2022. Id. at 180. Finally, the Commission required the Postal Service to provide a report 

on its initiative to resolve a source system error with respect to Parcels. Id.

FY 2022 Results

Figure V-19 shows the service performance results compared to the FY 2022 targets for 

USPS Marketing Mail products for FY 2022.
Docket No. ACR2022 - 152 -

Figure V-19

USPS Marketing Mail

Service Performance Results, by Percent, FY 2022

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 2022 Service Performance Report at 9.

Table V-4 summarizes service performance results compared to the annual targets for 

Marketing Mail products for FY 2020, FY 2021, and FY 2022.
Docket No. ACR2022 - 153 -

Table V-4

USPS Marketing Mail

Service Performance Results, by Percent, FY 2020–FY 2022

Product FY 2020 Target FY 2021 Target FY 2022 Target

High Density and 

Saturation Letters (HDSL) 93.2 91.8 92.7 86.62 96.6 91.84

High Density and 

Saturation Flats/Parcels 

(HDSF)

87.5 91.8 85.3 86.62 87.6 91.84

Carrier Route 87.8 91.8 85.1 86.62 93.3 91.84

Letters 89.8 91.8 89.5 86.62 94.4 91.84

Flats 75.7 91.8 72.5 86.62 84.3 91.84

Parcels 96.7 91.8 52.7 86.62 96.8 91.84

Every Door Direct MailRetail (EDDM) 77.0 91.8 75.7 86.62 78.0 91.84

Notes: Red text indicates service performance was below target. Green text 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.

Postal Service Report

The Postal Service notes that the service performance scores for all USPS Marketing Mail 

products increased from FY 2021 to FY 2022. FY 2022 Service Performance Report at 11. It 

also explains that four USPS Marketing Mail products achieved their targets (High Density 

and Saturation Letters, Carrier Route, Letters, and Parcels) and three did not achieve their 

targets (High Density and Saturation Flats/Parcels, Flats, and EDDM-R). Id.

As directed in the FY 2021 ACD, for USPS Marketing Mail products that failed to achieve 

their on-time service performance targets in FY 2022, the Postal Service provided 

explanations of its progress at improving service performance in FY 2022 and plans for 

further remedying issues with respect to those products’ service performance in FY 2023. 

See FY 2021 Service Performance Report at 12-16. These initiatives are described in 

greater detail in Section A.2.d., above. The Postal Service also provided periodic data 

throughout FY 2022 with respect to those products.243

Comments and Related Commission Analysis

The Public Representative observes that, after decreasing in FY 2021, the service 

performance targets for USPS Marketing Mail products in FY 2022 returned to their FY 

2020 levels. PR Comments at 34. He notes that in FY 2022, all Marketing Mail products 

243 See, e.g., Docket No. ACR2021, Second Response to Directives, Excel file “FY 2022 Monthly Data 5-10-22.xlsx;” see also Library Reference 

USPS-FY22-29, Excel file “FY22 Marketing Mail Root Cause.xlsx.”
Docket No. ACR2022 - 154 -

except High Density and Saturation Flats/Parcels, Flats, EDDM-R and Mixed Products 

Letters met or exceeded their targets. Id. Moreover, more products in FY 2022 than in FY 

2021 met their targets per quarter. Id. at 35-36. Similarly, service performance for Flats 

products, “while still not meeting their performance targets, improved from an FY 2021 

annual on-time percent of 72.5 to an on-time percent of 84.3 in FY 2022.” Id. at 36.

The Commission acknowledges these observations and has taken them into account in 

formulating its directives. Accordingly, the Commission has developed directives 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, which are detailed below in Section 

V.A.4.b.6., infra.

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. FY 2022 service performance results for four USPS 

Marketing Mail products (Letters, Carrier Route, Parcels, and High Density and Saturation 

Letters) exceeded the applicable targets set by the Postal Service. High Density and 

Saturation Letters and Parcels scored about five percentage points above the applicable FY 

2022 target. Two other products (Letters and Carrier Route) exceeded their FY 2022 

targets by more modest amounts (2.56 and 1.46 percentage points, respectively). 

Conversely, three USPS Marketing Mail products failed to meet their targets in FY 2022: 

High Density and Saturation Flats, Flats, and EDDM-R. These products include flat-shaped 

mailpieces, which have faced challenges for several years and will be analyzed in the 

Commission’s Flats Study. FY 2022 Service Performance Report at 9.

Table V-5 presents the quarterly service performance results for USPS Marketing Mail 

products for FY 2021 and FY 2022.
Docket No. ACR2022 - 155 -

Table V-5

USPS Marketing Mail

Service Performance Results, by Quarter, by Percent, FY 2021–FY 2022

Product

Quarter 1 Quarter 2 Quarter 3 Quarter 4

FY 

2021

FY 

2022

FY 

2021

FY 

2022

FY 

2021

FY 

2022

FY 

2021

FY 

2022

High Density and 

Saturation Letters 

(HDSL)

88.2 95.9 91.6 95.8 95.6 97.4 96.2 97.3

High Density and 

Saturation 

Flats/Parcels 

(HDSF)

84.1 87.8 83.4 86.0 86 88.4 88.4 87.9

Carrier Route 81.9 91.3 82.0 93.0 89.6 95.1 92.4 95.1

Letters 85.9 93.1 86.9 93.0 92.2 95.8 94.2 95.8

Flats 69.1 81.4 66.9 81.7 76.9 86.5 82.7 88.1

Parcels 51.7 90.4 48.3 91.7 54.1 79.7 58.5 98.8

Every Door Direct 

Mail-Retail 

(EDDM)

73.6 75.4 75.3 78.5 76.4 76.4 77.3 79.8

Note: Red text indicates service performance in the quarter FY 2022 was below service performance of the corresponding quarter in FY 2021. 

Green text indicates service performance in the quarter in FY 2022 was above service performance of the corresponding quarter in FY 2021.

Source: Library Reference USPS-FY22-29, Excel file “FY22 ACR Marketing Mail.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, Excel 

file “FY21 ACR Marketing Mail.xlsx.” 

Three of the seven USPS Marketing Mail products (High Density and Saturation Flats, Flats, 

and EDDM-R) did not achieve their service performance targets in FY 2022. However, 

every product exceeded its service performance score in FY 2021.

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.

244 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.

244 Library Reference USPS-FY22-29, Excel file “FY22 Marketing Mail Root Cause.xlsx.”
Docket No. ACR2022 - 156 -

Figures V-20 and V-21 show the FY 2022 top root causes and corresponding point impacts 

for letter- and flat-shaped USPS Marketing Mail entered at origin.

Figure V-20

USPS Marketing Mail Origin-Entered Letter/Cards

FY 2022 National Top 5 Root Causes and Point Impact

Source: Library Reference USPS-FY22-29, Excel file “FY22 Marketing Mail Root Cause.xlsx;” Docket No. ACR2021, Library Reference 

USPS-FY21-29, Excel file “FY21 Marketing Mail Root Cause.xlsx.”

3-5-DAY SERVICE STANDARD

ROOT CAUSE Transit Late

Secondary 

Scan

Transit 

Missing 

Outgoing Scan 

Last Mile Unable to 

Assign First Mile

POINT

IMPACT

FY 

2022 2.64 2.45 1.03 0.81 0.37

FY 

2021 5.13 4.13 1.00 1.18 0.84

CHANGE % -48.54% -40.68% 3.00% -48.31% -55.95%

6-10-DAY SERVICE STANDARD

ROOT CAUSE Transit 

Missing 

Outgoing Scan

Transit Late 

Secondary 

Scan

Unable to 

Assign Last Mile

Start-theClock to 

Outgoing 

Processing 

Delay

POINT

IMPACT

FY 

2022 13.86 4.88 2.52 0.99 0.39

FY 

2021 20.56 8.45 4.78 0.85 NA

CHANGE % -32.59% -42.25% -47.28% 16.47% NA

11+- DAY SERVICE STANDARD

ROOT CAUSE Transit Late 

Secondary 

Scan

Transit 

Missing 

Outgoing Scan

Unable to 

Assign Last Mile

AADC 

Processing 

Delay-MMP to 

DPS Delay

POINT

IMPACT

FY 

2022 10.92 3.86 3.46 0.72 0.12

FY 

2021 17.79 7.08 1.94 0.93 NA

CHANGE % -38.59% -45.43% 78.51% -22.69% NA
Docket No. ACR2022 - 157 -

Figure V-21

USPS Marketing Mail Origin-Entered Flats 

FY 2022 National Top 5 Root Causes and Point Impact

Source: Library Reference USPS-FY22-29, Excel file “FY22 Marketing Mail Root Cause.xlsx;” Docket No. ACR2021, Library Reference USPSFY21-29, Excel file “FY21 Marketing Mail Root Cause.xlsx.”

3-5-DAY SERVICE STANDARD

ROOT CAUSE Transit 

Missing 

Outgoing Scan 

Last Mile Unable to 

Assign

Transit Late

Secondary 

Scan 

First Mile

POINT

IMPACT

FY 

2022 5.17 3.46 2.86 2.17 0.85

FY 

2021 8.52 3.67 5.24 3.54 2.47

CHANGE % -39.38% -5.67% -45.68% -38.64% -65.73%

6-10-DAY SERVICE STANDARD

ROOT CAUSE Transit 

Missing 

Outgoing Scan

Unable to 

Assign

Transit Late 

Secondary 

Scan

Last Mile

AADC 

Processing 

Delay: NonStandard Flow

POINT

IMPACT

FY 

2022 18.77 8.38 6.20 2.63 0.61

FY 

2021 25.39 13.96 8.37 2.45 NA

CHANGE % -26.07% -39.97% -25.89% 7.23% NA

11+-DAY SERVICE STANDARD

ROOT CAUSE Transit 

Missing 

Outgoing Scan

Last Mile Unable to 

Assign

Transit Late 

Secondary 

Scan

AADC 

Processing 

Delay: NonStandard Flow

POINT

IMPACT

FY 

2022 13.57 4.19 2.53 1.24 0.36

FY 

2021 21.50 5.54 3.60 1.77 NA

CHANGE % -36.91% -24.43% -29.61% -29.80% NA
Docket No. ACR2022 - 158 -

In FY 2022, 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. In 

general, the point impacts of the top five root causes decreased compared with FY 2021. 

With four exceptions, the point impacts of the top five root causes for USPS Marketing Mail 

were in the single digits in FY 2022. The four exceptions include: 6-10-Day USPS Marketing 

Mail letters and cards, with the point impact for the Transit Missing Outgoing Scan 

indicator at 13.86; 11+ -Day USPS Marketing Mail letters and cards, with the point impact 

for the Transit Late Secondary Scan indicator at 10.92; 6-10-Day USPS Marketing Mail flats, 

with the point impact for the Transit Missing Outgoing Scan indicator at 18.77 percent; and 

11+ -Day USPS Marketing Mail flats with the point impact for the Transit Missing Outgoing 

Scan indicator at 13.57 percent. The Commission encourages the Postal Service to refine 

and apply its data leveraging techniques to improve service performance for all USPS 

Marketing Mail products that did not achieve their targets.

Commission Findings and Directives

Although on-time service performance scores increased for each USPS Marketing Mail 

product from FY 2021 to FY 2022, three products did not achieve their service performance 

targets in FY 2022: High Density and Saturation Flats/Parcels, Flats, and 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 2022. 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 2023. 

To monitor the Postal Service’s initiatives to remediate service performance issues with 

respect to these non-compliant products, which have been exacerbated by the COVID-19 

pandemic, 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 2023).

The Commission directs the Postal Service to evaluate the efficacy of its FY 2022 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 2023), 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 2023 initiatives to 

improve on-time results for these products by describing the progress made 

(including how the Postal Service adapted its initiatives in light of the COVID19 pandemic’s impacts and the status of initiatives identified in Docket Nos. 

ACR2020, ACR2021, and ACR2022) and explaining how the Postal Service’s 

progress (or lack thereof) affected on-time results for these products in 

FY 2023. The evaluations shall include quantitative comparisons of the same 

period last year (e.g., compare FY 2023 Quarter 1 to FY 2022 Quarter 1) and 

provide a narrative explaining the practices observed to remediate the 

underlying problem(s) in FY 2023.
Docket No. ACR2022 - 159 -

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 27, 2023). An updated report shall be filed at the time of the 

FY 2023 ACR (by December 29, 2023).

c. Periodicals

FY 2021 Directives

Finding that the two Periodicals products had not met their service performance targets 

since FY 2009 and had declined from FY 2020, the Commission found both In-County 

Periodicals and Outside County Periodicals to be out of compliance in FY 2021. FY 2020 

ACD at 188. The Commission directed the Postal Service to provide the Commission the top 

five root cause point impacts for Periodicals for each quarter and annually in FY 2022. Id.

Additionally, it required the Postal Service to evaluate the efficacy of its FY 2022 initiatives 

to improve service performance and provide a detailed plan to improve performance. See 

id. at 188-89. The Commission also directed the Postal Service to file national service 

performance results, disaggregated by month, for Periodicals in FY 2022. Id. at 189.

FY 2022 Results

Figure V-22 shows the service performance results compared to the annual targets for both 

Periodicals products for FY 2022.
Docket No. ACR2022 - 160 -

Figure V-22

Periodicals

Service Performance Results, by Percent, FY 2021

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 2022 Service Performance Report at 17.

Table V-6 summarizes service performance results compared to the annual targets for both 

Periodicals products for FY 2020, FY 2021, and FY 2022.

Table V-6

Periodicals

Service Performance Results, by Percent, FY 2020–FY 2022

Product FY 2020 FY 2020 

Target FY 2021 FY 2021 Target FY 2022 FY 2022 Target

In-County 80.9 91.8 75.6 86.62 83.6 82.67

Outside County 80.7 91.8 75.0 86.62 83.3 82.67

Note: Red text indicates service performance was below target. Green text indicates service performance was above target.

0.93 0.63

82.67 82.67

0

20

40

60

80

100

In County Outside County

On-Time (%)

FY 2022 FY 2022 Target Points from Target
Docket No. ACR2022 - 161 -

Postal Service Report

The Postal Service explains that both Periodicals products exceeded their service 

performance targets in FY 2022. FY 2022 Service Performance Report at 18. It also 

emphasizes that scores “improved by roughly eight percentage points compared to FY 

2021.” Id. at 19. The Postal Service also discussed several initiatives that it believes will 

improve service performance, described in greater detail in Section A.2.d., above.

As directed in the FY 2021 ACD, the Postal Service provided evaluations of the efficacy of its 

FY 2022 initiatives to improve service performance for both Periodicals products, as well 

as its plans to further remedy service performance for those products in FY 2023.245 The 

Postal Service also, as directed, provided monthly service performance results for 

Periodicals.246 Moreover, the Postal Service provided quarterly root cause point impact 

data for Periodicals in FY 2022. See, e.g., Docket No. ACR2021, Third Response to Directives 

at 23.

Comments and Related Commission Analysis

The Public Representative notes that in FY 2022, both In-County and Outside County 

Periodicals met their service performance targets; however, he asserts that “this result 

appears to have been achieved due only to the lowering of Service Performance Targets 

from 91.8 percent in FY 2020 and 86.62 percent in FY 2021, down to 82.67 percent in FY 

2022,” and that the FY 2022 service performance scores would have fallen short using the 

FY 2021 targets. PR Comments at 37-39. Further, the Public Representative notes that 

service standard changes, impacting 7 percent of Periodicals, makes it “difficult to conclude 

whether improved service performance results are due to improved Postal Service 

procedures or a change in service standards.” Id. at 39.

NMA asserts generally that “[t]he service provided to Periodicals mail, while facially 

improved by a marginal degree, remains unacceptable.” NMA Comments at 6. Specifically, 

NMA also notes that: (1) the Postal Service only measured about half of all Periodicals mail; 

(2) the Periodicals service standard in effect in FY 2022 was slower than that in FY 2021 

due to the changes deriving from Docket No. N2021-1; (3) “achieving a target that is set far 

below the prevailing service standard (even one that was less demanding than in the 

previous year) is not acceptable;” (4) the FY 2023 target is merely 85.75 percent on-time 

delivery, far below the 95 percent target conveyed in the DFA Plan; and (5) the service 

standards for Periodicals will change once again due to the changes in CET reflected in 

Docket No. N2022-2, thus again “[m]oving the goalposts” for successful service 

performance. Id. at 7-8.

The Postal Service responds that not all Periodicals are measured because not all 

Periodicals are machine-processed and, therefore, they do not all receive the requisite 

245 See FY 2022 Service Performance Report at 19-22; Docket No. ACR2021, Third Response of the United States Postal Service to Commission 

Requests for Additional Information in the FY 2021 Annual Compliance Determination, June 27, 2022, at 24-27 (Docket No. ACR2021, Third 

Response to Directives).

246 See Docket No. ACR2021, Third Response to Directives, Excel file “FY 2022 Monthly Data 5-10-22.xlsx.”
Docket No. ACR2022 - 162 -

Start-the-Clock and Stop-the-Clock scans. Postal Service Reply Comments at 17. According 

to the Postal Service, however, the absence of unmeasured mailpieces does not “make[] the 

service performance score for Periodical Mail that is in measurement somehow 

inaccurate.” Id. The Postal Service notes that it did not change the service standards for 

Periodicals in order to improve service performance scores, but rather as “a necessary part 

of improving service reliability over the long run as they enable better operational 

precision and improve the Postal Service transportation and processing networks.” Id. at 

12. It asserts that service performance improvement in FY 2022 demonstrates that these 

changes have already begun to have their intended effect. Id. Moreover, the Postal Service 

asserts that, in terms of the CET change for Periodicals, this change was required to enable 

better mail processing and service performance and is not germane to FY 2022 compliance.

Id. at 17-18.

The Commission acknowledges that the changes in service standards for some Periodicals 

categories complicates the comparability of year-over-year on-time service performance 

results for these classes and suggests that the Postal Service endeavor to develop a method 

to accurately measure how service performance has changed for these mailpieces over 

time.

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 met their 

applicable 82.67 percent on-time target in FY 2022. FY 2022 results are 0.93 percentage 

points and 0.63 percentage points above target for In-County Periodicals and Outside 

County Periodicals, respectively. Overall, on-time performance for Periodicals increased 

from FY 2021 to FY 2022. Specifically, FY 2022 results increased 8.0 percentage points and 

8.3 percentage points from FY 2021 results for In-County Periodicals and Outside County 

Periodicals, respectively. FY 2022 was the first year that Periodicals products met their 

applicable targets since FY 2009.247 However, the Commission notes that the targets that 

the Postal Service set for Periodicals are the lowest Market Dominant product targets in 

effect during FY 2022. Service performance results for both Periodicals products remain 

below the levels observed in FY 2019 (before the outbreak of the COVID-19-pandemic), 

although both products’ FY 2022 results exceed their FY 2020 and FY 2021 results.

Table V-7 presents the quarterly service performance results for both Periodicals products 

for FY 2021 and FY 2022.

247 Prior to FY 2009, the Postal Service provided service performance data that were limited to certain categories of First-Class Mail and Package 

Services. See FY 2008 ACD at 41. For FY 2009 through FY 2011, the Postal Service applied a 91.0 percent on-time target to an aggregate 

Periodicals result. See FY 2011 ACD at 74 (comparing an aggregate result for both Periodicals products to the 91.0 percent target); FY 2010 ACD 

at 67 (same); FY 2009 ACD at 55 (same). Since FY 2012, the Postal Service has set separate (but equal) targets for each Periodicals product 

across all service standards. See, e.g., FY 2012 ACD at 57 (comparing FY 2012 result to the 91.0 percent target for each product); FY 2018 ACD 

at 185 (comparing results for FY 2013 through FY 2017 to the 91.0 percent target for each product and FY 2018 results to the 91.8 percent 

target for each product); FY 2019 ACD at 128 (comparing FY 2019 result to the 91.8 percent target for each product); FY 2020 Service 

Performance Report at 17 (comparing FY 2020 result to the 91.8 percent target for each product).
Docket No. ACR2022 - 163 -

Table V-7

Periodicals

Service Performance Results, by Quarter, by Percent, FY 2021–FY 2022

Product

Quarter 1 Quarter 2 Quarter 3 Quarter 4

FY 

2021

FY 

2022

FY 

2021

FY 

2022

FY 

2021

FY 

2022

FY 

2021

FY 

2022

In-County 69.8 80.8 71.5 81.4 79 86.6 82.7 86.8

Outside 

County 69.5 80.3 70.9 81.1 78.2 86.4 82.2 86.6

Note: Red text indicates service performance in the quarter FY 2022 was below service performance of the corresponding quarter in FY 2021. 

Green text indicates service performance in the quarter in FY 2022 was above service performance of the corresponding quarter in FY 2021.

Source: Library Reference USPS-FY22-29, Excel file “FY22 ACR Periodicals.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, Excel file 

“FY21 ACR Periodicals.xlsx.”

Both Periodicals products experienced similar trends from FY 2021 to FY 2022. For both 

products, results were lower in the first half of the fiscal year (Quarters 1 and 2) than in the 

second half of the fiscal year (Quarters 3 and 4). The improvements in service performance 

observed in the second half of FY 2022 relative to the corresponding periods in FY 2021,

was sufficient to offset the below-target results observed in the first half of FY 2022.248 In 

addition, the results for every quarter in FY 2022 exceeded the results for the same period 

in FY 2021.249

Figure V-23 presents the top five root causes for failure of In-County and Outside County 

periodicals to be delivered on time in FY 2022, along with the corresponding change from 

FY 2021.

248 Compare Library Reference USPS-FY22-29, Excel file “FY22 ACR Periodicals.xlsx,” tab “Aggregation,” with Docket No. ACR2021, Library 

Reference USPS-FY21-29, Excel file “FY21 ACR Periodicals.xlsx,” tab “Aggregation.”

249 Compare Library Reference USPS-FY22-29, Excel file “FY22 ACR Periodicals.xlsx,” tab “Aggregation,” with Docket No. ACR2021, Library 

Reference USPS-FY21-29, Excel file “FY21 ACR Periodicals.xlsx,” tab “Aggregation.”
Docket No. ACR2022 - 164 -

Figure V-23

In-County and Outside County Periodicals

FY 2022 National Top 5 Root Causes and Point Impact

Source: Library Reference USPS-FY22-29, Excel file “FY22 Periodicals Root Cause.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, 

Excel file “FY21 Periodicals Root Cause.xlsx.”

Relative to FY 2021, all top five root cause categories decreased in point impact in FY 2022. 

Last Mile failures decreased from 5.80 in FY 2021 to 5.56 in FY 2022, which represents a 

decrease of 4.14 percent, but remains the highest root cause of failure in FY 2022. The 

second highest root cause category, Unable to Assign, decreased in point impact from 5.31 

in FY 2021 to 3.31 in FY 2022, which amounts to a decrease of 37.66 percent. As Figure V23 shows, the point impacts of the remaining root causes decreased by even larger 

percentages from FY 2021 to FY 2022.

Commission Findings and Directives

The Commission is encouraged that both Periodicals products met their on-time service 

performance targets in FY 2022 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 in FY 2022 and FY 2023 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 2023, 

specific detailed plans to improve service performance as described in items 1 and 2.

ROOT CAUSE

Last Mile Unable to Assign Transit Missing 

Outgoing Scan

Transit Late 

Secondary Scan First Mile

POINT IMPACT

FY 2022

5.56

FY 2021

5.80

FY 2022

3.31

FY 2021

5.31

FY 2022

2.56

FY 2021

5.67

FY 2022

1.23

FY 2021

2.42

FY 2022

1.09

FY 2021

3.86

CHANGE %

-4.14% -37.66% -54.85% -49.17% -71.76%
Docket No. ACR2022 - 165 -

1. The Postal Service shall evaluate the efficacy of its FY 2023 initiatives to improve 

on-time results for Periodicals by describing the progress made (including how the 

Postal Service adapted its initiatives in light of the COVID-19 pandemic’s impacts 

and the status of initiatives identified in Docket Nos. ACR2020, ACR2021, and 

ACR2022) and explaining how the Postal Service’s progress (or lack thereof) 

affected on-time results for Periodicals in FY 2023. The evaluations shall include 

quantitative comparisons of the same period last year (e.g., compare FY 2023 

Quarter 1 to FY 2022 Quarter 1) and provide a narrative explaining the practices 

employed to remediate the underlying problem(s) in FY 2023.

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 2023 ACR (by December 29, 2023).

d. Package Services

FY 2021 Directives

The Commission found that FY 2021 was the tenth consecutive year that the service 

performance result for BPM Flats was below its target. FY 2021 ACD at 196. The 

Commission also found that service performance results for Media Mail/Library Mail fell 

below target for the fourth year in a row. Id. Thus, the Commission found both products to 

be out of compliance in FY 2021. Id. For these two products, the Commission directed the 

Postal Service to provide the Commission the top five root cause point impacts for each 

quarter and annually in FY 2022. Id. at 196. The Commission also directed the Postal 

Service to evaluate the efficacy of its FY 2022 initiatives to improve service performance 

and provide a detailed plan to improve performance in FY 2023. Id. at 197. The 

Commission also directed the Postal Service to file national service performance results, 

disaggregated by month, for both products in FY 2022. Id.

FY 2022 Results

Figure V-24 shows the FY 2022 service performance results compared to the annual target 

of 90.0 percent on-time for Package Services products.
Docket No. ACR2022 - 166 -

Figure V-24

Package Services

Service Performance Results, by Percent, FY 2022

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 2022 Service Performance Report at 24.

Table V-8 summarizes service performance results compared to the annual targets for 

Package Services products for FY 2020, FY 2021, and FY 2022.

Table V-8

Package Services

Service Performance Results, by Percent, FY 2020–FY 2022

Product FY 2020 FY 2020 

Target FY 2021 FY 2021 Target FY 2022 FY 2022 Target

Bound Printed Matter 

Flats (BPMF) 55.7 90 61.7 90 72.0 90

Bound Printed Matter 

Parcels (BPMP) 98.5 90 97.5 90 98.2 90

Media Mail/Library Mail 80.9 90 79.2 90 88.0 90

Note: Red text indicates service performance was below target. Green text indicates service performance was above target.
Docket No. ACR2022 - 167 -

Postal Service Report

The Postal Service reports that service performance for BPM Parcels exceeded its target in 

FY 2022. FY 2022 Service Performance Report at 26. It also notes that, while service 

performance for BPM Flats and Media Mail/Library Mail did not meet targets, it did 

improve compared both to FY 2021 and to pre-pandemic (FY 2019) levels. Id. It explains 

that because Package Services are “relatively low-volume products that are currently 

processed separately from other package products,” service performance improvements 

are more difficult to achieve. Id.

The Postal Service also identifies a number of initiatives that it contends should improve 

service performance specifically for package products going forward. For instance, it states 

that it installed additional package sorting machines in FY 2022 to provide added 

processing capacity. Id. It also explains that it intends to shift Media Mail/Library Mail and 

BPM from the Network Distribution Center (NDC) network to local Process & Distribution 

Centers (P&DCs), which it expects will increase processing consistency and achieve 

economies of scale. Id. at 27. For BPM Flats, the Postal Service intends to continue to 

improve service performance by employing the Cycle Time Diagnostics Tool to attempt to 

reduce cycle time and monitoring the OPP to better achieve SSOP compliance. Id. at 27-28.

As directed in the FY 2021 ACD, the Postal Service provided evaluations of the efficacy of its 

FY 2022 initiatives to improve service performance for Package Services products, as well 

as its plans to further remedy service performance for those products in FY 2023. See id. at 

26-28; Docket No. ACR2021, Third Response to Directives at 30-31. The Postal Service also, 

as directed, provided monthly service performance results for Package Services.250

Moreover, the Postal Service provided quarterly root cause point impact data for Package 

Services in FY 2022. See, e.g., Docket No. ACR2021, Third Response to Directives at 29.

Comments and Related Commission Analysis

The Public Representative notes that on-time service performance targets for Package 

Services remained unchanged from FY 2020. PR Comments at 40. Only one product—BPM 

Parcels—met its target. Id. However, the Public Representative observes that Media 

Mail/Library Mail was within 2 percentage points of its target. Id. On the other hand, while 

BPM Flats’ on-time service performance score has improved, it still fell short of its target by 

a wide margin. Id.

The Commission acknowledges these observations and has taken them into account in 

formulating its directives. Accordingly, the Commission has developed directives 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 and Media Mail/Library Mail, which are detailed below in 

Section V.A.4.d.6., infra.

250 See Docket No. ACR2021, Second Response to Directives, Excel file “FY 2022 Monthly Data 5-10-22.xlsx.”
Docket No. ACR2022 - 168 -

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 exceeded the applicable service 

performance target in FY 2022. BPM Flats and Media Mail/Library Mail did not meet their 

service performance targets for FY 2022.

The two products that did not achieve their FY 2022 service performance targets, BPM 

Flats and Media Mail/Library Mail, have experienced service performance challenges for 

many years. BPM Flats has been below target for over a decade, while Media Mail/Library 

Mail has been below target for 5 consecutive years.

Table V-9 presents the quarterly service performance results for Package Services products 

for FY 2021 and FY 2022. 

Table V-9

Package Services

Service Performance Results, by Quarter, by Percent, FY 2021–FY 2022

Product

Quarter 1 Quarter 2 Quarter 3 Quarter 4

FY 

2021

FY 

2022

FY 

2021

FY 

2022 FY 2021 FY 2022 FY 2021 FY 2022

Bound 

Printed 

Matter Flats 

(BPMF)

57.2 67.6 59.8 70.4 63.9 76.0 69.7 76.0

Bound 

Printed 

Matter 

Parcels 

(BPMP)

97.3 98.6 96.6 98.2 97.7 98.1 98.5 97.5

Media 

Mail/Library 

Mail

74.7 86.5 73.8 82.5 84.2 89.4 86.7 94.3

Note: Red text indicates service performance in the quarter FY 2022 was below service performance of the corresponding quarter in FY 2021. 

Green text indicates service performance in the quarter in FY 2022 was above service performance of the corresponding quarter in FY 2021.

Source: Library Reference USPS-FY22-29, Excel file “FY22 ACR Package Services.xlsx;” Docket No. ACR2021, Library Reference USPS-FY21-29, 

Excel file “FY21 ACR Package Services.xlsx.” 

Media Mail/Library Mail and BPM Flats experienced a similar trend as the majority of other 

Market Dominant products. In the first half of FY 2022 (Quarters 1 and 2) results were 

higher than in the second half of FY 2022 (Quarters 3 and 4). For BPM Parcels, scores were 

slightly lower in the second half of FY 2022 but remained well-above the target of 90 

percent. With one exception, quarterly results increased for all Package Services products 

compared to the results for the same period in FY 2021.
Docket No. ACR2022 - 169 -

Figure V-25 presents the top five root causes for the failure of the BPM Flats product to be 

delivered on time in FY 2022, with the corresponding change from FY 2021.

Figure V-25

Bound Printed Matter Flats 

FY 2022 National Top 5 Root Causes and Point Impacts

Source: Library Reference USPS-FY22-29, Excel file “FY22 Bound Printed Matter Flats Root Cause.xlsx;” Docket No. ACR2021, Responses of the 

United States Postal Service to Questions 1-21 of Chairman’s Information Request No. 11, February 11, 2022, question 13.

BPM Flats experienced a significant improvement in service performance score compared 

with FY 2021 but still fell well below its FY 2022 target. While it is difficult to draw 

conclusions from the root cause data for BPM Flats between FY 2021 and FY 2022, three 

out of the top five root causes experienced a sizable decrease compared with FY 2021. The 

Unable to Assign indicator decreased from 17.53 in FY 2021 to 9.79 in FY 2022, a decrease 

of 44.15 percent. The Unable to Assign indicator is applied to mailpieces for which there is 

insufficient information to determine the root cause. FY 2022 Division Report at 5. As a 

result, it is impossible to determine at what point in processing such failures have 

occurred. The Transit Late Secondary Scan indicator and First Mile indicator also 

experienced a decrease in point impact compared with FY 2021, decreasing by 18.58 

percent and 31.25 percent, respectively, but Last Mile failures increased by 8.33 percent 

between FY 2021 and FY 2022, a relatively small increase compared with the 25.89 percent 

increase between FY 2020 and FY 2021. The point impact of Transit Missing Outgoing Scan 

also increased in FY 2022, albeit by just 2.41 percent.

ROOT CAUSE

Unable to Assign Transit Late 

Secondary Scan Last Mile Transit Missing 

Outgoing Scan First Mile

POINT IMPACT

FY 2022

9.79

FY 2021

17.53

FY 2022

5.96

FY 2021

7.32

FY 2022

5.20

FY 2021

4.80

FY 2022

3.82

FY 2021

3.73

FY 2022

2.75

FY 2021

4.00

CHANGE %

-44.15% -18.58% 8.33%% 2.41% -31.25%
Docket No. ACR2022 - 170 -

The Commission acknowledges the unique characteristics of BPM Flats, which are offered 

as a cost-effective option for business mailers251 and advertised as potentially receiving 

deferred service. See DMM § 263.3.1.

Commission Findings and Directives

Although on-time service performance scores increased for each Package Services product 

from FY 2021 to FY 2022, two products did not achieve their service performance targets in 

FY 2022: BPM Flats and Media Mail/Library Mail. While the on-time performance result for 

BPM Flats increased from FY 2021 to FY 2022 by approximately 10 percentage points, the 

Commission remains concerned that this product is substantially below its target. Moreover, 

FY 2022 marks the eleventh consecutive year that BPM Flats has remained below its target. 

The Commission is also concerned that the FY 2022 on-time performance result for Media 

Mail/Library Mail remains below target. The Commission acknowledges that the Postal 

Service has repeatedly asserted that both of these products have 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 and Media 

Mail/Library Mail were each out of compliance in FY 2022. 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 2023. 

To monitor the Postal Service’s initiatives to remediate these ongoing issues related to these 

non-compliant products, the Commission directs the Postal Service to evaluate the efficacy of 

the Postal Service’s FY 2023 initiatives (including how the Postal Service adapted its 

initiatives in light of the COVID-19 pandemic’s impacts and the status of initiatives identified 

in Docket Nos. ACR2020, ACR2021, and ACR2022) to improve on-time service performance for 

BPM Flats and Media Mail/Library Mail. 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 and Media 

Mail/Library Mail, 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 27, 2023). An updated report shall be filed at the time of the FY 2023 ACR 

(by December 29, 2023).

251 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. ACR2022 - 171 -

e. Special Services

FY 2021 Directives

Finding that two Special Services products (Post Office Box Service and Ancillary Services) 

failed to meet their service performance targets for FY 2021, the Commission deemed both 

to be out of compliance. FY 2021 ACD at 200. The Commission directed the Postal Service 

to evaluate the efficacy of its FY 2022 initiatives to improve service performance and 

provide a detailed plan to improve performance in FY 2023. Id. The Commission also 

directed the Postal Service to file national service performance results, disaggregated by 

month, for both products in FY 2022. Id.

FY 2022 Results

Table V-10 shows the service performance results compared to the annual target of 90.0 

percent on-time for Special Services products for FY 2020, FY 2021, and FY 2022.

Table V-10

Special Services

Service Performance Results, by Percent, FY 2020–FY 2022

Special Services

Annual

% On-Time

Target

FY 2020 FY 2021 FY 2022

Ancillary Services 89.6 82.9 84.5 90.0

International Ancillary Services 99.8 99.9 99.9 90.0

Money Orders 93.1 98.9 99.9 90.0

Post OfficeTM Box Service 88.2 87.0 86.7 90.0

Stamp Fulfillment Services 79.1 91.7 99.8 90.0

Notes: The Postal Service reports its targets and results to one place past the decimal point. Red text indicates service performance was below 

target. Green text indicates service performance was above target.

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).

Source: FY 2022 Service Performance Report at 30; FY 2021 Service Performance Report at 25.
Docket No. ACR2022 - 172 -

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 2022. FY 2022 Service Performance Report at 

34. With respect to Post Office Box Service, the Postal Service reports that in FY 2022 it 

continued to suffer significant impacts from the COVID-19 pandemic-related employee 

unavailability, which led to employees sharing functions in the field and being unfamiliar 

with box sections in different offices. Id. To address these impacts, it attempted to better 

realign its Integrated Operating Plans (IOPs) and improve communication between 

customer service units and plant operations. Id. It also states that it will leverage advances 

in technologies to improve service performance going forward. Id. at 32-33. With respect to 

Ancillary Services, the Postal Service reports that Green Card performance presents the 

biggest area for service performance growth, while noting improvements in performance 

for insurance services and Ancillary Services as a whole. Id. at 32. It notes that it will 

continue to improve service performance for Ancillary Services by researching new 

technology for Certified Mail sortation, advancing field communication and instruction, and 

sharing service performance metrics and results with “opportunity offices.” Id. at 33-34.

As directed in the FY 2021 ACD, the Postal Service provided evaluations of the efficacy of its 

FY 2022 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 2022. Id. at 32-34. The Postal Service also, as directed, provided periodic 

service performance results for Special Services.252

Comments and Related Commission Analysis

No commenters addressed the Special Services class specifically.

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 2022. Two products did not 

achieve their respective FY 2022 targets: Post Office Box Service and Ancillary Services.

Service performance results for Post Office Box Service have remained slightly below the 

target since FY 2015. For FY 2022, service performance results for Post Office Box Service 

were 3.3 percentage points below target and have been declining for the past several fiscal 

years. Service performance results for Ancillary Services first fell below target in FY 2020 

and have remained below target since then. In FY 2022, despite a slight increase from FY 

252 See, e.g., Docket No. ACR2021, Second Response to Directives, Excel file “FY 2022 Monthly Data 5-10-22.xlsx.”
Docket No. ACR2022 - 173 -

2021, the FY 2022 service performance result for Ancillary Services was 5.5 percentage 

points below target.

Commission Findings and Directives

Two Special Services products did not achieve their service performance targets in FY 2022: 

Post Office Box Service and Ancillary Services in FY 2022. Considering this, the Commission 

finds that Post Office Box Service and Ancillary Services were out of compliance in FY 2022. 

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 2023. 

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 2023 ACR for Post Office Box Service and Ancillary Services: 

(1) an evaluation of the efficacy of the Postal Service’s FY 2023 initiatives (including how the 

Postal Service adapted its initiatives in light of the COVID-19 pandemic’s impacts and the 

status of initiatives identified in Docket Nos. ACR2020, ACR2021, and ACR2022) to improve 

on-time service performance for each product; and (2) a detailed plan explaining how each 

product’s results will be improved.

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. § 3005.3. 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 

2022.253

253 See, e.g., FY 2022 ACR at 102 (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. ACR2022 - 174 -

Customer Access

Introduction

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.”254 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 2022 ACR and 

Library Reference USPS-FY22-33 contain customer access information responsive to the 

requirements of Title 39 and the Commission’s regulations.255 The Postal Service provided 

additional information in responses to CHIRs.256

The Postal Service also reported the number of retail facilities and delivery points in its 

Annual Report to Congress (Annual Report).257 In FY 2021, the Postal Service used two 

different databases to report the number of contractor-operated retail facilities, which 

caused large discrepancies in the numbers reported in the FY 2021 Annual Report and the 

FY 2021 ACR. FY 2021 ACD at 202-03. The Postal Service previously stated that in future 

ACRs it will report the number of contractor-operated retail facilities using only one 

database: the Contract Postal Unit Technology (CPUT) system.258 In the FY 2021 ACD, the 

Commission reiterated the importance of reporting consistent information among the 

Annual Report, ACR, and CHIR responses. FY 2021 ACD at 203. For the FY 2022 filings, it 

directed the Postal Service to “report the number of retail facilities using data from the 

same system to ensure that information is accurate and consistent” for both retail facilities 

and delivery points among the FY 2022 Annual Report, FY 2022 ACR, and CHIR responses. 

Id. The Commission stated that if there are any discrepancies in the numbers reported, “the 

Postal Service must identify and reconcile them in the FY 2022 ACR instead of in CHIR 

responses.” Id.

The number of delivery points is consistent between the FY 2022 Annual Report and the 

FY 2022 ACR.259 For FY 2022, the Postal Service reported the number of contractoroperated retail facilities (community Postal Offices (CPOs), contract postal units (CPUs), 

and Village Post Offices (VPOs)) in the FY 2022 Annual Report and FY 2022 ACR using only 

254 39 U.S.C. § 3652(a)(2)(B)(ii); see 39 C.F.R. § 3055.90.

255 FY 2022 ACR at 84-87; Library Reference USPS-FY22-33, December 29, 2022.

256 See Response to CHIR No. 4, questions 18-26; Response to CHIR No. 6, questions 6-9; Response to CHIR No. 7, questions 22-28; Response to 

CHIR No. 10, questions 23-26; Response to CHIR No. 12, questions 1-5.

257 FY 2022 Annual Report at 28. Retail facilities are physical locations where the Postal Service offers products and services such as stamps and 

PO Boxes. See Section V.B.2., infra.

258 Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-38 of Chairman’s Information Request No. 1, January 19, 

2021, questions 5.e.-7.e. (Docket No. ACR2020, Response to CHIR No. 1).

259 Compare FY 2022 Annual Report at 28, with Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder “FY22.33.Files,” Excel file 

“DeliveryPointsFY2022.xlsx,” tabs “Beginning FY” and “End FY.”
Docket No. ACR2022 - 175 -

the CPUT system.260 However, the number of retail facilities listed in the FY 2022 Annual 

Report differs from the FY 2022 ACR, Library Reference USPS-FY22-33, and CHIR 

responses.261 In the FY 2022 ACR, the Postal Service does note a slight discrepancy in the 

number of carrier annexes reported in the FY 2022 Annual Report due to additional 

information discovered after the FY 2022 Annual Report was issued: specifically, two 

additional carrier annexes were opened during FY 2022. FY 2022 ACR at 84 n.26. However, 

when asked to confirm the number of contractor-operated retail facilities at the end of FY 

2022, the Postal Service provided numbers that differed from the FY 2022 Annual Report 

and FY 2022 ACR. See Response to CHIR No. 4, questions 21-23.

The Postal Service provides two reasons for the discrepancies. First, it states that the CPUT 

system records all contracts for contractor-operated retail facilities and is updated 

whenever contracts are formed and terminated. Response to CHIR No. 4, question 21.e. It 

explains that CPUT system outputs can fluctuate, even when referring to a single point in 

time, as information is entered into the system. Id. Second, the Postal Service notes that a 

calculation error attributed some contract terminations to CPUs instead of VPOs. Id.

The Postal Service’s reporting of the number of contractor-operated retail facilities 

improved compared to FY 2021 because it used numbers from only one database (the 

CPUT system). However, there continue to be discrepancies in the numbers reported that 

require reconciliation via CHIRs. See CHIR No. 4, questions 21-24; CHIR No. 7, questions 22-

25. To facilitate transparency, the Postal Service could improve accuracy and consistency in 

the numbers reported via the CPUT system by, for example, requiring employees to enter 

information about new and terminated contracts within a certain time period (e.g., 15 

days). This requirement could help finalize the number of contractor-operated facilities at 

the end of the fiscal year because the CPUT system would reflect information about all the 

contracts formed and terminated during that fiscal year.

The Commission reiterates the importance of providing consistent information among the 

Annual Report, ACR, and CHIR responses. In the FY 2023 Annual Report and the FY 2023 ACR, 

the Postal Service must continue to report the number of retail facilities using data from the 

same system to ensure that information is accurate and consistent. If there are any 

discrepancies in the number of retail facilities or delivery points, the Postal Service must 

identify and reconcile them in the FY 2023 ACR instead of in CHIR responses.

Retail Facilities

The Postal Service offers products and services such as stamps and Post Office Boxes (PO 

Box) at retail facilities, which are operated either by the Postal Service (Postal Serviceoperated 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 

260 See FY 2022 Annual Report at 28 n.1; Response to CHIR No. 4, question 21.e.

261 Compare FY 2022 Annual Report at 28, with FY 2022 ACR at 84; Response to CHIR No. 4, questions 21-24; Response to CHIR No. 7, questions 

22-25.
Docket No. ACR2022 - 176 -

offices, classified stations and branches, and carrier annexes. Classified stations and 

branches are managed by a post office located in a city that provides complete postal 

services to a geographic area and is generally where the Postmaster is located.262 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.263 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.264 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.265

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. Docket No. ACR2020, Response to CHIR No. 1, question 4. 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 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 2022 in the 

FY 2022 Annual Report, FY 2022 ACR, Library Reference USPS-FY22-33, and CHIR 

responses.266 This information is shown in Table V-11.

262 “Main Post Office,” Postal Service Glossary of Postal Terms, available at https://about.usps.com/publications/pub32.pdf.

263 Id. “Post Office station;” “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). The Postal Service provided a copy of Handbook PO-101 in a CHIR 

response. Response to CHIR No. 10, question 25, PDF file “chir10_q25_po101.pdf.”

264 “Post Office branch,” Postal Service Glossary of Postal Terms; “Classified Branch,” Handbook PO-101, Appendix A at 53.

265 “Carrier annex,” Postal Service Glossary of Postal Terms.

266 FY 2022 Annual Report at 28; FY 2022 ACR at 84-85; Library Reference USPS-FY22-33, Excel file “PostOfficesFY2022.xlsx,” tab “Post Offices;” 

Response to CHIR No. 4, questions 21-24; Response to CHIR No. 7, questions 22-25.
Docket No. ACR2022 - 177 -

Table V-11

Number of Retail Facilities, FY 2020–FY 2022

Facility Type FY 2020 FY 2021 FY 2022

FY 2022 

Change 

from FY 

2021

FY 2022 

Change from 

FY 2020

Post Offices 26,361a 26,361 26,269 -92 -92

Classified Stations &

Branches and Carrier Annexes 4,968 4,885 4,865 -20 -103

Total Postal-Managed 31,329 31,246 31,134 -112 -195

Contract Postal Units 1,914 1,820 1,733 -87 -181

Village Post Offices 441 411 377 -37 -65

Community Post Offices 441 419 398 -21 -43

Total Non-Postal-Managed 2,796 2,650 2,508 -145 -289

Total Retail Facilities 34,125 33,896 33,642 -257 -484

a The Postal Service identified a “phantom office” in their FY 2020 count of post offices, resulting in an updated count of 26,361 post offices for 

FY 2020 instead of 26,362. 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 6.

Source: Response to CHIR No. 7, questions 22-25. 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 2022 was 33,642, which was 257 less than 

FY 2021. Between FY 2021 and FY 2022, the number of contractor-operated retail facilities 

declined for each facility type (CPU, VPO, and CPO). The largest decrease between FY 2021 

and FY 2022 was in the number of CPUs, which decreased by 87. The Commission will 

continue to monitor the number of retail facilities in the FY 2023 ACD to ensure customers 

have continued access to postal services.

Post Office Suspensions

For each fiscal year, the Postal Service must provide information on the number of 

suspended post offices267 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 2022. 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 last several fiscal 

years.268

267 A post office is suspended when the Postal Service stops operations at a post office because an emergency or other condition requires such 

action. “Emergency Suspension,” Handbook PO-101, Appendix A at 54. 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.

268 See 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 2, 21 (Order No. 6101).
Docket No. ACR2022 - 178 -

a. Post Office Suspension Activity during FY 2022

The Postal Service filed data on the number of suspended post offices in Library Reference 

USPS-FY22-33,269 which the Postal Service updated in a CHIR response.270 This library 

reference also includes data on post offices reopened and closed during FY 2022. Table V12 shows post office suspension activity during FY 2022 by facility type. It lists the number 

of suspended post offices at the beginning and end of FY 2022, as well as the number of 

post offices suspended, reopened, and closed during FY 2022. The number of suspended 

post offices at the end of FY 2022 is calculated by adding the number of post offices 

suspended during the fiscal year to the number of suspended post offices at the beginning 

of the fiscal year, and then subtracting the number of post offices reopened and closed 

during the fiscal year. Table V-12 shows that the total number of suspended post offices 

decreased by 44 in FY 2022. At the end of FY 2022, there were a total of 381 suspended 

post offices. This decrease was primarily driven by the Postal Service issuing final 

determinations to close 119 post offices.

Table V-12

Post Office Suspension Activity during FY 2022

Under 

Suspension 

at the Start 

of FY 2022

Suspended 

During FY 

2022

Offices 

Suspended Prior 

FYs and Reopened 

During FY 2022

Offices 

Suspended 

During FY 2022 

and Reopened 

During FY 2022

Closed 

During FY 

2022

Under 

Suspension at 

the End of FY 

2022

Post Offices 334 89 20 16 92 295

Stations/Branches 90 18 3 0 26 79

Carrier Annexes 1 7 0 0 1 7

Total 425 114 23 16 119 381

Source: Response to CHIR No. 7, questions 26, 27.a., Excel file “ChIR7_Qs26-27_PostOfficesFY2022.xlsx” tab “Suspension Summary.”

Note: The numbers in Table V-12 reflect the most up-to-date numbers reported by the Postal Service.

b. Status of Post Offices Suspended at the end of FY 2016

Background

For the past few years, the Commission has monitored the Postal Service’s progress in 

resolving suspended post offices, primarily via its ACR review. See, e.g., FY 2021 ACD at 

206-11. In the FY 2015 ACD, the Commission expressed concerns about the large number 

of unresolved suspended post offices, which had nearly tripled since FY 2012. FY 2015 ACD 

at 150. In the FY 2016 ACD, the Commission directed the Postal Service to begin filing 

quarterly reports on the status of the post offices suspended at the end of FY 2016. FY 2016 

ACD at 151. Beginning in FY 2017, the Postal Service has filed quarterly reports on the 

269 Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder “FY22.33.Files,” Excel file “PostOfficesFY2022.xlsx,” tab “Suspension 

Summary.”

270 Response to CHIR No. 7, questions 26, 27.a., Excel file “ChIR7_Qs26-27_PostOfficesFY2022.xlsx” tab “Suspension Summary.”
Docket No. ACR2022 - 179 -

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.

Quarterly reports from FY 2017 through FY 2021 are described in detail in the FY 2021 

ACD and Order No. 6101.271 In FY 2020 and FY 2021, there were several factors impeding 

the Postal Service’s ability to resolve suspended post offices, including the COVID-19 

pandemic, the Postal Service organizational restructuring, and the Postal Service’s business 

decision to pause all customer-facing activities for the remaining suspended post offices.272

As an intermediary measure, the Postal Service stated it has closely examined the 

remaining suspended post offices to “[identify] those suspensions that can be resolved 

outside the PO-101 discontinuance process and independently of the customer-facing 

activities on which that process relies.” FY 2021 ACR at 81. It also identified various causes 

underlying the remaining suspensions and mapped steps taken regarding each suspended 

post office. Id. Of the post offices suspended at the end of FY 2016, 207 remained 

suspended at the end of FY 2021. FY 2021 ACD at 210.

On February 3, 2022, the Commission established Docket No. PI2022-1 to identify and 

address issues impeding the Postal Service’s progress in resolving suspended post offices 

in a timely manner. Order No. 6101 at 3. The Commission received public input regarding 

suggested procedures or courses of action for how the Postal Service may expeditiously 

resolve suspended post offices. In the FY 2021 ACD, the Commission expressed concerns 

about the accuracy of the post office suspension information reported by the Postal Service 

in the ACR, Library Reference USPS-FY21-33, and CHIR responses. FY 2021 ACD at 210. It 

emphasized the importance of providing accurate information to properly evaluate the 

suspended post offices and conduct related data analyses. Id. at 211. The Commission 

directed the Postal Service to continue filing quarterly reports on the status of the 

suspensions remaining from FY 2016 that reflect the most accurate data currently available 

to the Postal Service. Id. It also directed that each quarterly report identify and reconcile 

any discrepancies or differences from the prior report. Id.

FY 2022 Post Office Suspension Activity

In FY 2022, the Postal Service continued to file quarterly reports on the status of the 

remaining post offices suspended at the end of FY 2016.273 The Postal Service also filed the 

report for FY 2023, Quarter 1.274 In the FY 2022 ACR, the Postal Service explains that it 

271 See FY 2021 ACD at 207-09; Order No. 6101 at 21-26. The post office suspension numbers in this section do not match some of the numbers 

in the FY 2021 ACD and Order No. 6101 because the Postal Service continually updates these numbers in subsequent filings. See Docket No. 

ACR2020, Ninth Response of the United States Postal Service to Commission Request for Additional Information in the FY 2020 Annual 

Compliance Determination, February 9, 2022. The numbers in this section reflect the most up-to-date numbers reported by the Postal Service.

272 FY 2022 ACR at 87-88. These factors are described in detail in recent ACDs. See FY 2020 ACD at 213-18; FY 2021 ACD at 207-09.

273 Docket No. ACR2021, Second Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2021 

Annual Compliance Determination, May 10, 2022, question 6; Docket No. ACR2021, Fourth Response of the United States Postal Service to 

Commission Requests for Additional Information in the FY 2021 Annual Compliance Determination, August 9, 2022, question 6; Docket No. 

ACR2021, Fifth Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2021 Annual 

Compliance Determination, November 9, 2022, question 6.

274 Docket 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. ACR2021, Sixth Response).
Docket No. ACR2022 - 180 -

identified several suspended post offices that may be resolved via the post office 

discontinuance process in Handbook PO-101, Postal Service-Operated Retail Facilities 

Discontinuance Guide.

275 Consequently, the Postal Service was able to resolve 36 suspended 

post offices in FY 2022, Quarter 3; 83 suspended post offices in FY 2022, Quarter 4; and 9 

suspended post offices in FY 2023, Quarter 1. FY 2022 ACR at 88-89.

Figure V-26 shows the number of suspended post offices resolved during each quarter of 

FY 2022 and FY 2023, Quarter 1. Figure V-26 shows that of the 663 post offices suspended 

at the end of FY 2016, 79 remained suspended at the end of FY 2023, Quarter 1.

Figure V-26

Number of Suspended Post Offices Remaining by Quarter

For 207 Post Offices Suspended at the end of FY 2021a

a This number does not include post offices suspended after the end of FY 2016.

In the FY 2022 ACR, the Postal Service proposed a three-pronged approach to resolving the 

remaining suspended post offices. FY 2022 ACR at 89. First, it states it plans to resolve 40 

suspended post offices via the post office discontinuance process in Handbook PO-101, 

which it targets completing in June 2023. Id. Second, the Postal Service plans to assemble a 

team to review documentation for those suspended post offices that have incomplete 

internal dockets preventing them from completing the post office discontinuance process. 

Id.; Response to CHIR No. 10, question 26.a. Third, in FY 2023, Quarter 2, the Postal Service 

275 FY 2022 ACR at 88. Order No. 6101 describes the post office discontinuance process in detail. Order No. 6101 at 11-18.

207 207

171

88 79

FY 2022 Q1 FY 2022 Q2 FY 2022 Q3 FY 2022 Q4 FY 2023 Q1

Total Number of Suspensions Remaining
Docket No. ACR2022 - 181 -

plans to lift the pause on customer-facing activities to allow community meetings to 

resume, which is necessary to complete the post office discontinuance process. FY 2022 

ACR at 89. It states that lifting the pause on customer-facing activities should allow the 

Postal Service to discontinue those suspended post offices that cannot be reopened or 

relocated. Id.

In the FY 2021 ACD, the Commission directed that the FY 2022 ACR “include a detailed plan 

and timeline for resolving all remaining suspended post offices, including post offices 

suspended from FY 2017 through FY 2022.” FY 2021 ACD at 211. CHIR No. 10 asked for 

details and a timeline for resolving the post offices suspended after the end of FY 2016. 

CHIR No. 10, question 26. In its response, the Postal Service states that it is unable to 

provide a timeline for completing the post office discontinuance process for all remaining 

suspended post offices because timelines for resolving individual suspended post offices 

vary. Response to CHIR No. 10, question 26.b. It points out that a timeline would be further 

impacted by newly suspended post offices that require resolution. Id. It notes that for post 

offices with incomplete internal dockets, “the review process will include completion of the 

necessary steps, and the date of its completion cannot at this time be predicted.” Id.

Comments

The Public Representative states that he is encouraged by the Postal Service’s progress in 

resolving the backlog of suspended post offices. PR Comments at 46. He comments that the 

Postal Service took a sensible course of action in focusing its resolution efforts on those 

suspended post offices that had almost completed the post office discontinuance process. 

Id. He observes that forming a team to review incomplete dockets was also a sensible 

approach because tracking suspended post offices is time consuming considering that post 

offices are routinely suspended during the year due to storm damage and other safety 

issues. Id. He recommends that the Postal Service reexamine its post office discontinuance 

process to find ways to expedite and/or reduce the complexity of the process. Id.

Commission Analysis

In FY 2022, the Postal Service made significant progress in resolving the remaining post 

offices suspended at the end of the FY 2016. Although no suspensions were resolved during 

FY 2022, Quarters 1 and 2, the Postal Service resolved 119 suspended post offices during 

FY 2022, Quarters 3 and 4, which was more than half of the remaining suspended post 

offices at the end of FY 2021 (207). The Postal Service continued this progress during 

FY 2023, Quarter 1 by resolving 9 more suspended post offices, with only 79 suspended 

post offices remaining from the end of the FY 2016.

The Postal Service’s approach of identifying suspended post offices eligible for the post 

office discontinuance process in Handbook PO-101 was successful in resolving many 

suspended post offices while ensuring that customers received adequate notice and 

opportunity to comment on potential discontinuances. In FY 2023, the Postal Service plans 

to resolve all remaining suspended post offices by: (1) continuing to identify suspended 

post offices eligible for the discontinuance process in Handbook PO-101; (2) reviewing 

documentation for those suspended post offices that have incomplete internal dockets; and 
Docket No. ACR2022 - 182 -

(3) lifting the pause on customer-facing activities to allow community meetings to resume. 

FY 2022 ACR at 89. This approach is logical because many of the remaining suspended post 

offices have incomplete docket information or have not yet completed their community 

meeting.276 However, it is unclear how the Postal Service plans to resolve post offices 

suspended after the end of FY 2016. Besides the 79 suspended post offices remaining from 

FY 2016, 302 post offices were suspended between FY 2017 and FY 2022. The total 

number of suspended post offices at the end of FY 2022, as reported by the Postal Service, 

is shown in Figure V-27:

a

Figure V-27

Remaining Suspended Post Offices

At the End of FY 2022

a FY 2022 ACR at 89.

b This number was calculated as the number of suspensions the Postal Service reported at the end of FY 2022 (381) minus the 79 

suspensions remaining from FY 2016. The net number of post offices suspended between FY 2017 and FY 2022 is 302. It does not 

include post offices that were suspended and subsequently reopened or closed during this time period.

c Response to CHIR No. 7, question 27.a.

Note: The numbers in Figure V-27 reflect the most up-to-date numbers provided by the Postal Service.

In FY 2023, the Postal Service should strive to resolve the 79 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. The Postal Service must file 

this information within 40 days after the end of each quarter in FY 2023 and in FY 2024 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 in Docket 

No. ACR2021 on February 21, 2023.277

276 See Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder “FY22.33.Files,” Excel file “PostOfficesFY2022.xlsx,” tab “Incomplete 

Docket.”

277 See Docket No. ACR2021, Response of the United States Postal Service to Question 1 of Chairman’s Information Request No. 35, February 21, 

2023, Excel file “acr2021_chir35_suspensiondata.xlsx.”

79 302 381

 r 

 a r 

 20 a

 r 

 

 20 a 2022 

 a r 

 c a h 

 2022c
Docket No. ACR2022 - 183 -

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.278 If the Postal Service does not resolve the 79 remaining suspended post offices 

by 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. Also, the FY 2023 ACR must include a detailed plan and timeline for 

resolving post offices suspended from FY 2017 through FY 2023.

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 2022 in Library Reference USPS-FY22-

33 and in the FY 2022 Annual Report.

279 The total number of delivery points in FY 2022 was 

164,904,092, an increase of 1,764,925 from FY 2021. FY 2022 Annual Report at 28. Figure 

V-28 shows the volume per delivery point between FY 2018 and FY 2022.

Figure V-28

Annual Volume per Delivery Point, FY 2018–FY 2022

a Density is the Market Dominant and Competitive volumes divided by the number of delivery points.

Source: FY 2021 ACD at 212; Commission calculation is based on FY 2022 Annual Report at 26, 28.

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 

278 For example, the spreadsheet could highlight cells that differ from the prior report or describe any corrections in the Excel spreadsheet.

279 Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder “FY22.33.Files,” Excel file “Delivery Points FY2022.xlsx;” FY 2022 Annual 

Report at 28.

2018 2019 2020 2021 2022

Density 923 892 800 790 772

Mail Volume (Billions) 146 143 129 129 127

Delivery Points (Millions) 159 160 161 163 165

 700

 750

 800

 850

 900

 950

Volume Per Delivery Point a
Docket No. ACR2022 - 184 -

point in FY 2006. Volume per delivery point was 772 in FY 2022, a 47 percent decrease 

since FY 2006.

Collection Boxes

A collection box is a container dedicated to collecting mail deposited by customers.280 The 

Postal Service must provide, at the national and Area levels, information on 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). The 

Postal Service filed this data for FY 2022 in Library Reference USPS-FY22-33 and a CHIR 

response.281 Nationally, there were 139,487 collection boxes at the end of FY 2022, 575 

fewer than in FY 2021. Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder 

“FY22.33.Files,” Excel file “CollectionBoxesFY2022.xlsx,” cells C9 and G9. Figure V-29 shows 

historical data on the number of collection boxes between FY 2018 and FY 2022.

Figure V-29

Number of Collection Boxes

FY 2018–FY 2022

Source: Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder “FY22.33.Files,” Excel file 

“CollectionBoxesFY2022.xlsx.”

The Postal Service reports that during FY 2022, 655 collection boxes were removed, and 88 

collection boxes were installed in new locations. Response to CHIR No. 4, question 19. 

These numbers are not consistent with Library Reference USPS-FY22-33, which shows that 

280 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.

281 Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder “FY22.33.Files,” Excel file “CollectionBoxesFY2022.xlsx;” Response to CHIR 

No. 4, question 19.

143,977

142,300

140,845

140,062

139,487

130

135

140

145

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Collection Boxes (Thousands)
Docket No. ACR2022 - 185 -

575 collection boxes were removed in FY 2022. The Postal Service confirms that an 

aggregate of 575 collection boxes was removed in FY 2022. Response to CHIR No. 7, 

question 28.a. It explains that it obtains collection box data from two different data sets: 

one derived from the blue box collection schedules at the beginning and end of the fiscal 

year; and the other reflecting field inputs for creating, removing, and changing blue box 

locations. Id. The Postal Service states that the aggregate reduction of collection boxes in 

FY 2022 (575) was obtained using data sets from the blue box collection schedules, which 

it asserts are the most reliable source because they are monitored continuously. Id. It 

explains that the reported number of collection boxes added (655) and removed (88) were 

obtained using the data sets from field inputs, which is a less reliable source. Id. The Postal 

Service states it is communicating with the developers of the field input data sets to try to 

identify and resolve all discrepancies. Id.

The Postal Service also confirms that, in FY 2022, it continued to follow procedures 

specified in the Postal Operations Manual (POM) for conducting an annual density test of 

collection boxes to determine which ones to remove. Response to CHIR No. 6, question 7.b. 

The POM states that mail from collection boxes located in primarily residential areas is 

generally collected when mail is delivered.282 To justify its location, a collection box must 

have a 25-piece daily average, which is calculated using a density testing process 

prescribed by the POM. POM § 311.a. The process for conducting a density test 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.

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.” 

Id. § 315.3. If the Postal Service exhausts potential relocation options, the 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.283 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 as well as the security of 

its location due to vandalism and/or tampering. Response to CHIR No. 6, question 7.c.; POM 

§§ 315.1, 315.4.

282 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. Response to CHIR No. 10, question 23, PDF file

“chir10_q23_pom.pdf.”

283 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. ACR2022 - 186 -

The Commission will continue to monitor the number of collection boxes in Docket 

No. ACR2023. In the FY 2023 ACR, the Postal Service must continue to report, at the national 

and area levels, information on the number of collection boxes at the beginning and end of 

FY 2023. The FY 2023 ACR must also 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). If 

there are any discrepancies between the number of collection boxes at the beginning and end 

of FY 2023 and the number of collection boxes added and removed during FY 2023, the Postal 

Service must reconcile these discrepancies in the FY 2023 ACR.

In FY 2023, the Commission recommends that the Postal Service continue conducting annual 

density testing of collection boxes 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 2023 

ACR any plans or initiatives to remove collection boxes beyond the procedures specified in the 

POM.

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 2022 in Library Reference USPS-FY22-33.

284 The national average wait 

time in line improved at the national level from 2 minutes 48 seconds in FY 2021 to 2 

minutes 20 seconds in FY 2022. FY 2022 ACR at 85. Table V-13 shows the national average 

customer wait time in line annually and by quarter for FY 2018 through FY 2022.

Table V-13

National Average Wait Time in Line (in Minutes)

by Quarter, FY 2018–FY 2022

Quarter FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Quarter 1 2:18 2:25 1:57 3:14 2:30

Quarter 2 2:28 2:34 2:06 3:15 2:33

Quarter 3 2:04 1:54 2:59 2:38 2:17

Quarter 4 1:53 1:39 3:05 2:05 1:59

Annual 2:11 2:08 2:26 2:48 2:20

Source: Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder “FY22.33.Files,” Excel file 

“WaitTimeInLine FY2022.xlsx,” tab “Nat’l Avg Wait Time by Qtr FY22;” FY 2021 ACD at 215.

Table V-13 shows that in FY 2022, the national average wait time in line increased slightly 

between Quarter 1 and Quarter 2, but improved significantly during Quarters 3 and 4 to 1 

minute 59 seconds in Quarter 4. This table also shows that in FY 2022, wait time in line for 

284 Library Reference USPS-FY22-33, folder “USPS-FY22-33,” folder “FY22.33.Files,” Excel file “WaitTimeInLine FY2022.xlsx.”
Docket No. ACR2022 - 187 -

each quarter improved compared to FY 2021. The Postal Service describes measures it has 

undertaken to continue to minimize wait time in line, which include:

• Daily Retail Customer Experience (CX) reporting and weekly CX Point of Sale 

reporting to retail leaders

• Various communications disseminated to retail employees to train them on how to 

help customers in line to facilitate transactions and conduct model transactions that 

respect the customer’s time

• Retail Gemba assessments during peak season and as needed285

• Relocating 72 Self-Service Kiosks (SSKs) and adding 24 new SSKs in FY 2023286

• Deployment of Rapid Dropoff Stations to expedite Label Broker® pre-paid parcel 

acceptance transactions, which the Postal Service plans to expand in FY 2023287

• Daily reporting to ensure that all post offices are effectively using systems and tools 

to prevent gaps in employee scheduling

• Scheduled visits by Postmasters and/or managers of post office operations to retail 

facilities identified as “vital” based on key performance indicators

• A weekly cadence of district and area meetings to discuss wait time in line data, 

determine the root causes of extended wait times, and develop action items to 

reduce wait time in line within 7-14 days

• Direct engagement with post offices that have exceeded wait time targets288

CHIR No. 4 asked the Postal Service to describe which measures were most effective in 

reducing wait time in line. CHIR No. 4, question 26.a. The Postal Service responds that SSK 

transaction rates increased by 3.3 percent between FY 2021 and FY 2022. Response to 

CHIR No. 4, question 26.a. It posits that wait time in line improved because the Postal 

Service strategically relocated SSKs from locations with lower transaction rates to those 

with higher transaction rates. Id.

285 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. Response to CHIR No. 4, 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.

286 There were 2,730 SSKs operating at the end of FY 2022. Response to CHIR No. 4, questions 18.a.-b. The Postal Service explains that it 

relocates SSKs based on utilization rates for each site and the corresponding “gaining site,” which is the site to where the SSK is moved. Id. It 

states that low customer utilization was the driving factor when relocating SSKs in FY 2022, and gaining sites are based on several factors, 

including walk-in revenue, transaction types, Window Operations Survey hours, wait time in line scores, pre-paid acceptance rates, Internet and 

power sources, and 24-hour lobby availability. Id. question 18.c.

287 The Rapid Dropoff Station, which was piloted nationally in FY 2021 and FY 2022, 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 2022 ACR at 86 n.28. 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 and via USPS.com and at post offices equipped 

with Retail Systems Software. Id.

288 FY 2022 ACR at 86-87.
Docket No. ACR2022 - 188 -

In FY 2022, wait time in line improved both quarterly and nationally compared to FY 2021. 

The Postal Service has taken appropriate steps to improve wait time in line, including 

employee and management training as well as using technology to facilitate transactions. 

The Commission will monitor wait time in line in Docket No. ACR2023 to ensure continued 

improvement.

The Commission encourages the Postal Service to continue implementing strategies designed 

to improve wait time in line in FY 2023. In the FY 2023 ACR, the Postal Service must describe 

actions taken during FY 2023 to improve wait time in line and explain which actions were 

most and least effective in reducing wait time in line. If wait time in line worsens during 

FY 2023, the FY 2023 ACR should:

• Explain why wait time in line increased and identify factors contributing to the 

increase

• Describe plans for improving wait time in line during FY 2024 that include specific 

actions, strategies, and initiatives designed to address factors contributing to 

increased wait time in line, such as reduced employee availability

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 Go289

The Commission previously recommended that the Postal Service expand alternative 

access channels to ensure customers have ready access to essential postal services.290 The 

Postal Service provided a table containing information on retail revenue from post offices 

289 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., b.iv. (Docket No. ACR2021, Response to CHIR No. 13).

290 Docket No. N2012-2, Advisory Opinion on Post Office Structure Plan, August 23, 2012, at 37.
Docket No. ACR2022 - 189 -

and alternative access channels for FY 2021 and FY 2022 in a CHIR response. Response to 

CHIR No. 4, question 25. Figure V-30 compares retail revenue by channel from FY 2018 

through FY 2022 in three categories:

• Post Offices (walk-in revenue from post offices and contractor-operated retail 

facilities)291

• Internet Access (Click-N-Ship)

• Other (including Stamp Sales by Partners, SSKs, Stamps by Mail/Phone, and other 

alternative access points)

Figure V-30

Retail Revenue, by Channel, FY 2018–FY 2022

Source: Response to CHIR No. 4, question 25; FY 2021 ACD at 218.

Figure V-30 shows that in FY 2022, revenue from all retail revenue channels declined 

substantially. Overall, the revenue decline between FY 2021 and FY 2022 was 

approximately $1.13 billion, or 8.60 percent. Of the channels, Post Offices (walk-inrevenue) experienced the smallest decrease (7.07 percent). However, the Other and 

291 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.

$10,266 $10,303 $10,413 $10,639 $9,886

$1,987 $1,918 $1,940 $1,980

$1,670

$469 $451 $529 $545

$474

$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 2018 FY 2019 FY 2020 FY 2021 FY 2022

Revenue (in Millions)

Post Offices (walk-in revenue) Other Internet Access
Docket No. ACR2022 - 190 -

Internet Access channels decreased by approximately 15.66 percent and 12.87 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 2022 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.

Alternative access channels allow customers to obtain postal products and services with 

limited interpersonal contact. These channels have been particularly important during the 

COVID-19 pandemic, as people have strived to minimize their exposure by remaining at 

home, which minimizes visits to brick and mortar post offices and conducting transactions 

in person. The substantial decline in retail revenue for all channels is concerning. The 

Commission will continue to monitor alternate 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 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 2023, the Postal Service must 

identify the root causes for these declines and describe plans to address them in the FY 2023 

ACR.

Customer Satisfaction with Market 

Dominant Products

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 2022 ACR and Library Reference USPS-FY22-38.292

292 FY 2022 ACR 75-84; Library Reference USPS-FY22-38, December 29, 2022, folders “FY22.38.Files,” PDF file “CX_Surveys_FY22.pdf” (CX 

Surveys).
Docket No. ACR2022 - 191 -

In FY 2022, the Postal Service measured CX using eight surveys: Business Service Network, 

Point of Sale, Delivery, Customer Care Center, Customer 360, Large Business Panel, 

Business Mail Entry Unit, and USPS.com.293 Each survey measures a customer touchpoint 

or interaction between the customer and the Postal Service. For example, the Point of Sale 

survey measures CX at retail facilities with Point of Sale systems. Library Reference USPSFY22-38, 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 2022 targets and results, and CX metrics—will be analyzed in detail in the 

Commission’s forthcoming Analysis of the FY 2022 Annual Performance Report and FY 2023 

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 2022 ACR at 75. The Delivery 

survey measures residential and small/medium business customer satisfaction with 

receiving mail and packages. Library Reference USPS-FY22-38, Preface at 3. In FY 2022, 

residential and small/medium business customers were randomly selected, mailed a 

weekly invitation to take the Delivery survey, and given the option to complete the survey 

by phone or online.294

The Large Business Panel survey measures customer satisfaction of large businesses with 

500 or more employees. Library Reference USPS-FY22-38, 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 for Market 

Dominant products. FY 2022 ACR at 76. In this section, the Delivery and Large Business 

surveys are together referred to as the Customer Satisfaction surveys.

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.295 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. CX Surveys at 35-36, 65-66. The customer 

satisfaction result for each mailing service is expressed as the percentage of customers who 

293 Library Reference USPS-FY22-38, PDF file “USPS-FY22-38 Preface.pdf,” at 1-2 (Preface).

294 Id. The Postal Service states that “[r]esidential and small/medium business customers were sufficiently sampled to ensure, at the Districtlevel, a minimum precision level of +/- 5 percentage points, at the 90 percent level of confidence per postal quarter.” FY 2022 ACR at 75.

295 CX Surveys at 35-36, 65-66. The Customer Satisfaction surveys group classes and products into mailing services. 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 analyzes customer satisfaction with Market Dominant products.
Docket No. ACR2022 - 192 -

selected Very Satisfied or Mostly Satisfied. See FY 2022 ACR at 76-77; FY 2021 ACR at 

73-74.

In the FY 2021 ACD, the Commission directed the Postal Service to “[d]escribe specific 

actions taken as well as plans, initiatives, and strategies implemented in FY 2022 to 

improve residential and small/medium business customer satisfaction with Market 

Dominant products” and “[e]xplain how these actions, plans, initiatives, and strategies 

were targeted to improve Market Dominant product satisfaction for each customer type.” 

FY 2021 ACD at 227. In the FY 2022 ACR, the Postal Service responds that in FY 2022, it 

continued to support all mailers, including residential and business customers, by 

educating them about postal products, product requirements, mailing standards, and 

operational processes and collaborating with industry associations, alliance partners, and 

Postal Customer Councils. FY 2022 ACR at 78.

The Postal Service describes two initiatives aimed at improving residential and 

small/medium business customer satisfaction with Market Dominant products. Id. at 79. 

First, the Postal Service states it conducted a market test for USPS Connect Local Mail that 

allows businesses to send documents locally the same day or next day using a fast, 

convenient service. Id. It notes that target mailers include law firms, real estate firms, 

medical offices, and event organizers, and mailers and recipients must both be in the same 

delivery unit. Id. Second, the Postal Service states that it rolled back of prices for EDDM-R to 

pre-COVID 19 pandemic levels to encourage mailers to use a combination of EDDM-R and 

USPS Connect Local. Id. at 80. It explains that “lower prices were intended to encourage 

small and medium-sized businesses to use EDDM-Retail to reach out to local customers to 

let them know about their products and also use [USPS] Connect Local to get the products 

to the customers quickly and economically once they were ordered.” Id.

The Postal Service acknowledges that between FY 2021 and FY 2022, Market Dominant 

product satisfaction declined across all customer types for domestic First-Class Mail, as 

well as all products for large business customers except for USPS Retail Ground and Media 

Mail. Id. However, it points out that these declines were “relatively modest,” and Market 

Dominant product satisfaction results for large business customers were generally better 

in FY 2022 compared to FY 2020. Id. It describes several challenges affecting product 

satisfaction and mailer use of various mail classes, including the ongoing diversion from 

mail to electronic communications, the economic downturn, the lingering effects of the 

COVID-19 pandemic, ongoing paper and ink shortages/costs, and higher labor costs. Id. The 

Postal Service acknowledges that increases to postage rates could have adversely affected 

Market Dominant product satisfaction but maintains that these rate increases are 

necessary to address its financial situation and consistent with its Delivering for America

10-Year Strategic Plan. Id. at 81.

CHIR No. 12 asked the Postal Service to explain how actions taken in FY 2022 to improve 

Market Dominant product satisfaction impacted results for each customer type 

(residential, small/medium business, and large business). CHIR No. 12, question 3. The 

Postal Service responds that actions taken in FY 2022 to improve Market Dominant 
Docket No. ACR2022 - 193 -

product satisfaction affected results for residential customers that received same-day or 

next-day service through USPS Connect Local Mail, as well as information about local 

products through EDDM-R. Response to CHIR No. 12, question 3. For small/medium 

business and large business customers, the Postal Service explains that Market Dominant 

product satisfaction results were impacted by the following:

• The Plus One product was an additional offering for marketing campaigns296

• Larger sized post cards expanded the space for messaging297

• Businesses could send documents locally within the same day or next day via USPS 

Connect Local Mail298

• Promotions offered higher discounts to business customers299

Response to CHIR No. 12, question 3. For small/medium business customers, the Postal 

Service also notes that lower prices for EDDM-R promoted outreach to local customers. Id.

CHIR No. 12 also asked the Postal Service to explain how each of the factors contributing to 

declines in customers satisfaction with domestic First-Class Mail products described above 

affected each customer type in FY 2022. CHIR No. 12, question 5. The Postal Service 

responds that digital diversion provided residential, small/medium business, and large 

business customers with more alternatives for mail products, which may have altered their 

expectations regarding important factors such as convenience, speed, and costs. Response 

to CHIR No. 12, questions 5.a.-c. It states that the lingering effects of the COVID-19 

pandemic, as well as paper and ink shortages/costs, may have caused residential 

customers to experience delays in receiving mail. Id. As a result, these delays may have 

made it more complicated for small/medium business and large business customers to use 

the mail. Id. For small/medium business and large business customers, the Postal Service 

notes that increases in postage rates also increased the cost of doing business, which may 

have adversely affected Market Dominant product satisfaction.

Commission Analysis

For each customer type, Table V-14 compares customer satisfaction results for select 

Market Dominant mailing services between FY 2021 and FY 2022. Results are expressed as 

the percentage of customers who were Very Satisfied or Mostly Satisfied with a Market 

Dominant mail class or category.

296 In FY 2022, the Commission approved the Postal Service’s proposal to convert Plus One from an experimental to a permanent offering. See

Docket No. MC2022-20, Order Approving Addition of Plus One to the Mail Classification Schedule, January 4, 2022 (Order No. 6081).

297 In FY 2021, the Commission approved the Postal Service’s proposal to update the size limitation. See Docket No. MC2021-104, Order 

Approving Update to the Maximum Size Limit for Presorted First-Class Mail Postcards, July 28, 2021 (Order No. 5946).

298 In FY 2022, the Commission approved the Postal Service’s proposal to proceed with a market test for USPS Connect Local Mail, which 

provides same-day or next-day delivery, 6 days per week, with customers receiving same-day or next-day delivery based on when they enter 

their mail. Docket No. MT2022-1, Order Authorizing Market Test of Experimental Product – USPS Connect Local Mail, January 4, 2022 (Order 

No. 6080).

299 The Postal Service proposed promotions for First-Class Mail and USPS Marketing Mail for calendar year 2022, which the Commission 

reviewed and approved. Order No. 5937 at 16; Order No. 6188 at 44.
Docket No. ACR2022 - 194 -

Table V-14

Customer Satisfaction with

Market Dominant Mailing Services, by Percentage

FY 2021–FY 2022

Market Dominant 

Products (Mailing 

Services)

Residential Customers Small/Medium Business 

Customers Large Business Customers

FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022

First-Class Mail

Domestic 79.14% 77.07% 78.26% 77.92% 85.57% 85.06%

First-Class Mail 

International 76.27% 77.79% 71.39% 75.30% 89.75% 87.89%

USPS Marketing Mail N/A 71.85% 73.56% 83.50% 83.43%

Periodicals N/A 80.46% 81.84% 84.58% 82.84%

Media Mail 79.47% 80.37% 77.51% 80.69% 83.43% 83.48%

Library Mail 76.25% 76.03% 75.52% 76.78% 83.88% 83.70%

N/A - Residential customers were not asked about their satisfaction with this mailing service.

Source: FY 2022 ACR at 74.

Overall, in FY 2022, Market Dominant product satisfaction improved or remained the same 

for each customer type. In the FY 2021 ACD, the Commission expressed concerns about the 

decline in Market Dominant product satisfaction for residential and small/medium 

business customers. FY 2021 ACD at 226. These concerns were addressed in FY 2022. 

Table V-14 shows that for residential and small/medium business customers, between 

FY 2021 and FY 2022, Market Dominant product satisfaction increased or remained 

approximately the same for each product except for domestic First-Class Mail.300 Overall, 

Market Dominant product satisfaction for residential and small/medium business 

customers improved compared to FY 2021, which showed satisfaction declines across all 

products. See FY 2021 ACD at 224. The only decline in Market Dominant product 

satisfaction for both residential and small/medium business customers was with domestic 

First-Class Mail, which decreased slightly by 2.07 and 0.34 percentage points, respectively. 

However, these declines are small considering that Market Dominant product satisfaction 

for residential and small/medium business customers declined significantly by 12.30 and 

11.81 percentage points, respectively, between FY 2020 and FY 2021. See id.

For large business customers, Market Dominant product satisfaction results were 

approximately the same (within 1 percentage point) between FY 2021 and FY 2022. 

Market Dominant product satisfaction declined slightly for First-Class Mail International 

300 Residential Market Dominant product satisfaction for Library Mail decreased by less than one percentage point between FY 2021 (76.25%) 

and FY 2022 (76.03%).
Docket No. ACR2022 - 195 -

and Periodicals by 1.86 and 1.74 percentage points, respectively. However, First-Class Mail 

International had the highest Market Dominant product satisfaction result.

In FY 2022, of the measured Market Dominant products, results for thirteen out of sixteen 

mailing services (approximately 81 percent) either improved or remained within 1 

percentage point of the FY 2021 result. The increase in USPS Connect Local Mail 

transaction volume during FY 2022, Quarter 4 could have improved residential and 

small/medium business customer satisfaction with Market Dominant products during that 

quarter, especially for customers in the Southern area in FY 2022.301 The Commission will 

continue to monitor customer satisfaction with Market Dominant products for all customer 

types in FY 2023.

In FY 2023, 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 2023 ACR, for each customer type, the Postal Service must:

• Describe specific actions taken as well as plans, initiatives, and strategies implemented 

in FY 2023 to improve customer satisfaction with Market Dominant products

• Explain how these actions, plans, initiatives, and strategies were targeted to improve 

Market Dominant product satisfaction

• Explain how these actions, plans, initiatives, and strategies impacted FY 2023 results

If 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. When responding to these directives, the 

FY 2023 ACR must group explanations and descriptions by customer type (residential, 

small/medium business, and large business) or otherwise identify which explanations and 

descriptions apply to each customer type.

301 See Docket No. MT2022-1, Letter to Secretary Erica A. Barker Providing USPS Connect Local Mail Data Collection Report for FY 2022, Quarter 

4, November 10, 2022.
Docket No. ACR2022 Appendix A

 Page 1 of 17

Appendix A: Key Commission Findings 

and Directives Requiring Postal Service 

Action for Future Annual Compliance 

Reports

Workshare Discounts with 100 Percent Passthroughs:

• The Commission reminds the Postal Service that in any rate adjustment proceeding

before the FY 2023 avoided costs are filed, the Postal Service cannot change the 

workshare discounts identified in Table II-1 consistent with 39 C.F.R. § 3030.282(a). FY 

2022 ACD, Chapter II.

Workshare Discounts with Passthroughs that Exceed 100 Percent:

• In the next rate adjustment proceeding, the Postal Service must bring the workshare 

discounts identified in Table II-2 into compliance with 39 C.F.R. § 3030.283, which 

could include aligning workshare discounts with avoided costs or explaining how the 

workshare discount complies with existing exceptions (including waivers granted in 

accordance with the rules set forth in 39 C.F.R. § 3030.286). In addition, the workshare 

discounts identified in Table II-2 cannot be increased in any rate adjustment 

proceeding before the FY 2023 avoided costs are filed consistent with 39 C.F.R. 

§ 3030.282(b). FY 2022 ACD, Chapter II.

Workshare Discounts with Passthroughs Under 85 Percent:

• In the next rate adjustment proceeding, the Postal Service must bring the workshare 

discounts identified in Table II-3 into compliance with 39 C.F.R. § 3030.284, which 

could include aligning workshare discounts with avoided costs or explaining how the 

workshare discount complies 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 set below their FY 2022 avoided costs, including those identified in Table II3, cannot be decreased in any rate adjustment proceeding before the FY 2023 avoided 

costs are filed consistent with 39 C.F.R. § 3030.282(c). FY 2022 ACD, Chapter II.
Docket No. ACR2021 Appendix A

 Page 2 of 17

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.

o Although the Commission analyzes inefficiencies in flats operations and the impact 

of these initiatives on the cost of Periodicals in its forthcoming Flats Study, the 

Postal Service should also monitor its costs and develop a plan to further reduce 

Periodicals costs. FY 2022 ACD, Chapter III.

o 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 revenue by 

strategically pricing Periodicals. FY 2022 ACD, Chapter III.

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 

remains severely deficient, despite improvement in FY 2022. FY 2022 ACD, Chapter 

III.

o The Commission reminds the Postal Service that under 39 C.F.R. § 3030.221, the 

Postal Service must propose a price increase for USPS Marketing Mail Flats that is 

at least 2 percentage points above the average for the class. FY 2022 ACD, Chapter 

III.

o The Commission urges the Postal Service to continue to pursue cost reductions, 

while it concludes its analysis of inefficiencies in flats operations and the impact of 

initiatives on the cost of flat-shaped products as part of its Flats Study. FY 2022 

ACD, Chapter III.

o The Commission removes the directives related to USPS Marketing Mail Flats 

stemming from the FY 2010, FY 2015, FY 2018, and FY 2019 through FY 2021 

ACDs. FY 2022 ACD, Chapter III.

• USPS Marketing Mail Carrier Route:

o The Commission finds that the FY 2022 revenue for USPS Marketing Mail Carrier 

Route was not sufficient to cover attributable cost, but the product’s cost coverage 

showed improvement. FY 2022 ACD, Chapter III.
Docket No. ACR2021 Appendix A

 Page 3 of 17

o The Commission reminds the Postal Service that under 39 C.F.R. § 3030.221, the Postal 

Service must propose a price increase for USPS Marketing Mail Flats that is at least 2 

percentage points above the average for the class. FY 2022 ACD, Chapter III.

o The Commission urges the Postal Service to continue to pursue cost reductions, while it 

concludes its analysis of inefficiencies in flats operations and the impact of initiatives 

on the cost of flat-shaped products as part of its Flats Study. FY 2022 ACD, Chapter III.

• USPS Marketing Mail Parcels:

o The Commission finds that the FY 2022 revenue for USPS Marketing Mail Parcels 

was not sufficient to cover attributable cost, but the product’s cost coverage 

showed improvement. FY 2022 ACD, Chapter III.

o The Commission reminds the Postal Service that under 39 C.F.R. § 3030.221, the 

Postal Service must propose a price increase for USPS Marketing Mail Parcels that 

is at least 2 percentage points above the average for the class. FY 2022 ACD, 

Chapter III.

o The Commission encourages the Postal Service to continue to expend a reasonable 

amount of resources given the size of the product to explore and implement 

opportunities to further reduce the unit cost of USPS Marketing Mail Parcels, and 

the Postal Service shall report on those opportunities and results in the FY 2023 

ACR. FY 2022 ACD, Chapter III.

• Package Services—Media Mail/Library Mail:

o The Commission finds that the FY 2022 revenue for Media Mail/Library Mail was 

not sufficient to cover attributable cost. FY 2022 ACD, Chapter III.

o 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 2023 ACD. 

FY 2022 ACD, Chapter III.

• Special Services—Money Orders:

o The Commission finds that the FY 2022 revenue for Money Orders was not 

sufficient to cover attributable cost. FY 2022 ACD, Chapter III.

o The Commission reminds the Postal Service that under 39 C.F.R. § 3030.221, the 

Postal Service must increase the price of Money Orders by at least 2 percentage 

points above the class average in each Market Dominant rate adjustment affecting 
Docket No. ACR2021 Appendix A

 Page 4 of 17

the Special Shervices class through the issuance of the FY 2023 ACD. FY 2022 ACD, 

Chapter III.

o The Commission encourages the Postal Service to continuously look for ways to 

reduce the unit costs of Money Orders. FY 2022 ACD, Chapter III.

o The Commission also directs the Postal Service to include a discussion of the 

initiatives identified in response to the OIG’s recommendation to reduce window 

service costs for Money Orders, including the current status of each initiative, in the 

FY 2023 ACR. FY 2022 ACD, Chapter III.

Competitive Products, Cross-Subsidization:

• The Commission finds Competitive products satisfied 39 U.S.C. § 3633(a)(1) in FY 2022. 

FY 2022 ACD, Chapter IV.

Competitive Products, Cost Coverage, Domestic:

• The Commission finds that, in FY 2022, every Competitive domestic product with rates 

of general applicability covered its attributable cost and, thereby, satisfied the 

statutory requirements of 39 U.S.C. § 3633(a)(2). FY 2022 ACD, Chapter IV.

Competitive Products, Cost Coverage, Negotiated Service Agreements:

• The Commission finds that Priority Mail Contract 543 was not in compliance with 39 

U.S.C. § 3633(a)(2) in FY 2022. The Commission directs the Postal Service to 

renegotiate higher prices for that contract or terminate the contract. FY 2022 ACD, 

Chapter IV.

• 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 such report due 

April 7, 2023, and the last such report due January 8, 2024. 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 2022 ACD, Chapter IV.
Docket No. ACR2021 Appendix A

 Page 5 of 17

Competitive Products, Cost Coverage, International:

• International Money Transfer Service—Inbound:

o The Commission finds that the IMTS—Inbound product was not in compliance with 

39 U.S.C. § 3633(a)(2) in FY 2022. FY 2022 ACD, Chapter IV.

o The Commission encourages the Postal Service to continue its efforts towards 

termination of the remaining agreements comprising the IMTS—Inbound product 

during FY 2023. FY 2022 ACD, Chapter IV.

o Should the progress towards this goal include modifications rather than 

terminations of international postal money order agreements, the Commission 

directs the Postal Service to report the details of any agreement’s modifications, 

including the impact on the IMTS—Inbound product’s reportable transactions and 

revenues, as part of its FY 2023 ACR filing. FY 2022 ACD, Chapter IV.

o The Commission also directs the Postal Service to provide data on all foreign-issued 

money orders processed through the Federal Reserve Bank for payment in the 

United States in FY 2023 as part of its FY 2023 ACR filing. These data shall include 

additional details, such as country of origin, number of paper and electronic money 

orders, and information on whether they were issued by an FPO or other financial 

institution (if any). These data shall also include information on the number of 

money orders cashed at Postal Service retail windows and those cashed at U.S. 

banks. FY 2022 ACD, Chapter IV.

• International Money Transfer Service—Outbound:

o The Commission finds that the IMTS—Outbound product was not in compliance 

with 39 U.S.C. § 3633(a)(2) in FY 2022. FY 2022 ACD, Chapter IV.

o The Commission encourages the Postal Service to monitor the impact of the price

increases that took effect in July 2022 on the product based on information 

available before the Postal Service files its next request to adjust prices of general 

applicability for Competitive products and encourages the Postal Service to request 

further price increases as necessary based on its continued assessment of the 

impact of the July 2022 price increases on the cost coverage of the IMTS—

Outbound product. FY 2022 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 2022 because one of its subcomponents, Inbound Competitive International Registered Mail, did not cover 

cost. FY 2022 ACD, Chapter IV.
Docket No. ACR2021 Appendix A

 Page 6 of 17

o The Commission directs the Postal Service to produce in the FY 2023 ACR and in all 

future ACRs a table that includes revenue, pieces, volume-variable costs, productspecific costs, total costs, contribution, and cost coverage of inbound registered 

items under MCS section 2615.2 (Competitive International Registered Mail, 

Inbound Competitive International Registered Mail), as well as inbound registered 

items that were attributed to other products, including MCS section 2515.10 

(Inbound Competitive International Multi-Service Agreements with Foreign Postal 

Operators), that are in effect during the relevant fiscal year. FY 2022 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 one Competitive 

outbound international NSA in Docket No. CP2020-193 that did not cover its 

attributable cost. FY 2022 ACD, Chapter IV.

o The Commission recommends that the Postal Service continually monitor the 

financial performance of each outbound international NSA and take steps to 

terminate or renegotiate agreements that are non-compensatory. FY 2022 ACD, 

Chapter IV.

o The Commission also urges the Postal Service to update its accounting processes to 

ensure that the FY 2023 ACR includes all latest available terminal dues and other 

international delivery rates. FY 2022 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 

such report due April 7, 2023, and the last such report due January 8, 2024. 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 2022 

ACD, Chapter IV.

• Inbound:

o The Commission concludes that Competitive inbound international products 

consisting of NSAs satisfied 39 U.S.C. § 3633(a)(2) because revenue exceeded 

attributable cost for each product. 
Docket No. ACR2021 Appendix A

 Page 7 of 17

o The Commission recommends that the Postal Service continually monitor the 

financial performance of each inbound international NSA and take steps to 

terminate or renegotiate agreements that are non-compensatory.

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

such report due April 7, 2023, and the last such report due January 8, 2024. 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.

Competitive Products, Cost Coverage, Nonpostal Services:

• The Commission concludes that Competitive Nonpostal Services satisfied 39 U.S.C. 

§ 3633(a)(2) because revenue exceeded the attributable cost for each product. FY 

2022 ACD, Chapter IV.

Competitive Products, Appropriate Share:

• The Commission finds that in FY 2022 Competitive products satisfied 39 U.S.C. 

§ 3633(a)(3) by covering an appropriate share of the Postal Service’s institutional 

costs. FY 2022 ACD, Chapter IV.

Competitive Products, Pilot Program—Gift Cards:

• The Commission directs the Postal Service to report quarterly information on the Pilot 

Program and the Gift Card product as a whole.1 The report shall be filed in Docket No. 

MC2022-60 and shall 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. The report 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). Finally, the report must include any plans for 

modifications or other future plans of the Pilot Program or Gift Card product, 

including any plans for termination of the Pilot Program.

1 Chairman Kubayanda and Commissioner Poling do not agree with including the Gift Card product as a whole in this directive.
Docket No. ACR2021 Appendix A

 Page 8 of 17

Competitive Products, Pilot Program—Interagency Agreements:

• Consistent with 39 U.S.C. § 3705(b)(2), the Commission directs the Postal Service to 

develop a proposed methodology (or methodologies) for calculating and attributing 

costs and revenue to interagency agreements authorized under 39 U.S.C. §§ 3703 and 

3704. The Postal Service shall initiate a rulemaking proceeding (or proceedings) 

concerning such methodology (or methodologies) in accordance with 39 C.F.R. 

§ 3050.11 no later than May 31, 2023.

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 that the Postal Service 

shall file the information responsive to CHIR No. 3, question 11 and CHIR No. 16, 

question 1 in table form, including detailed descriptions for data that are not available 

or not applicable, for FY 2023 along with the FY 2023 ACR.

First-Class Mail Service Performance:

• The following First-Class Mail products/categories did not achieve their service 

performance targets in FY 2022: 3-5-Day Single-Piece Letters/Postcards, Flats, 

Inbound Letter Post, and Single-Piece Outbound International. Considering this, the 

Commission finds Single-Piece Letters/Postcards, Flats, Inbound Letter Post, and 

Single-Piece Outbound International were each out of compliance in FY 2022. 

Specifically for Single-Piece Letters/Postcards, the Commission notes that the 2-Day 

service standard category did exceed its target whereas the 3-5-Day service standard 

category did not achieve its target in FY 2022. 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 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. ACR2022, if necessary. Where appropriate, the Postal 

Service shall explain the reasons for any differences in the calculation of data in FY 

2023 versus FY 2022 and shall propose a method for comparing the data.
Docket No. ACR2021 Appendix A

 Page 9 of 17

(a) FY 2022 Nationwide Transit and Last Mile 

Improvement Initiatives

First, the Commission directs the Postal Service to evaluate the efficacy of its FY 2023 

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.

3. The transit evaluation shall explain how the progress made in FY 2023 (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 2023. 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 KPI(s) used to measure and evaluate progress 

toward completion. 

4. The Last Mile evaluation shall explain how the progress made in FY 2023 (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 2023. 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 2023 Quarter 1 to FY 2022 Quarter 1) and provide a narrative explaining the 

practices employed to remediate the underlying problem(s) in FY 2023. 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,

2 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 27, 

2023). An updated evaluation and plan shall be filed at the time of the FY 2023 ACR (by 

December 29, 2023).

(b) FY 2022 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 

2 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. ACR2021 Appendix A

 Page 10 of 17

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.

3. For each Division, the Postal Service shall evaluate the efficacy of its FY 2023 

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 2023. This evaluation shall 

include quantitative comparisons of the same period last year (e.g., compare 

FY 2023 Quarter 1 to FY 2022 Quarter 1) and provide a narrative explaining 

the practices employed to remediate the underlying problem(s) in FY 2023.

4. 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.3 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 27, 2023). An updated report from each 

Division shall be filed at the time of the FY 2023 ACR (by December 29, 2023).

(c) Consistent Data

Third, to facilitate the consistent monitoring of First-Class Mail service performance, the 

Commission directs the Postal Service to provide the following data, described in items 1 and 

2. Data shall be provided for FY 2023 Quarter 1, Quarter 2, and “mid-year”4 within 90 days of 

the issuance of this ACD (by June 27, 2023). Data shall be provided for FY 2023 Quarter 3, 

Quarter 4, “second-half”5 and annualized for the fiscal year, in the FY 2023 ACR (by December 

3 See generally FY 2022 Division Report; FY 2022 Division Report - Attachment A.

4 Mid-year refers to the aggregation of the data for Quarters 1 and 2 of FY 2023.

5 Second-half refers to the aggregation of the data for Quarters 3 and 4 of FY 2023. Annualized refers to the aggregation of the data for all four 

quarters of FY 2023.
Docket No. ACR2021 Appendix A

 Page 11 of 17

29, 2023). The Commission continues to direct the Postal Service to provide Area- and 

District-level data to allow comparability to prior fiscal years.

3. The air carrier capacity requested, air carrier capacity received, and air 

capacity gap calculated, using daily cubic feet volume.6

4. The number of CLTs (any HCR that is late by more than 4 hours), presented for 

the nation, each Area, and each District.7

(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 International, the Commission directs the 

Postal Service to provide information from each ISC (and the Honolulu, Hawaii facility 

responsible for processing Outbound Single-Piece International) on the following matters, 

described in items 1 and 2.

3. For each facility, the Postal Service shall evaluate the efficacy of its FY 2023 

initiatives to improve on-time service performance results for Inbound Letter 

Post and Outbound Single-Piece 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 2023.

4. 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 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 

International volume it processed each Quarter and provide corresponding 

quantification for the same period during FY 2022. The report for each facility 

shall be filed within 90 days of the issuance of this ACD (by June 27, 2023). An 

6 See, e.g., Library Reference USPS-FY22-NP30, December 29, 2022, Excel file “NONPUBLIC Air Capacity FY2022.xlsx.”

7 See, e.g., Library Reference USPS-FY22-29, Excel file “CLT FY22 11.30.2022.xlsx.”
Docket No. ACR2021 Appendix A

 Page 12 of 17

updated report from each facility shall be filed at the time of the FY 2023 ACR 

(by December 29, 2023).

USPS Marketing Mail Service Performance:

• Although on-time service performance scores increased for each USPS Marketing Mail 

product from FY 2021 to FY 2022, three products did not achieve their service 

performance targets in FY 2022: High Density and Saturation Flats/Parcels, Flats, and 

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 2022. 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 2023. 

• To monitor the Postal Service’s initiatives to remediate service performance issues 

with respect to these non-compliant products, which have been exacerbated by the 

COVID-19 pandemic, 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 2023).

• The Commission directs the Postal Service to evaluate the efficacy of its FY 2022 

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 2023), and to provide 

specific detailed plans to improve these products’ service performance, as described in 

items 1 and 2.

3. The Postal Service shall evaluate the efficacy of its FY 2023 initiatives to 

improve on-time results for these products by describing the progress made 

(including how the Postal Service adapted its initiatives in light of the COVID19 pandemic’s impacts and the status of initiatives identified in Docket Nos. 

ACR2020, ACR2021, and ACR2022) and explaining how the Postal Service’s 

progress (or lack thereof) affected on-time results for these products in 

FY 2023. The evaluations shall include quantitative comparisons of the same 

period last year (e.g., compare FY 2023 Quarter 1 to FY 2022 Quarter 1) and 

provide a narrative explaining the practices observed to remediate the 

underlying problem(s) in FY 2023.

4. 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. ACR2021 Appendix A

 Page 13 of 17

• 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 27, 2023). An updated report shall 

be filed at the time of the FY 2023 ACR (by December 29, 2023).

Periodicals Service Performance:

• The Commission is encouraged that both Periodicals products met their on-time 

service performance targets in FY 2022 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 in FY 2022 and FY 2023 

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 2023, specific detailed plans to improve service 

performance as described in items 1 and 2.

3. The Postal Service shall evaluate the efficacy of its FY 2023 initiatives to 

improve on-time results for Periodicals by describing the progress made 

(including how the Postal Service adapted its initiatives in light of the COVID19 pandemic’s impacts and the status of initiatives identified in Docket Nos. 

ACR2020, ACR2021, and ACR2022) and explaining how the Postal Service’s 

progress (or lack thereof) affected on-time results for Periodicals in FY 2023. 

The evaluations shall include quantitative comparisons of the same period last 

year (e.g., compare FY 2023 Quarter 1 to FY 2022 Quarter 1) and provide a 

narrative explaining the practices employed to remediate the underlying 

problem(s) in FY 2023.

4. 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 2023 ACR (by December 29, 2023).
Docket No. ACR2021 Appendix A

 Page 14 of 17

Package Services Service Performance:

• Although on-time service performance scores increased for each Package Services 

product from FY 2021 to FY 2022, two products did not achieve their service 

performance targets in FY 2022: BPM Flats and Media Mail/Library Mail. While the 

on-time performance result for BPM Flats increased from FY 2021 to FY 2022 by 

approximately 10 percentage points, the Commission remains concerned that this 

product is substantially below its target. Moreover, FY 2022 marks the eleventh 

consecutive year that BPM Flats has remained below its target. The Commission is also 

concerned that the FY 2022 on-time performance result for Media Mail/Library Mail

remains below target. The Commission acknowledges that the Postal Service has 

repeatedly asserted that both of these products have 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 and 

Media Mail/Library Mail were each out of compliance in FY 2022. 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 2023. 

• To monitor the Postal Service’s initiatives to remediate these ongoing issues related to 

these non-compliant products, the Commission directs the Postal Service to evaluate 

the efficacy of the Postal Service’s FY 2023 initiatives (including how the Postal Service 

adapted its initiatives in light of the COVID-19 pandemic’s impacts and the status of 

initiatives identified in Docket Nos. ACR2020, ACR2021, and ACR2022) to improve ontime service performance for BPM Flats and Media Mail/Library Mail. 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 and Media 

Mail/Library Mail, 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 27, 2023). An updated report shall be filed at the time of 

the FY 2023 ACR (by December 29, 2023).

Special Services Service Performance Targets:

• Two Special Services products did not achieve their service performance targets in FY 

2022: Post Office Box Service and Ancillary Services in FY 2022. Considering this, the 

Commission finds that Post Office Box Service and Ancillary Services were out of 

compliance in FY 2022. The Commission directs the Postal Service to improve service 
Docket No. ACR2021 Appendix A

 Page 15 of 17

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

products in FY 2023. 

• 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 2023 ACR for Post Office Box Service and 

Ancillary Services: (1) an evaluation of the efficacy of the Postal Service’s FY 2023 

initiatives (including how the Postal Service adapted its initiatives in light of the 

COVID-19 pandemic’s impacts and the status of initiatives identified in Docket Nos. 

ACR2020, ACR2021, and ACR2022) 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 consistent information among 

the Annual Report, ACR, and CHIR responses. In the FY 2023 Annual Report and the FY 

2023 ACR, the Postal Service must continue to report the number of retail facilities 

using data from the same system to ensure that information is accurate and 

consistent. If there are any discrepancies in the number of retail facilities or delivery 

points, the Postal Service must identify and reconcile them in the FY 2023 ACR instead 

of in CHIR responses.

Post Office Suspensions:

• In FY 2023, the Postal Service should strive to resolve the 79 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. The 

Postal Service must file this information within 40 days after the end of each quarter in 

FY 2023 and in FY 2024 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 in Docket No. ACR2021 on February 21, 2023.8

• 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.9 If the Postal Service does not resolve the 79 

8 See Docket No. ACR2021, Response of the United States Postal Service to Question 1 of Chairman’s Information Request No. 35, February 21, 

2023, Excel file “acr2021_chir35_suspensiondata.xlsx.”

9 For example, the spreadsheet could highlight cells that differ from the prior report or describe any corrections in the Excel spreadsheet.
Docket No. ACR2021 Appendix A

 Page 16 of 17

remaining suspended post offices by 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. Also, the FY 2023 ACR 

must include a detailed plan and timeline for resolving post offices suspended from FY 

2017 through FY 2023.

Collection Boxes:

• The Commission will continue to monitor the number of collection boxes in Docket 

No. ACR2023. In the FY 2023 ACR, the Postal Service must continue to report, at the 

national and area levels, information on the number of collection boxes at the 

beginning and end of FY 2023. The FY 2023 ACR must also 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). If there are any discrepancies between the number of 

collection boxes at the beginning and end of FY 2023 and the number of collection 

boxes added and removed during FY 2023, the Postal Service must reconcile these 

discrepancies in the FY 2023 ACR.

• In FY 2023, the Commission recommends that the Postal Service continue conducting 

annual density testing of collection boxes 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 2023 ACR any plans or initiatives to remove collection boxes beyond 

the procedures specified in the POM.

Wait Time in Line:

• The Commission encourages the Postal Service to continue implementing strategies 

designed to improve wait time in line in FY 2023. In the FY 2023 ACR, the Postal 

Service must describe actions taken during FY 2023 to improve wait time in line and 

explain which actions were most and least effective in reducing wait time in line. If 

wait time in line worsens during FY 2023, the FY 2023 ACR should:

• Explain why wait time in line increased and identify factors contributing to the 

increase

• Describe plans for improving wait time in line during FY 2024 that include specific 

actions, strategies, and initiatives designed to address factors contributing to

increased wait time in line, such as reduced employee availability
Docket No. ACR2021 Appendix A

 Page 17 of 17

Alternative Access:

• The Commission recommends that the Postal Service continue to 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 2023, the 

Postal Service must identify the root causes for these declines and describe plans to 

address them in the FY 2023 ACR.

Customer Satisfaction:

• In FY 2023, 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 2023 ACR, for each customer type, the Postal 

Service must:

• Describe specific actions taken as well as plans, initiatives, and strategies 

implemented in FY 2023 to improve customer satisfaction with Market Dominant 

products

• Explain how these actions, plans, initiatives, and strategies were targeted to 

improve Market Dominant product satisfaction

• Explain how these actions, plans, initiatives, and strategies impacted FY 2023 

results

• If 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. When responding to these 

directives, the FY 2023 ACR must group explanations and descriptions by customer 

type (residential, small/medium business, and large business) or otherwise identify 

which explanations and descriptions apply to each customer type.
Docket No. ACR2022 Appendix B

 Page 1 of 1

Appendix B: Initial and Reply Comments

FY 2022 Annual Compliance Determination

Commenter Full Form Comment Citation Short Form Comment Citation

Initial Comments

American Catalog Mailers 

Association (ACMA)

Initial Comments of the American Catalog 

Mailers Association (ACMA)

January 31, 2023

ACMA Comments

Association for Postal 

Commerce (PostCom)

Comments of the Association for Postal 

Commerce, January 31, 2023

PostCom Comments

Greeting Card Association 

(GCA)

Comments of the Greeting Card 

Association, January 31, 2023 GCA Comments

National Association of Presort 

Mailers (NAPM)

Comments of the National Association of 

Presort Mailers, January 31, 2023 NAPM Comments

National Postal Policy Council 

(NPPC)

Comments of the National Postal Policy 

Council, January 31, 2023 NPPC Comments

The News/Media Alliance 

(N/MA)

Comments of the N/MA – The News/Media 

Alliance, January 31, 2023 N/MA Comments

Pitney Bowes Inc. (Pitney 

Bowes)

Comments of Pitney Bowes Inc.,

January 31, 2023 Pitney Bowes Comments

Public Representative (PR) Public Repersentative Comments,

January 31, 2023 PR Comments

Taxpayers Protection Alliance 

(TPA)

TPA Comments for USPS FY 2022 ACR,

January 31, 2023 TPA Comments

Reply Comments

United States Postal Service 

(Postal Service)

Reply Comments of the United States 

Postal Service, February 14, 2023

Postal Service Reply Comments
Docket No. ACR2022 Appendix C

 Page 1 of 3

Appendix C: Information Requests and 

Responses to Information Requests

FY 2022 Annual Compliance Determination

Full Form Citation Short Form Citation

 ha r a ’ r a q 

Chairman’s Information Request No. 1, January 3, 2023. CHIR No. 1

Chairman’s Information Request No. 2 and Notice of Filing Under Seal, January 6, 2023. CHIR No. 2

Chairman’s Information Request No. 3, January 10, 2023. CHIR No. 3

Chairman’s Information Request No. 4 and Notice of Filing Under Seal, January 13, 2023. CHIR No. 4

Chairman’s Information Request No. 5, January 18, 2023. CHIR No. 5

Chairman’s Information Request No. 6 and Notice of Filing Under Seal, January 20, 2023. CHIR No. 6

Chairman’s Information Request No. 7 and Notice of Filing Under Seal, January 27, 2023. CHIR No. 7

Chairman’s Information Request No. 8, January 30, 2023. CHIR No. 8

Chairman’s Information Request No. 9, February 1, 2023. CHIR No. 9

Chairman’s Information Request No. 10 and Notice of Filing Under Seal, February 3, 2023. CHIR No. 10

Errata to Chairman’s Information Request No. 10, February 6, 2023 (revising question 3 

and correcting the numbering of the Customer Access questions in CHIR No. 10). Revised CHIR No. 10

Chairman’s Information Request No. 11 and Notice of Filing Under Seal, February 8, 2023. CHIR No. 11

Chairman’s Information Request No. 12, February 10, 2023. CHIR No. 12
Docket No. ACR2022 Appendix C

 Page 2 of 3

Full Form Citation Short Form Citation

 ha r a ’ r a q , continued

Chairman’s Information Request No. 16 and Notice of Filing Under Seal, March 2, 2023. CHIR No. 16

Chairman’s Information Request No. 21, March 21, 2023. CHIR No. 21

Chairman’s Information Request No. 22, March 28, 2023. CHIR No. 22

Full Form Citation Short Form Citation

 ha r a ’ r a q 

Responses of the United States Postal Service to Questions 1-6 of Chairman’s Information 

Request No. 1, January 10, 2023. Response to CHIR No. 1

Responses of the United States Postal Service to Questions 1-17 of Chairman’s 

Information Request No. 2, January 13, 2023. Response to CHIR No. 2

Responses of the United States Postal Service to Questions 1-13 of Chairman’s 

Information Request No. 3, January 17, 2023. Response to CHIR No. 3

Responses of the United States Postal Service to Questions 1-28 of Chairman’s 

Information Request No. 4, January 20, 2023. Response to CHIR No. 4

Responses of the United States Postal Service to Questions 1-7 of Chairman’s Information 

Request No. 5, January 25, 2023. Response to CHIR No. 5

Responses of the United States Postal Service to Questions 1-9 of Chairman’s Information 

Request No. 6, January 27, 2023. Response to CHIR No. 6

Responses of the United States Postal Service to Questions 1-30 of Chairman’s 

Information Request No. 7, February 3, 2023. Response to CHIR No. 7

Responses of the United States Postal Service to Questions 1-3 of Chairman’s Information 

Request No. 8, February 6, 2023. Response to CHIR No. 8

Responses of the United States Postal Service to Questions 1-5 of Chairman’s Information 

Request No. 9, February 8, 2023. Response to CHIR No. 9

Responses of the United States Postal Service to Questions 1-26 of Chairman’s 

Information Request No. 10, February 10, 2023.

February 10 Response to 

CHIR No. 10
Docket No. ACR2022 Appendix C

 Page 3 of 3

Full Form Citation Short Form Citation

 ha r a ’ r a q , c 

Motion for Extension of Time to Respond and for Partial Reconsideration of Question 9 of 

Chairman’s Information Request No. 10, February 9, 2023. Motion CHIR No. 10

Supplemental Response of the United States Postal Service to Question 9.b. of Chairman’s 

Information Request No. 10, February 24, 2023.

February 24 Supplemental 

Response to CHIR No. 10

Second Supplemental Response of the United States Postal Service to Question 9.b of 

Chairman’s Information Request No. 10, March 6, 2023.

March 6 Supplemental 

Response to CHIR No. 10

Responses of the United States Postal Service to Questions 1-19 of Chairman’s 

Information Request No. 11, February 15, 2023. Response to CHIR No. 11

Responses of the United States Postal Service to Questions 1-6 of Chairman’s Information 

Request No. 12, February 17, 2023. Response to CHIR No. 12

Responses of the United States Postal Service to Questions 1-8 of Chairman’s Information 

Request No. 14, March 3, 2023. Response to CHIR No. 14

Responses of the United States Postal Service to Questions 1-2 of Chairman’s Information 

Request No. 16, March 9, 2023. Response to CHIR No. 16

Responses of the United States Postal Service to Chairman’s Information Request No. 21, 

March 27, 2023. Response to CHIR No. 21

Responses of the United States Postal Service to Question 1 of Chairman’s Information 

Request No. 22, March 28, 2023. Response to CHIR No. 22

Commission Information Request

Commission Information Request No. 1, January 25, 2023. CIR No. 1

Commision Information Request No. 2, February 8, 2023. CIR No. 2

Response to Commission Information Request

Responses of the United States Postal Service to Questions 1-8 of Commission 

Information Request No. 1, February 1, 2023. Response to CIR No. 1

Responses of the United States Postal Service to Questions 1-3 of Commission 

Information Request No. 2, February 15, 2023. Response to CIR No. 2
Docket No. ACR2022 Appendix D

 Page 1 of 3

Appendix D: Acronyms and Abbreviations

Acronym/Abbreviation Meaning

AADC automated area distribution center

ACD Annual Compliance Determination

ACMA American Catalog Mailers Association

ACR Annual Compliance Report

ADC area distribution center

BPM Bound Printed Matter

C.F.R. Code of Federal Regulations

CET critical entry time

CHIR Chairman’s Information Request 

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

CRID Customer Registration Identification

CSA Customer Supplier Agreement

CX Customer Experience

CY Calendar Year

DDU destination delivery unit

DFA Delivering for America

DMU Detached Mail Unit

DNDC destination network distribution center

DPS delivery point sequence

DSCF destination sectional center facility

ECP Efficient Component Pricing

ECSI educational, cultural, scientific, or informational (value)

EDDM Every Door Direct Mail

EDDM-R Every Door Direct Mail—Retail

FAST Facility Access and Shipment Tracking

FPO foreign postal operator

FSS Flats Sequencing System

FY Fiscal Year

GCA Greeting Card Association
Docket No. ACR2022 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

ICRA International Cost and Revenue Analysis

IMb Intelligent Mail barcode

IMF International Monetary Fund

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

IPA International Priority Airmail

IPPS irregular parcels and pieces

ISAL International Surface Air Lift

ISC International Service Center

KPI key performance indicator

MCS Mail Classification Schedule

Mixed ADC mixed area distribution center

MMA Major Mailers Association

MMP Managed Mail Program

N/MA N/MA – The News Media Alliance

NAPM National Association of Presort Mailers

NDC network distribution center

NPPC National Postal Policy Council

NSA negotiated service agreement

OIG Office of Inspector General

OPP Operating Plan Precision

P&DC processing and distribution center

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

PostCom Association for Postal Commerce

PR Public Representative

Priority Mail—NPR Priority Mail—Non-Published Rates
Docket No. ACR2022 Appendix D

 Page 3 of 3

Acronym/Abbreviation Meaning

PSAs Package Support Annexes

PSRA Postal Service Reform Act of 2022

PTR Product Tracking and Reporting

RHB retiree health benefit

SCF sectional center facility

SDR Special Drawing Right

SPM service performance measurement

SSKs Self-Service Kiosks

SSOP site-specific operating plan

STT Silver Track Training

TPA Taxpayers Protection Alliance

U.S.C. United States Code

UPS United Parcel Service, Inc.

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