POSTAL REGULATORY COMMISSION

Annual Compliance 

Determination Report

Fiscal Year 2021

March 29, 2022

Postal Regulatory Commission

Submitted 3/29/2022 1:47:42 PM

Filing ID: 121270

Accepted 3/29/2022
TABLE OF CONTENTS

Page

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

Principal Findings: Market Dominant Rate and Fee Compliance ..........................1

Principal Findings: Market Dominant Non-Compensatory Products ..................2

Principal Findings: Competitive Products Rate and Fee Compliance..................4

Principal Findings: Service Performance........................................................................4

Principal Findings: Flats Cost and Service Issues ........................................................5

CHAPTER I. INTRODUCTION............................................................................................................................7

Statutory Context......................................................................................................................7

Timeline and Review of Report...........................................................................................9

Focus of the ACR .......................................................................................................................9

Other Reports.............................................................................................................................9

Commission Responsibilities...............................................................................................9

Procedural History...................................................................................................................9

Methodology Changes.......................................................................................................... 10

Product Analysis .................................................................................................................... 10

Service Performance ............................................................................................................ 11

Confidentiality ........................................................................................................................ 11

Requests for Additional Information............................................................................. 12

CHAPTER II. MARKET DOMINANT PRODUCTS: PRICING REQUIREMENTS.............................. 13

Introduction............................................................................................................................. 13

The Class-Level Price Cap................................................................................................... 13

Workshare Discounts........................................................................................................... 14

Workshare Discount Data Used in Report..................................................... 15

Workshare Discounts with 100 Percent Passthroughs............................ 17

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

Workshare Discounts with Passthroughs Under 85 Percent................. 20

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

ISSUES .................................................................................................................................................................... 26

Introduction............................................................................................................................. 26

Non-Compensatory Classes............................................................................................... 27

Periodicals.................................................................................................................. 27

Package Services...................................................................................................... 36

Non-Compensatory Products in Compensatory Classes........................................ 44

First-Class Mail......................................................................................................... 44

USPS Marketing Mail.............................................................................................. 50
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Special Services........................................................................................................ 69

Other Issues ............................................................................................................................. 72

First-Class Mail Non-Machinable Surcharge................................................. 72

CHAPTER IV. COMPETITIVE PRODUCTS.................................................................................................. 76

Introduction............................................................................................................................. 76

Cross-Subsidy Provision: 39 U.S.C. § 3633(a)(1)...................................................... 76

Product Cost Coverage Provision: 39 U.S.C. § 3633(a)(2)..................................... 78

Competitive Domestic Products with Rates of General Applicability. 78

Competitive Domestic Products Consisting of NSAs ................................. 78

Competitive International Products with Rates of General 

Applicability .............................................................................................................. 81

Competitive International Products Consisting of NSAs ......................... 90

Competitive Nonpostal Services........................................................................ 94

Appropriate Contribution Provision: 39 U.S.C. § 3633(a)(3)............................... 94

Comments on Appropriate Contribution Provision .................................. 95

Commission Analysis............................................................................................. 96

Pilot Program – Gift Cards................................................................................................100

CHAPTER V. SERVICE PERFORMANCE ...................................................................................................104

Service Performance Results ..........................................................................................104

Introduction ............................................................................................................104

FY 2021 Events Affecting Service Performance for All Market 

Dominant Products...............................................................................................108

FY 2021 Service Performance Measurement Systems ...........................128

FY 2021 Service Performance Results by Class.........................................138

FY 2021 Offshore Special Study.......................................................................201

Customer Access ..................................................................................................................202

Introduction ............................................................................................................202

Retail Facilities.......................................................................................................203

Post Office Suspensions ......................................................................................206

Delivery Points.......................................................................................................212

Collection Boxes.....................................................................................................212

Wait Time in Line..................................................................................................214

Alternative Access.................................................................................................217

Customer Satisfaction with Market Dominant Products .....................................219

Background .............................................................................................................219

Comments ................................................................................................................221

Commission Analysis...........................................................................................224

CHAPTER VI. FLATS COST AND SERVICE ISSUES...............................................................................228
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Introduction...........................................................................................................................228

FY 2021 Flats Volume and Financial Performance ................................................228

Cost Coverage, Contribution, and Volume...................................................228

Unit Attributable Costs........................................................................................232

3. Above-Average Price Increases and Unit Revenue ..................................233

Service Performance ..........................................................................................................236

Impact of Operational Initiatives and Methodological Changes .......................237

Operational Initiatives ........................................................................................237

Cost Impact of Methodological Changes ......................................................240

Pinch Points...........................................................................................................................241

Bundle Processing.................................................................................................242

Low Productivity on Automation Equipment............................................247

Manual Sorting .......................................................................................................255

Productivity and Service Issues in Allied Operations .............................258

Transportation Cost and Time.........................................................................259

Last Mile/Delivery ................................................................................................260

Analysis of Unit Costs for Major Functional Categories (by Dependent 

Component)...........................................................................................................................262

Mail Processing Unit Cost...................................................................................264

Delivery Unit Cost.................................................................................................266

Purchased Transportation Unit Cost.............................................................271

Summary of Analysis ...........................................................................................274

Comments...............................................................................................................................275

Conclusion..............................................................................................................................277

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

Action for Annual Compliance Reports

Appendix B—Commenters 2021 Annual Compliance Determination

Appendix C—Acronyms and Abbreviations
EXECUTIVE SUMMARY

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

(FY) 2021, fulfilling the Commission’s responsibility to produce an annual assessment of 

Postal Service rates and service mandated by 39 U.S.C. § 3653. 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. Specific Commission findings and 

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

Significant events continued to impact the Postal Service in FY 2021, including the ongoing 

COVID-19 pandemic. The Commission appreciates the heroic efforts of the frontline Postal 

Service workers to provide continuous mail service to the nation during the COVID-19 

pandemic. Just as in FY 2020, the pandemic negatively affected the Postal Service’s 

operational capacity in numerous ways, including reducing employee availability and 

disrupting transportation. These challenges were exacerbated by historically high peak 

season package volume.

In part due to these significant events, the Postal Service continued to struggle with 

meeting its Service Performance targets. However, as part of the Postal Service’s efforts to 

address ongoing service performance issues, in FY 2021, the Postal Service published a 

10-year strategic plan, Delivering for America, setting forth comprehensive initiatives 

intended to achieve service performance excellence in the future.

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

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

statutory subsections require the Commission to make determinations on whether any 

rates and fees in effect during FY 2021 were not in compliance with chapter 36 of Title 

39 of the United States Code and whether any service standards in effect during FY 2021 

were not met. The Commission’s review in this year’s ACD is based on the rates approved 

in Docket No. R2021-2 and all the rates in effect during FY 2021 for Competitive products.

The financial analysis that had been incorporated in ACDs prior to 2013 is expanded in the 

report titled Financial Analysis of United States Postal Service Financial Results and 10-K 

Statement 2021 that will be issued later this spring. The Commission will also issue a 

separate report on the Postal Service’s FY 2021 Annual Performance Report and FY 2022 

Performance Plan to fulfill its statutory responsibilities under 39 U.S.C. § 3653(c).

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. Under the Efficient Component Pricing (ECP) rule, which guided the 
Docket No. ACR2021 - 2 -

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

equal to their avoided costs and produce passthroughs equal to 100 percent. 

For the six 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 2022 ACD.

For the six 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.

For the 63 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 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 non-compensatory products within compensatory 

classes. The Commission’s new regulations grant additional rate authority to noncompensatory classes and more strictly govern how rate authority must be used for noncompensatory products in compensatory classes. Collectively, the Postal Service lost $1.9 

billion in FY 2021 from non-compensatory classes and products.

The Commission identifies two non-compensatory classes, Periodicals and Package 

Services, and four non-compensatory products within those non-compensatory classes, 

Periodicals In-County, Periodicals Outside County, Bound Printed Matter (BPM) Parcels, 

and Media Mail/Library Mail.

For Periodicals In-County and Periodicals Outside County, the Commission reiterates its 

longstanding finding that despite cost reduction initiatives and the maximization of its 

pricing authority, the costs of these products continue to rise, while unit revenue has 

remained relatively flat, negatively effecting cost coverage.

For BPM Parcels, the Commission finds that the Postal Service has not taken adequate steps 

to improve cost coverage and directs the Postal Service to increase BPM Parcels’ prices by 

at least 2 percentage points above the class average in each rate adjustment affecting the 

Package Services class until the FY 2022 ACD. The Commission also requests that 

additional information related to either implemented or planned initiatives for improving 

BPM Parcels’ cost coverage be filed as part of the FY 2022 ACR.
Docket No. ACR2021 - 3 -

For Media Mail/Library Mail, the Postal Service’s continued price increases have resulted in 

improved cost coverage for the product. The Commission strongly recommends that the 

Postal Service continue its above-average price increases in future rate adjustment 

proceedings.

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

First-Class Mail Flats, USPS Marketing Mail Flats, USPS Marketing Mail Carrier Route, USPS 

Marketing Mail Parcels, and Money Orders.

For the first time, First-Class Mail Flats failed to cover its attributable costs. As a result, the 

Commission directs the Postal Service to increase the product’s prices by at least 2 

percentage points above the class average in each Market Dominant rate adjustment 

proceeding affecting First-Class Mail Flats through the issuance of the FY 2022 ACD, 

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

As it relates to USPS Marketing Mail Carrier Route and USPS Marketing Mail Parcels, the 

Commission finds that both products failed to cover their attributable costs and directs the 

Postal Service to increase the price for each product by at least 2 percentage points above 

the class average in each generally applicable Market Dominant rate proceeding, consistent 

with 39 C.F.R. part 3030, subpart G. For USPS Marketing Mail Parcels specifically, the 

Commission encourages the Postal Service to continue to expend a reasonable amount of 

resources in order to explore and implement opportunities to reduce unit costs in light of 

the volume of the product.

As it relates to USPS Marketing Mail Flats, the Commission discusses the product’s 

continued struggle to cover its attributable costs. The Commission finds that the Postal 

Service has been unsuccessful at improving the cost coverage of the product as required by 

various ACD directives, and that the product continues to represent an intra-class subsidy 

that unfairly burdens other mailers within the USPS Marketing Mail class. The Commission 

notes its continued concerns regarding the Postal Service’s inability to quantify the cost 

savings of its initiatives intended to reduce unit costs for the product. As a result, the 

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

percentage points above the class average and continue to respond to prior ACD directives 

by reducing the product’s costs and providing the required documentation of those cost 

reduction efforts in further ACDs.

As it relates to issues that continue to plague flat-shaped products in general (i.e., FirstClass Mail Flats, USPS Marketing Mail Flats, and USPS Marketing Mail Carrier Route), the 

Commission directs the Postal Service to continue to explore and implement opportunities 

to reduce unit costs. Additional Commission discussion on flat-shaped products can be 

found in Chapter VI.

For the Special Services product Money Orders, the Commission finds that revenue was not 

sufficient to cover attributable cost and directs the Postal Service to increase prices by at 
Docket No. ACR2021 - 4 -

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 2022 ACD.

Principal Findings: Competitive Products 

Rate and Fee Compliance

In Chapter IV., the Commission finds that revenues for three Competitive products did not 

cover attributable costs and, therefore, did not comply with 39 U.S.C. § 3633(a)(2). The 

Commission also determines that every domestic product with rates of general 

applicability covered its attributable cost, as did all negotiated service agreements (NSAs), 

both domestic and international. The Competitive products that did not cover attributable 

costs are: International Money Transfer Service—Inbound (IMTS—Inbound), International 

Money Transfer Service—Outbound (IMTS—Outbound), and International Ancillary 

Services. The Commission directs the Postal Service to take corrective action as it relates to 

these products.

The Commission also sought 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. In its responses to 

Commission Information Requests (CIRs), the Postal Service asserts that this Pilot Program 

constitutes a change in the payment method for the existing Gift Card product and is not a 

new or experimental product.1 Questions remain with regard to this time-limited Pilot 

Program. The Commission 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, based on the information obtained, the Commission directs 

the Postal Service to file quarterly reports on the Pilot Program, including updates on 

volume and revenue, as well as future plans for the Pilot Program. The Postal Service is 

required to file a notice of termination when the Pilot Program ends. Should the Pilot 

Program remain in effect after March 2022, the Commission intends to initiate a mail 

classification proceeding pursuant to 39 C.F.R. part 3040 in order to review the Pilot 

Program more thoroughly.

Principal Findings: Service Performance

In Chapter V., the Commission finds that most Market Dominant products failed to meet 

their service performance targets for FY 2021 and directs the Postal Service to take 

corrective action. Of the 27 Market Dominant products/categories measured, 21 

 

1 Responses of the United States Postal Service to Questions 1-2 of Commission Information Request No. 1, January 14, 2022, question 1.c. 

(Response to CIR No. 1); Responses of the United States Postal Service to Questions 1-7 of Commission Information Request No. 2, February 4, 

2022, question 6 (Response to CIR No. 2).
Docket No. ACR2021 - 5 -

products/categories (more than 77 percent) did not meet their targets in FY 2021, and 

some were substantially below the applicable target.

The Postal Service met its service performance targets for six Market Dominant products: 

two USPS Marketing Mail products (Letters and High Density and Saturation Letters), one 

Package Services product (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 2021: all First-Class Mail products, 

five USPS Marketing Mail products (High Density and Saturation Flats/Parcels, Carrier 

Route, Flats, Parcels, and Every Door Direct Mail—Retail (EDDM-R)), both Periodicals 

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

Special Services products (Ancillary Services and Post Office Box Service). For the seventh 

consecutive year, no First-Class Mail product category achieved its service performance 

target.

The Commission directs the Postal Service to improve service performance results to 

achieve the applicable on-time percent target level for these noncompliant products in 

FY 2022. The Commission has also specifically developed directives that are designed to 

elicit information and data from the Postal Service regarding service performance for 

noncompliant products and the steps that the Postal Service will take to restore service 

performance for those products in FY 2022. 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 2022 ACR. Additionally, the 

Commission directs the Postal Service to include with its FY 2022 ACR filing a specific plan 

for moving service performance targets from their current interim levels to 95 percent for 

each Market Dominant product, should that remain its intention.

Principal Findings: Flats Cost and Service 

Issues

In Chapter VI., the Commission analyzes the issues related to processing and delivering 

flats2 on-time and in a cost-effective manner. FY 2021 was the third year that the Postal 

Service was required to provide specific information related to flats cost and service 

issues.3 The Commission appreciates the data provided by the Postal Service.4 The 

Commission focuses its analysis in Chapter VI. on five areas: (1) flats financial performance, 

(2) flats service performance, (3) the impact of operational initiatives and methodological 

 

2 As discussed in Chapter VI., “flats” refer to all mail products that contain at least 80 percent flat-shaped mailpieces.

3 See Docket No. RM2018-1, Order Adopting Final Rules on Reporting Requirements Related to Flats, May 8, 2019 (Order No. 5086).

4 Pursuant to 39 C.F.R. § 3050.50(b)(2).
Docket No. ACR2021 - 6 -

changes on flats, (4) pinch points5 that impact flats operational performance, and (5) flats 

unit costs for mail processing, delivery, and purchased transportation operations.

The Commission finds that for flats overall, attributable cost has continued to rise, negative 

contribution has continued to grow, and none of the flats products have met their service 

performance targets. In addition, data show that despite Postal Service operational 

initiatives,6 several pinch points have gotten worse. Bundle breakage increased, mail 

processing productivity decreased, transportation costs increased, and delivery costs 

increased.

The Commission remains deeply concerned with the continued trends of increases in costs 

and declines in quality of service. The Commission also remains concerned about the lack 

of specific plans to reduce costs and improve service for flats. The Commission provides 

recommendations for data collection and analysis regarding ongoing and future Postal 

Service initiatives designed to reduce flats costs, improve flats service performance, and/or 

improve flats operations. The fact that in FY 2021 flat-shaped mail products collectively 

had a cumulative negative contribution of almost $1.3 billion highlights the urgency and 

importance of improvement on this issue.

 

5

In the FY 2015 ACD, the Commission identified and analyzed six “pinch points” that contributed to cost and service issues for flats: (1) bundle 

processing, (2) low productivity on automated equipment, (3) manual sorting, (4) productivity and service issues in allied operations, (5) 

increased transportation time and cost, and (6) last mile/delivery. Docket No. ACR2015, Annual Compliance Determination, March 28, 2016, at 

165 (FY 2015 ACD).

6 The Commission recognizes the impact of the COVID-19 pandemic on flats cost and service issues, including the delayed implementation of 

several initiatives intended to address these issues.
Docket No. ACR2021 - 7 -

CHAPTER I. INTRODUCTION

Statutory Context

Two sections of Title 39 of the United States Code (U.S.C.), as amended by the Postal 

Accountability and Enhancement Act (PAEA),7 require ongoing, systematic reports and 

assessments of the financial and operational performance of the Postal Service. The first 

provision, 39 U.S.C. § 3652, requires the Postal Service to file certain annual reports with 

the Commission, including an ACR. See 39 U.S.C. § 3652(a). The second provision, 39 U.S.C. 

§ 3653, requires the Commission to review the Postal Service’s annual reports and issue an 

ACD regarding whether rates were not in compliance with applicable provisions of Title 39 

and whether any service standards were not met. 39 U.S.C. § 3653(b). Together, these 

provisions establish the ACR and the ACD as integrated mechanisms for providing ongoing 

accountability, transparency, and oversight of the Postal Service.

The Commission has again decided to report separately on the Postal Service’s financial 

condition and its performance plans and program performance.8 It will issue both its 

financial analysis and its analysis of the performance plans and program performance, 

required by 39 U.S.C. § 3653(d), in the second quarter of 2022. This ACD focuses on the 

requirements of 39 U.S.C. § 3653(b)(1) and (b)(2).9

For regulations governing rates and fees, Congress divided mail categories and services 

between Market Dominant and Competitive products. Sections 3622 and 3626 of Title 39 

pertain to rates and fees for Market Dominant products; section 3633 pertains to 

Competitive products.

The PAEA also required the Commission to review the system for regulating rates and 

classes for Market Dominant products 10 years after the PAEA’s enactment to determine if 

it had achieved 9 statutory objectives specified by the PAEA, taking into account 14 

statutory factors. 39 U.S.C. § 3622(b), (c), (d)(3). Section 3622(d)(3) further states that “[i]f 

the Commission determines, after notice and opportunity for public comment, that the 

system is not achieving the objectives in subsection (b), taking into account the factors in 

subsection (c), the Commission may, by regulation, make such modification or adopt such 

alternative system for regulating rates and classes for market-dominant products as 

necessary to achieve the objectives.” 39 U.S.C. § 3622(d)(3).

 

7 Pub. L. 109-435, 120 Stat. 3198 (2006).

8 See Notice Requesting Comments on the Postal Service FY 2021 Annual Performance Report and FY 2022 Annual Performance Plan, January 6, 

2022 (Order No. 6082).

9 The Commission addresses only rates and fees that have been challenged by commenters, or otherwise present compliance issues.
Docket No. ACR2021 - 8 -

On December 20, 2016, the Commission initiated its required review of the ratemaking 

system, pursuant to 39 U.S.C. § 3622(d)(3), by issuing an advance notice of proposed 

rulemaking.10 Upon review of the ratemaking system, the Commission found that it was not 

achieving the statutory objectives, taking into account the statutory factors.11 The 

Commission issued a notice of proposed rulemaking, suggesting a number of regulatory 

modifications to the ratemaking system intended to enable the system to achieve the 

statutory objectives.12 Based on the comments received in response to Order No. 4258, the 

Commission issued a revised notice of proposed rulemaking on December 5, 2019.13 On 

November 30, 2020, the Commission issued an order adopting final rules, which included 

new rate authority mechanisms, new requirements for workshare discounts and noncompensatory products, and several procedural changes (e.g., revisions to the procedural 

schedule for rate adjustment proceedings).14 This ACD is the first to evaluate compliance 

under the new rules.

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

products to determine compliance with applicable statutory and regulatory 

requirements.15 Chapter II. also includes a discussion about the class-level price cap. 

Chapter III. focuses on other compliance issues related to Market Dominant products’ rates 

and fees, including non-compensatory classes and products. Chapter IV. covers compliance 

issues related to the rates and fees of Competitive products. In Chapter V., the Commission 

discusses service performance, customer access, and customer satisfaction. In Chapter VI., 

the Commission evaluates cost and service issues for flat-shaped mailpieces (flats).16

There are three appendices to the FY 2021 ACD. Appendix A contains Commission-directed 

undertakings in this ACD. Appendix B contains a list of commenters. Appendix C contains 

an index of acronyms and abbreviations.

 

10 Docket No. RM2017-3, Advance Notice of Proposed Rulemaking on the Statutory Review of the System for Regulating Rates and Classes for 

Market Dominant Products, December 20, 2016 (Order No. 3673).

11 Docket No. RM2017-3, Order on the Findings and Determination of the 39 U.S.C. § 3622 Review, December 1, 2017, at 275 (Order No. 4257).

12 Docket No. RM2017-3, Notice of Proposed Rulemaking for the System for Regulating Rates and Classes for Market Dominant Products, 

December 1, 2017 (Order No. 4258).

13 Docket No. RM2017-3, Revised Notice of Proposed Rulemaking, December 5, 2019 (Order No. 5337).

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

30, 2020 (Order No. 5763). On appeal, the D.C. Circuit denied petitions for review of the new rules. See Nat’l Postal Pol’y Council v. Postal Regul. 

Comm’n, 17 F.4th 1184 (D.C. Cir. 2021).

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

16 In Docket No. RM2018-1, the Commission established new rules to require the annual submission of comprehensive information regarding 

the cost and service performance of flat-shaped mail. See Order No. 5086. Pursuant to 39 C.F.R. § 3050.50, the Postal Service submitted the 

required information in its FY 2021 ACR. See Library Reference USPS-FY21-45, December 29, 2021.
Docket No. ACR2021 - 9 -

Timeline and Review of Report

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

(i.e., 90 days after September 30). The Commission must complete the ACD within 90 days 

of receiving the ACR. The Postal Service filed the FY 2021 ACR on December 29, 2021; thus, 

the Commission must issue this ACD no later than March 29, 2022.

Focus of the ACR

In accordance with 39 U.S.C. § 3652, the ACR must provide analyses of costs, revenues, 

rates, and quality of service sufficient to demonstrate that during the reporting year all 

products complied with all applicable requirements of Title 39. Additionally, 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 levels 

of customer satisfaction. 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 per-item contribution to institutional costs. 39 

U.S.C. § 3652(b).

Other Reports

In conjunction with filing the ACR, the Postal Service must also file its most recent 

Comprehensive Statement on Postal Operations, its FY 2022 Performance Plan, and its FY 

2021 Performance Report. 39 U.S.C. § 3652(g).

Commission Responsibilities

Upon receipt of the ACR, the Commission provides an opportunity for public comment on 

the Postal Service’s submissions.17 The Commission is responsible for making a written 

determination as to whether any rates or fees were not in compliance with applicable 

provisions of chapter 36 of Title 39 or related regulations, and whether any service 

standards were not met. 39 U.S.C. § 3653(b). If the Commission makes a timely written 

determination of non-compliance, it is required to take such action as it deems appropriate. 

39 U.S.C. § 3653(c).

Procedural History

On December 29, 2021, the Postal Service filed its FY 2021 ACR, covering the period from 

October 1, 2020, through September 30, 2021. See FY 2021 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 

 

17 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. See 39 U.S.C. § 505.
Docket No. ACR2021 - 10 -

supporting workshare discounts, and volume information presented in billing 

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

Document” to the FY 2021 ACR, which contains a brief description of each set of folder 

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

obsolescence in accordance with 39 C.F.R. § 3050.12.18

The Postal Service concurrently filed its 2021 Annual Report and Comprehensive Statement 

on Postal Service Operations as part of Library Reference USPS-FY21-17 to the FY 2021 

ACR.19

On January 3, 2022, the Commission issued an order establishing Docket No. ACR2021 to 

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

general public, and establishing January 31, 2022, and February 14, 2022, as the deadlines 

for comments and reply comments, respectively.20

Methodology Changes

The FY 2021 ACR generally employs the methodologies used most recently by the 

Commission unless the Commission has approved a change in methodology. See FY 2021 

ACR at 4-5. In this proceeding, the Postal Service relies upon five approved methodology 

changes.21 The Postal Service discusses the effect of methodology changes to FY 2021 ACR 

library references in the Roadmap Document. See Roadmap Document at 87-100.

Product Analysis

The Postal Service provides an analysis of each Market Dominant product, including special 

services and international NSAs active during FY 2021. This analysis includes a discussion 

of workshare discounts and passthroughs for Market Dominant products, required by 

39 U.S.C. § 3652(b). The Postal Service also provides data for Competitive products and 

discusses the data with references to standards under 39 U.S.C. § 3633 and 39 C.F.R. 

§ 3035.107. Last, the Postal Service discusses three Market Dominant market tests 

conducted in FY 2021. FY 2021 ACR at 90.

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.

 

18 Library Reference USPS-FY21-9, December 29, 2021, file “USPS-FY21-9 Roadmap.pdf” (Roadmap Document).

19 Library Reference USPS-FY21-17, December 29, 2021 (FY 2021 Annual Report).

20 Notice of Postal Service's Filing of Annual Compliance Report and Request for Public Comments, January 3, 2022 (Order No. 6079); see also FY 

2021 Annual Compliance Report, 87 Fed. Reg. 790 (Jan. 6, 2022). On January 6, 2022, the Commission established separate comment deadlines 

for the Postal Service’s FY 2021 Performance Report and FY 2022 Performance Plan. See Order No. 6082 at 3, 4.

21 Docket No. RM2021-7, Order on Analytical Principles Used in Periodic Reporting (Proposal Four), September 30, 2021 (Order No. 5991); 

Docket No. RM2021-1, Order on Analytical Principles Used in Periodic Reporting (Proposal Seven), October 6, 2021 (Order No. 5999); Docket 

No. RM2021-6, Order on Analytical Principles Used in Periodic Reporting (Proposal Three), November 4, 2021 (Order No. 6032); Docket No. 

RM2021-8, Order on Analytical Principles Used in Periodic Reporting (Proposal Five), November 5, 2021 (Order No. 6033); Docket No. RM2021-

9, Order on Analytical Principles Used in Periodic Reporting (Proposal Six), December 1, 2021 (Order No. 6050).
Docket No. ACR2021 - 11 -

Service Performance

The ACR also includes information regarding service performance, customer satisfaction, 

and consumer access, as required under 39 U.S.C. § 3652(a)(2) and 39 C.F.R. part 3055. FY 

2021 ACR, Section III.

Confidentiality

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

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

§ 3011.200. The application for non-public treatment must clearly identify all non-public 

materials and fulfill the burden of persuasion that the materials should be withheld from 

the public. Id. § 3011.201. The FY 2021 ACR includes such an application with respect to 

certain Competitive and international Market Dominant products. FY 2021 ACR, 

Attachment 2.

On January 19, 2022, United Parcel Service, Inc. (UPS) filed a motion for access to nonpublic information filed as part of the Postal Service’s ACR.22 The motion included a list of 

non-public library references to which UPS requested access, specified that access was 

necessary for the purpose of filing comments in this ACR, and provided the requisite 

statements of protective conditions and signed certifications from each individual for 

whom UPS sought access. See First UPS Motion for Access at 1-2. UPS noted that it 

conferred with the Postal Service and stated that the Postal Service consented to the 

motion with respect to certain library references. Id. Accordingly, the Commission granted 

UPS’s motion with respect to those library references on January 20, 2022.23

On January 26, 2022, the Postal Service filed a response regarding the remaining library 

references listed in the motion, stating that select foreign postal operators raised concern 

with the request, as has been the case in past dockets.24 The Postal Service attached to its 

response correspondence expressing concern from two of those operators. Response to 

First UPS Motion for Access, Attachments 1-2. The Postal Service requested that the 

Commission take these concerns into account when evaluating the motion. Response to 

First UPS Motion for Access at 3.

The Commission granted the remainder of the First UPS Motion for Access on February 1, 

2022. In evaluating the motion, the Commission first found that it satisfied the 

Commission’s rules for seeking access to non-public information.25 The Commission also 

found that the Postal Service and third-party concerns are mitigated by the numerous 

 

22 United Parcel Service, Inc.’s Motion Requesting Access to Non-Public Materials Under Protective Conditions, January 19, 2022, at 1 (First UPS 

Motion for Access).

23 Order Granting Motion for Access, in Part, January 20, 2022 (Order No. 6095).

24 United States Postal Service Notice of Filing Responses to United Parcel Service Inc.’s Motion Requesting Access to Non-Public Materials 

Under Protective Conditions, January 26, 2022 (Response to First UPS Motion for Access).

25 Order Granting Motion for Access, February 1, 2022, at 8-10 (Order No. 6098); 39 C.F.R. § 3011.301.
Docket No. ACR2021 - 12 -

protective conditions and prohibitions on improper disclosure of non-public information. 

Order No. 6098 at 13. The Commission stated that “denying access to non-public materials 

would significantly restrict the ability of interested persons to comment on the Postal 

Service’s compliance under the PAEA.” Id. at 14. “Having balanced the public interest in the 

financial transparency of the Postal Service against the Postal Service’s claims of 

commercial harm,” the Commission granted UPS’s motion for access. Id.

On February 9, 2022, UPS filed a second motion seeking access to a non-public library 

reference for use in Docket No. RM2022-2.26 It noted that in Order No. 6095, the 

Commission granted access to the non-public library reference for use in Docket No. 

ACR2021. Second UPS Motion for Access at 1. Noting that the request was uncontested by 

the Postal Service, the Commission granted the Second UPS Motion for Access on February 

17, 2022.27

Requests for Additional Information

Twenty-six Chairman’s Information Requests (CHIRs) and three CIRs were issued with 

respect to the ACR from January 7, 2022, to March 25, 2022. The Postal Service responded 

to the CHIRs and CIRs, often filing supplemental information in support of the responses.

UPS filed a motion for issuance of information requests on January 27, 2022, with 

questions it stated were intended to provide greater clarity regarding the complex costing 

practices that underlie the ACD.28 The Postal Service responded that it took no position 

with respect to the first three proposed questions, but requested that the Commission deny 

the motion with respect to the final two questions because they are outside the scope of the 

docket.29 The motion was granted in part and denied in part, with the Commission finding 

that the information sought by the first three proposed questions and a portion of question 

five were relevant and likely to materially assist the Commission in the conduct of the ACR 

proceeding, in the preparation of its ACD, and in the performance of its functions under 

Title 39 of the United States Code.30 For the remaining questions, the Commission found 

that the burden associated with responding to the proposed questions outweighed the 

relevance and additional value of the information sought. Order No. 6102 at 6. With respect 

to the portion of the motion that was granted, the Commission issued a CIR. See CIR No. 3.

 

26 United Parcel Service, Inc.’s Motion Requesting Access to Non-Public Materials Under Protective Conditions, February 9, 2022 (Second UPS 

Motion for Access).

27 Order Granting Motion for Access, February 17, 2022 (Order No. 6108).

28 Motion of United Parcel Service, Inc. for Issuance of Information Request to the United States Postal Service, January 27, 2022, at 1.

29 Response of the United States Postal Service to UPS Motion Seeking Information Request, January 31, 2022, at 1.

30 Order Granting in Part and Denying in Part United Parcel Service, Inc. Motion for Information Request, February 4, 2022, at 5 (Order No. 

6102).
Docket No. ACR2021 - 13 -

CHAPTER II. MARKET DOMINANT 

PRODUCTS: PRICING REQUIREMENTS

Introduction

As explained in Chapter I., 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.31 Chapter II. describes these regulatory changes in conjunction with its 

discussion of the class-level price cap and workshare discounts.

The Class-Level Price Cap

Two rate adjustments went into effect during FY 2021.32 The first was approved in Docket 

No. R2021-1 on November 18, 2020, before the new regulations went into effect. The classlevel price cap applicable in that proceeding was the one set forth in the prior ratemaking 

system pursuant to 39 U.S.C. § 3622(d), which set the class-level price cap at the change in 

the consumer price index for all urban customers (CPI-U) in addition to any unused banked 

rate authority for the class. In approving the rates, the Commission determined the rate 

adjustments complied with the price cap and applicable regulations. Order No. 5757 at 2.

The second rate adjustment was approved in Docket No. R2021-2 on July 19, 2021, and 

was the first rate adjustment filed and reviewed pursuant to the new regulations. Order 

No. 5937 at 1. The new regulations provide for multiple forms of rate authority. 39 C.F.R. 

§ 3030.127(a). In particular, in addition to rate authority based on the change in CPI-U and 

any unused banked rate authority, the maximum rate adjustment authority available to the 

Postal Service for each Market Dominant class under the new regulations also includes:

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

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

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

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

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

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

 

31 See generally Order No. 5763. See also id., at 370 (stating the new regulations are to take effect 30 days after publication in the Federal 

Register); 85 Fed. Reg. 81124 (Dec. 15, 2020).

32 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 (Order No. 5757); Docket No. R2021-2, Order on Price 

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

Classification Changes, July 19, 2021 (Order No. 5937).
Docket No. ACR2021 - 14 -

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

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

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

5763 at 72, 100, 189-91.

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 discounts are based on the avoided costs that 

result from the mailer performing the activity instead of the Postal Service.

Under the prior ratemaking system, the Commission performed its compliance analysis 

pursuant to 39 U.S.C. § 3622(e)(2), which directs the Commission to ensure that workshare 

discounts do not exceed the costs the Postal Service avoids as a result of the worksharing 

activity unless certain exceptions are met. See 39 U.S.C. § 3622(e)(2)(A) to (D).

In modifying how workshare discounts are regulated under the revised system for 

regulating rates and classes for Market Dominant products, the Commission’s primary 

focus was on increasing pricing efficiency for workshare discounts. Under the ECP rule, 

which guided the Commission’s approach, pricing efficiency is achieved when workshare 

discounts are set equal to their avoided costs and produce passthroughs equal to 100 

percent. See Order No. 4258. 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.33 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. The further from 100 percent a passthrough is, the less efficient the 

pricing according to ECP. Order No. 4257 at 136.

The Commission explained that workshare discounts set substantially above or 

substantially below avoided costs are problematic because they send inefficient pricing 

signals to mailers and therefore reduce productive efficiency in the postal sector. Order No. 

4258 at 89. These inefficient pricing signals may reduce incentives for the Postal Service to 

right-size its network and for mailers to enter volume that best conforms to that network, 

and may result in less efficient volume and decreased revenue for the Postal Service. Id.

at 89-90.

 

33 For example, if the Postal Service offers a discount of $0.02 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.
Docket No. ACR2021 - 15 -

The Commission found that most workshare discounts under the prior ratemaking system 

were set substantially above or substantially below avoided costs and thus failed to achieve 

pricing efficiency. Order No. 4257 at 138; Order No. 4258 at 89. The Commission also found 

that the Postal Service had the pricing flexibility under the prior system to set workshare 

discounts closer to avoided costs but elected not to do so. Order No. 4257 at 138-39.

In light of these findings, the new regulations governing workshare discounts provide an 

incremental path for improving the pricing efficiency of workshare discounts. Order No. 

5337 at 176. Specifically, the new regulations impose several requirements on noncomforming workshare discounts that must be complied with in each rate adjustment 

proceeding. First, workshare discounts are prohibited from being made less efficient. In 

other words, 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 allowable 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.

As is evident, 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.34 However, because changes in avoided 

costs are calculated for each fiscal year in the ACD, the Commission also analyzes 

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

Workshare Discount Data Used in Report

Under the modified ratemaking system, the Commission stated that it would determine 

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 stated it would also identify those 

workshare discounts that were equal to their avoided costs. Id. Accordingly, the sections 

below identify the workshare discounts with passthroughs that equaled 100 percent, 

exceeded 100 percent, and were below 85 percent in FY 2021.

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

rates and fees “in effect” during FY 2021. 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 

 

34 See, e.g., Order No. 5937 at 2 (approving workshare discounts proposed by the Postal Service as consistent with the new regulations in the 

first rate adjustment proceeding under the modified ratemaking system).
Docket No. ACR2021 - 16 -

year.35 This is consistent with the Commission’s long-standing practice to use the most 

recent data available in its analyses.

The National Postal Policy Council (NPPC) asserts that it is inconsistent with 39 C.F.R. § 

3050.21 and 39 U.S.C. § 3652 for the Postal Service and the Commission to focus solely on 

the workshare discounts in effect at the end of the fiscal year when other workshare 

discounts were in effect for the majority of the fiscal year.36 NPPC notes this is particularly 

important for FY 2021, when three different sets of workshare discounts were in effect 

during the fiscal year (i.e., workshare discounts approved as part of Docket No. R2020-1, 

Docket No. R2021-1, and Docket No. R2021-2). NPPC Comments at 3-6. Futhermore, NPPC 

notes that the Docket No. R2021-2 workshare discounts were only in effect for 33 days of 

FY 2021. Id. at 6.

The Postal Service asserts that reporting on all workshare discounts in effect during the 

fiscal year “would have little practical value for oversight or compliance” because the 

Commission already reviews workshare discounts for compliance in rate adjustment 

proceedings using the most recent avoided costs available at the time.37 When avoided 

costs are updated as part of the ACR, the Postal Service notes that compliance is again 

reviewed based on the current workshare discounts and new avoided costs. Postal Service 

Reply Comments at 2. The Postal Service further explains that if workshare discounts are 

found not compliant in the ACD, then the non-compliance is remedied in the next rate 

adjustment proceeding. Id. Because of this process, the Postal Service asserts non-current 

workshare discounts should not be reviewed as part of the ACD because such discounts are 

“by definition, compliant, or made compliant, when the Commission approved the price 

changes during the year” and do not demonstrate anything “about Postal Service policies 

and operations other than the fact there have been intervening price cases and changes in 

costs.” Id.

NPPC’s proposal to evaluate workshare discounts for compliance with respect to all 

discounts active during the fiscal year would be a change to the Commission’s longstanding practice of using the end-of-year discounts to evaluate compliance. In order to 

give adequate consideration to such a proposal, a rulemaking proceeding would be the 

appropriate venue to consider such a change. However, the Commission notes that its longstanding practice is grounded in the process described by the Postal Service, where the 

most recent data is used to bring workshare discounts into compliance in rate adjustment 

proceedings. Thus, workshare discounts that have already been changed and made 

compliant through a rate adjustment proceeding reveal nothing about the current 

compliance status of workshare discounts. It also would not give further insight into the 

 

35 See, e.g., Docket No. ACR2020, Annual Compliance Determination, March 29, 2021, at 12 (FY 2020 ACD); Docket No. ACR2019, Annual 

Compliance Determination, March 25, 2020, at 13 (FY 2019 ACD); Docket No. ACR2018, Annual Compliance Determination, April 12, 2019, at 13 

(FY 2018 ACD); Docket No. ACR2017, Annual Compliance Determination, March 29, 2018, at 15 (FY 2017 ACD); Docket No. ACR2016, Annual 

Compliance Determination, March 28, 2017, at 10 (FY 2016 ACD); FY 2015 ACD at 10.

36 Comments of the National Postal Policy Council, January 31, 2022, at 2-6 (NPPC Comments).

37 Reply Comments of the United States Postal Service, February 14, 2022, at 1-2 (Postal Service Reply Comments).
Docket No. ACR2021 - 17 -

effectiveness of the new regulations since the workshare discounts set in Docket No. 

R2020-1 and Docket No. R2021-1 were established under the prior ratemaking system.

The end-of-year prices in effect in FY 2021 were the prices approved in Docket No. 

R2021-2. Therefore, consistent with its long-standing practice, the Commission evaluates 

workshare discounts for compliance below using the Docket No. R2021-2 prices in 

conjunction with the FY 2021 avoided costs.

Workshare Discounts with 100 Percent 

Passthroughs

39 C.F.R. § 3030.282 prohibits the Postal Service from making workshare discounts more 

inefficient in rate adjustment proceedings. In accordance with 39 C.F.R. § 3030.282(a), 

workshare discounts that are set equal to their avoided costs and have passthroughs of 100 

percent cannot be changed in a rate adjustment proceeding prior to the issuance of the next 

ACD.

There were six workshare discounts with passthroughs equal to 100 percent in FY 2021, all 

of which were within the USPS Marketing Mail class. Table II-1 identifies the applicable 

discount, avoided cost, and passthrough for each of the six workshare discounts equal to 

their avoided costs.

Table II-1

FY 2021 Workshare Discounts with 100 Percent Passthroughs

Type of Worksharing Discount Avoided 

Cost Passthrough

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

Automation AADC Letters $0.021 $0.021 100%

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

Automation Mixed AADC Letters $0.006 $0.006 100%

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

Automation Mixed ADC Flats $0.027 $0.027 100%

USPS Marketing Mail Nonprofit Parcels Barcoding ($/piece)

Mixed NDC Machinable Barcoded Parcels $0.041 $0.041 100%

Mixed NDC Irregular Barcoded Parcels $0.041 $0.041 100%

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

Mixed NDC Barcoded Marketing Parcels $0.041 $0.041 100%

Note: AADC refers to automated area distribution center. ADC refers to area distribution center. NDC refers to network distribution center.

Source: Library References PRC-LR-ACR2021-3-6.
Docket No. ACR2021 - 18 -

No comments were received about these discounts.

The Commission reminds the Postal Service that the workshare discounts identified in Table 

II-1 cannot be changed in any rate adjustment proceedings occurring prior to the issuance of 

the FY 2022 ACD consistent with 39 C.F.R. § 3030.282(a).

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). The Commission notes that no 

discounts received a waiver for purposes of Docket No. R2021-2, the most recent rate 

adjustment proceeding.

In FY 2021, six workshare discounts exceeded the avoided costs of the corresponding 

worksharing activities. Five of those discounts were within the USPS Marketing Mail class, 

and one was within the Periodicals class. Table II-2 identifies the applicable discount, 

avoided cost, and passthrough for each of the six workshare discounts.
Docket No. ACR2021 - 19 -

Table II-2

FY 2021 Workshare Discounts with Passthroughs that Exceed 100 Percent

Type of Worksharing Discount Avoided 

Cost Passthrough

Periodicals Outside County Mail Presorting ($/piece)

Machinable Non-automation 3-Digit/SCF Flats $0.053 $0.052 101.9%

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

Automation 5-Digit Flats $0.158 $0.154 102.6%

USPS Marketing Mail Nonprofit Machinable & Irregular Parcels Dropshipping ($1,000/piece & pound total)

DSCF $419 $350 119.8%

DDU $66 $53 125.7%

USPS Marketing Mail Commercial & Nonprofit Marketing 

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

DSCF $2,230 $2,217 100.6%

DDU $2,484 $1,918 129.5%

Note: SCF refers to sectional center facility. DSCF refers to destination sectional center facility. DDU refers to destination delivery unit.

Source: Library References PRC-LR-ACR2021-3-6.

The Public Representative comments that of the six workshare discounts identified in 

Table II-2, only one is justified by an exception in 39 U.S.C. § 3622(e)(2).38 He notes that the 

five remaining discounts will be addressed in the next rate adjustment proceeding 

consistent with the new regulations and that no further action is necessary at this time. PR 

Comments at 16, 18-19. Concerning workshare discounts set above avoided costs 

generally, the Association for Postal Commerce (PostCom) asserts that the Commission 

improperly requires the Postal Service to reduce discounts with greater than 100 percent 

passthroughs when the reduction of such workshare discounts would impede the efficient 

operation of the Postal Service.39

Both the Public Representative and PostCom appear to misunderstand different aspects of 

the new regulations as they pertain to workshare discounts that exceed their avoided costs. 

With respect to both comments, the Commission notes that under the new regulations the 

exceptions of 39 U.S.C. § 3622(e) now apply when workshare discounts are proposed and 

approved in rate adjustment proceedings through the operation of the new regulations.

Concerning the Public Representative’s comments, the Commission notes that each of the 

six workshare discounts identified in Table II-2 must be addressed consistent with the new 

regulations in the next rate adjustment proceeding. With respect to PostCom’s concern that 

the regulations improperly require the Postal Service to reduce workshare discounts even 

when the reduction would impede the efficient operation of the Postal Service, the 

Commission notes that when efficient operation is at risk, the Postal Service is eligible to 

 

38 Public Representative Comments, January 31, 2022, at 16 (PR Comments).

39 Comments of the Association for Postal Commerce, January 31, 2022, at 5 (PostCom Comments).
Docket No. ACR2021 - 20 -

apply for waiver of 39 C.F.R. § 3030.283 in advance of the related rate adjustment 

proceeding under 39 C.F.R. § 3030.286(c)(5). If a waiver is granted, the Postal Service is 

exempted from reducing the workshare discount pursuant to 39 C.F.R. § 3030.283(d).

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. In addition, the 

workshare discounts identified in Table II-2 cannot be increased in the next rate adjustment 

proceeding 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 for purposes of 

Docket No. R2021-2, the most recent rate adjustment proceeding.

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 2021, 63 workshare discounts had passthroughs that were less than 85 

percent. Ten of those discounts were within First-Class Mail, 25 were within each of the 

USPS Marketing Mail and Periodicals classes, and 3 were within the Package Services class. 

Table II-3 identifies the applicable discount, avoided cost, and passthrough for each of the 

63 workshare discounts with passthroughs under 85 percent in FY 2021.
Docket No. ACR2021 - 21 -

Table II-3

FY 2021 Workshare Discounts with Passthroughs Under 85 Percent

Type of Worksharing Discount Avoided 

Cost Passthrough

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

Automation Mixed AADC Letters $0.045 $0.074 60.8%

Automation 5-Digit Letters $0.035 $0.042 83.3%

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

Non-automation Machinable Mixed AADC Letters $0.036 $0.064 56.3%

Non-automation Non-machinable Mixed AADC Letters $0.036 $0.175 20.6%

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

Automation Mixed AADC Cards

Automation AADC Cards

Automation 5-Digit Cards

$0.009

$0.008

$0.012

$0.013

$0.011

$0.018

69.2%

72.7%

66.7%

First-Class Mail Flats Presorting ($/piece)

Automation ADC Flats $0.108 $0.132 81.8%

Automation 3-Digit Flats $0.053 $0.069 76.8%

Automation 5-Digit Flats $0.175 $0.207 84.5%

Periodicals Outside County Mail Presorting ($/piece)

Machinable Non-automation ADC Flats $0.067 $0.094 71.3%

Machinable Non-automation 5-Digit Flats $0.119 $0.175 68.0%

Carrier Route Basic Flats $0.176 $0.259 68.0%

Saturation Flats $0.018 $0.045 40.0%

Machinable Automation ADC Flats $0.054 $0.075 72.0%

Machinable Automation 5-Digit Flats $0.104 $0.153 68.0%

Non-machinable Non-automation ADC Flats $0.102 $0.139 73.4%

Non-machinable Non-automation 3-Digit/SCF Flats $0.047 $0.063 74.6%

Non-machinable Non-automation 5-Digit Flats $0.087 $0.116 75.0%

Non-machinable Automation ADC Flats $0.110 $0.146 75.3%

Non-machinable Automation 3-Digit/SCF Flats $0.041 $0.056 73.2%

Non-machinable Automation 5-Digit Flats $0.087 $0.118 73.7%

3-Digit Automation Letter $0.005 $0.007 71.4%

Periodicals Outside County Mail Barcoding ($/piece)

Machinable Automation Mixed ADC Flats $0.054 $0.071 76.1%

Periodicals In-County Mail Presorting ($/piece)

3-Digit Presort Flats $0.029 $0.062 46.8%

5-Digit Presort Flats $0.044 $0.172 25.6%

Carrier Route Basic Flats $0.108 $0.299 36.1%

HD Flats $0.021 $0.036 58.3%

Saturation Flats $0.016 $0.045 35.6%

3-Digit Automation Letters $0.007 $0.009 77.8%

5-Digit Automation Letters $0.022 $0.028 78.6%

Periodicals In-County Mail Barcoding ($/piece)
Docket No. ACR2021 - 22 -

Basic Automation Flats $0.057 $0.090 63.3%

3-Digit Automation Flats $0.046 $0.076 60.5%

5-Digit Automation Flats $0.044 $0.061 72.1%

Periodicals In-County Mail Dropshipping ($/piece)

DDU $0.010 $0.021 47.6%

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

Non-automation AADC Machinable Letters $0.013 $0.030 43.3%

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

DNDC $0.021 $0.027 77.8%

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

Non-automation ADC Flats $0.066 $0.081 81.5%

USPS Marketing Mail Nonprofit Machinable & Irregular Parcels Dropshipping ($1,000/piece & pound total)

DNDC $716 $1,651 43.4%

USPS Marketing Commerical & Nonprofit Marketing Parcels Dropshipping ($1,000/piece & pound total)

DNDC $194 $359 53.9%

USPS Marketing Mail Commercial & Nonprofit Basic Carrier Route 

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

DNDC $16,192 $29,906 54.1%

DSCF $279,891 $406,916 68.8%

USPS Marketing Mail Commercial & Nonprofit 

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

DNDC $3,280 $4,202 78.0%

DSCF $218,286 $274,115 79.6%

DDU $376,608 $458,269 82.2%

USPS Marketing Mail Nonprofit Parcels Presorting ($/piece)

NDC Machinable Parcels $0.362 $0.563 64.3%

5-Digit Machinable Parcels $0.476 $0.783 60.8%

NDC Irregular Parcels $0.250 $0.361 69.3%

SCF Irregular Parcels $0.549 $0.832 66.0%

5-Digit Irregular Parcels $0.383 $0.986 38.8%

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

NDC Marketing Parcels $0.376 $0.478 78.7%

SCF Marketing Parcels $0.294 $0.370 79.5%

5-Digit Marketing Parcels $0.292 $0.944 30.9%

USPS Marketing Mail Commercial & Nonprofit Carrier Route 

Letters Dropshipping ($/piece)

DNDC $0.021 $0.027 77.8%

DSCF $0.024 $0.030 80.0%

USPS Marketing Mail Commercial & Nonprofit HD/Saturation 

Letters Presorting ($/piece)

HD Letters $0.093 $0.415 22.4%

USPS Marketing Mail Commercial & Nonprofit HD/Saturation 

Letters Dropshipping ($/piece)

DNDC $0.021 $0.027 77.8%

DSCF $0.025 $0.030 83.3%
Docket No. ACR2021 - 23 -

USPS Marketing Mail Commercial & Nonprofit HD/Saturation 

Flats Presorting ($/piece)

HD Flats $0.064 $0.077 83.1%

Origin Flats on 5-Digit Pallets $0.010 $0.022 45.5%

Package Services Library Mail Presorting ($/piece)

5-Digit $1.010 $1.207 83.7%

Package Services BPM Flats Dropshipping ($/piece)

Basic, Carrier Route DDU $0.734 $0.951 77.2%

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

Basic, Carrier Route DDU $0.744 $0.951 78.2%

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

to High Density. 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 Plus. NDC refers to network distribution center. BPM refers to Bound Printed Matter. IPPs 

refer to irregular parcels and pieces.

Source: Library References PRC-LR-ACR2021-3-6.

The National Association of Presort Mailers (NAPM) commends the new regulations for 

moving passthroughs closer to 100 percent and urges passthroughs be set as close to 100 

percent as possible given all of the uncompensated efforts mailers undertake to improve 

service and make the mail more efficient.40

In addition, Pitney Bowes, NPPC, and PostCom take issue with the Postal Service’s decision 

to set many workshare discounts close to 85 percent, which the commenters assert causes 

various issues.41 Pitney Bowes asserts that this leads to workshare discounts that are not 

compliant once avoided costs are calculated after the close of the fiscal year and suggests 

that the Commission monitor pricing behavior to assess whether the rules should be 

modified to narrow the passthrough floor. Pitney Bowes Comments at 3. Similarly, NPPC 

asserts that low passthroughs combined with the practice of using avoided costs from the 

prior fiscal year when setting discounts “almost ensures that most discounts will be 

nowhere near economically efficient levels while in effect” and uses the FY 2021 First-Class 

Mail workshare discounts to illustrate its concerns. NPPC Comments at 8-13. NPPC 

acknowledges that the issues with the timing of avoided cost data “are far outside of the 

scope of this proceeding” and believes stronger measures, including modifying the 

passthrough floor to 95 percent and removing the exception in 39 C.F.R. § 3030.284(c), 

must be taken to compensate. Id. at 7, 9, 14-15. PostCom asserts that passthroughs set 

below 100 percent allow inefficiencies to remain, and in setting passthroughs close to 85 

percent, “the Postal Service is likely to make discounts, and by extension rates, more 

volatile” as changes in avoided costs are more likely to necessitate changes in rate 

adjustment proceedings. PostCom Comments at 3, 5-6.

The Postal Service objects to the positions of Pitney Bowes, NPPC, and PostCom. Postal 

Service Reply Comments at 3. The Postal Service asserts that it has complied with the new 

 

40 Comments of the National Association of Presort Mailers, January 31, 2022, at 7-8 (NAPM Comments).

41 Comments of Pitney Bowes Inc., January 31, 2022, at 3 (Pitney Bowes Comments); NPPC Comments at 8-13; PostCom Comments at 1-2.
Docket No. ACR2021 - 24 -

regulations and the new regulations have “resulted in the Postal Service moving 

passthrough percentages toward 100 percent across all mail classes.” Id. The Postal Service 

also notes that the new regulations have only been in effect long enough to allow for one 

rate adjustment proceeding and states that it is premature to claim the new regulations 

have not been successful in achieving their aims. Id. at 6.

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

floor allowed by 39 C.F.R. § 3030.284(e) was less restrictive than many of other workshare 

discount requirements, but explained that the exception was appropriate given the 

regulatory requirements related to workshare discounts less than their avoided costs were 

new; the consequences of such workshare discounts are less detrimental to the Postal 

Service than workshare discounts set above their avoided costs; and the Commission 

sought to provide continued pricing flexibility to the Postal Service. Order No. 5763 at 212. 

The Commission emphasized that “the 85 percent passthrough floor phases out the most 

inefficient of the Postal Service’s pricing practices related to below-avoided-costs 

workshare discounts” and that 39 C.F.R. § 3030.284(e) “strikes an appropriate balance 

between improving pricing efficiency and providing sufficient pricing flexibility for belowavoided-costs workshare discounts that were not previously regulated.” Id. The 

Commission, however, also noted that if over time, the Postal Service was using the 85 

percent passthrough floor as a safe harbor and 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 No. R2021-2, finding that “it 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. 5937 at 61. 

However, the Commission also stated 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 may find it appropriate to regulate workshare discounts 

set below avoided costs more stringently when it undertakes its [5 year] review.” Id.

The Commission maintains the approach set forth in Docket Nos. RM2017-3 and R2021-2 

here. This is the first compliance determination under the new regulations, which evaluates 

the first workshare discounts implemented 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 the experience over multiple rate cyles 

show adjustments are necessary.

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

below avoided costs. MPA – The Association of Magazine Media (MPA) notes that there are 

a high number of Periodicals Outside County discounts below 85 percent and that the 

Postal Service stated that it may seek a waiver rather than bringing the discounts into 
Docket No. ACR2021 - 25 -

compliance.42 MPA asserts that waivers should generally be limited and not be permitted 

for the Periodicals Outside County Carrier Route Basic workshare discount. MPA 

Comments at 3.

NAPM suggests that the Postal Service should set First-Class Mail and USPS Marketing Mail 

workshare discounts that are below avoided costs closer to 100 percent rather than 

seeking waivers and that the Postal Service should use its pricing flexibility to ensure that 

the difference between DNDC and DSCF workshare discounts cover the additional 

transportation costs of dropshipping to the DSCF. NAPM Comments at 9-10.

Pitney Bowes notes that the First-Class Mail Automation 5-Digit Letters workshare 

discount has a passthrough of 83.3 percent and states that it should be set equal to avoided 

costs given its importance to “commercial mailers who produce the most profitable and 

price sensitive First-Class Mail letters.” Pitney Bowes Comments at 2. Pitney Bowes also 

urges the Postal Service to set the passthrough for USPS Marketing Mail Automation 5-Digit 

Letters at 100 percent. Id.

With respect to concerns that the Postal Service may seek waivers for specific workshare 

discounts, as discussed above, the use of waivers is governed by 39 C.F.R. § 3030.286. For 

workshare discounts with passthroughs below 100 percent, a waiver is limited solely to 

circumstances where the Postal Service shows by a preponderance of evidence that 

increasing the discount would impede the efficient operation of the Postal Service or if 

increasing or eliminating a low workshare discount for a non-compensatory product would 

result in a further increase in rates paid by mailers not able to take advantage of the 

workshare discount. 39 C.F.R. § 3030.286(b), (g). As the Commission stated in Docket 

No. RM2017-3, it intends for the waiver process to be used in exceptional circumstances 

and intends to ensure the Postal Service’s strict compliance with 39 C.F.R. § 3030.286. 

Order No. 5763 at 213-14. The Commission also notes that with regard to all 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.

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. In addition, all 

workshare discounts set below their avoided costs, including those identified in Table II-3, 

cannot be decreased in the next rate adjustment proceeding consistent with 39 C.F.R. 

§ 3030.282(c).

 

42 Comments of MPA – The Association of Magazine Media, January 31, 2022, at 2-3 (MPA Comments).
Docket No. ACR2021 - 26 -

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 issues related to non-compensatory classes and products, as well as pricing 

issues related to cost coverage.

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

products.43 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. 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. § 3030.221.44 The regulations also provide that rates may not be reduced 

for any non-compensatory product. Id. § 3030.127(b).

The Commission finds that two classes were non-compensatory in FY 2021: (1) Periodicals 

and (2) Package Services. Additionally, the Commission identifies the following noncompensatory products in compensatory classes: (1) First-Class Mail Flats, (2) USPS 

Marketing Mail Flats, (3) USPS Marketing Mail Carrier Route, (4) USPS Marketing Mail 

Parcels, and (5) Money Orders. Collectively, the Postal Service lost $1.9 billion in FY 2021 

from non-compensatory classes and products.

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

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

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

raised by commenters.

 

43 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.

44 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.
Docket No. ACR2021 - 27 -

Non-Compensatory Classes

Periodicals

a. Introduction

The Periodicals class comprises two products, In-County45 and Outside County. Revenue 

for both of these products was insufficient to cover attributable cost in FY 2021, with the 

cost coverage of the class declining to an all-time low of 53.2 percent. In this chapter, the 

Commission discusses the FY 2021 financial results for Periodicals in more detail.

b. Previous ACD Directives

The Periodicals class has consistently failed to cover cost, and the Commission has 

repeatedly encouraged the Postal Service to improve Periodicals cost coverage.46 In each 

ACD since FY 2015, the Commission directed the Postal Service to file a Periodicals Pricing 

Report that analyzes how pricing decisions impact cost, contribution, and revenue. FY 2020 

ACD at 21.

In the FY 2020 ACD, the Commission also made several recommendations to the Postal 

Service to develop specific plans and set goals to improve FY 2021 cost and service issues 

for flat-shaped mailpieces, which includes both In-County and Outside County Periodicals. 

Id. at 236. The Postal Service’s operational initiatives, and other changes in response to the 

FY 2020 recommendations, are discussed in Chapter VI. of this Report.

c. FY 2021 Cost Coverage

As in previous years, the cost coverage for Periodicals decreased in FY 2021, down to 53.2 

percent in FY 2021 from 56.9 percent in FY 2020, resulting in a negative contribution of 

nearly $828 million in FY 2021.47

 

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

46 See, e.g., FY 2017 ACD at 50; FY 2018 ACD at 46; FY 2019 ACD at 25; FY 2020 ACD at 20.

47 See Library Reference PRC-LR-ACR2021-5, Excel file “FY 2021 CH3 Periodicals.xlsx.”
Docket No. ACR2021 - 28 -

Table III-1

Periodicals Cost Coverage, FY 2017–FY 2021

Fiscal Year Periodicals

Class In-County Outside County

FY 2017 69.3% 68.5% 69.4%

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%

Source: Library Reference PRC-LR-ACR2021-5.

The Postal Service states that Periodicals cost coverage declined because its volume 

continued to decline, which resulted in reduced density and higher costs for delivery and 

mail processing. FY 2021 ACR at 38. The Postal Service notes a more pronounced decline in 

Periodicals volume in recent years due to increased substitution from the Internet, mobile 

devices, and e-readers.48 The Postal Service observes that, from FY 2020 to FY 2021, 10.9 

percent of publications ceased mailing. Id. The Postal Service notes that, in FY 2021, despite 

Periodicals price increases in January and August, its unit revenue remained unchanged 

due, in part, to a decrease in unit weight. FY 2021 ACR at 38.

In a response to a CHIR, the Postal Service detailed its plan to improve Periodicals cost 

coverage.49 The Postal Service points to broader operational initiatives discussed in Library 

Reference USPS-FY21-45, which include plans for reducing attributable costs for all flatshaped products. Response to CHIR No. 3, question 6; see also Chapter VI. With new 

Periodicals service standards introduced in Docket No. N2021-1, the Postal Service expects 

mail volume to transition from more expensive air transportation to less expensive surface 

transportation. Response to CHIR No. 3, question 6. In addition, the Postal Service plans to 

improve operational efficiency by providing price signals that encourage customers to 

prepare mail in containers that are less expensive for the Postal Service to handle and 

process (e.g., pallets). Id. The Postal Service concludes that Periodicals cost coverage will 

hopefully improve due to (1) increases in unit revenue as a result of above CPI-U price 

increases, (2) pricing initiatives that enhance operational efficiency, and (3) cost 

controlling initiatives for all flat-shaped products. Id.

 

48 See Library Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (b) -- Financial Report,” PDF file “Part B Narratives-FY 21 

Rule 3050.50.pdf,” at 9.

49 Responses of the United States Postal Service to Questions 1-6 of Chairman’s Information Request No. 3, January 26, 2022, question 6 

(Response to CHIR No. 3).
Docket No. ACR2021 - 29 -

d. Comments on Periodicals

MPA notes the rising unit cost of Periodicals has driven cost coverages downward. MPA 

Comments at 1. Likewise, the Public Representative comments that the cost coverage 

shortfall of Periodicals is a longstanding issue. PR Comments at 12. 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, particularly for the Outside County 

product which represents greater volume and therefore greater losses. Id.

e. Commission Analysis

Since FY 2017, Periodicals volume declined by 30.6 percent, total revenue declined by 31.5 

percent, total attributable cost declined by 10.8 percent, and the Periodicals class has 

provided cumulative negative contribution of nearly $3.5 billion.50 To better understand 

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 consistently implemented 

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

products. In the past, however, the CPI-U price cap limited the Postal Service’s ability to 

raise prices. The recent addition of density, retirement, and non-compensatory rate 

authorities allows the Postal Service more pricing flexibility within the Periodicals class 

going forward.51 In Docket No. R2021-2, the Postal Service raised Periodicals prices by 

8.771 percent on average. Order No. 5937 at 106-07. The magnitude of this price increase 

was significant compared to previous rate increases limited by the CPI-U price cap, but 

since the prices were implemented on August 29, 2021, the full impact of the price increase 

on Periodicals revenue will not be clear until the end of FY 2022.

As such, the FY 2021 Periodicals total revenue, and its unit revenue, are still largely limited 

by the CPI-U price cap and have not increased in step with price increases. As detailed in 

Figure III-1, from FY 2017 to FY 2021, Periodicals unit revenue remained relatively flat. 

Unit revenue for In-County was $0.112 in FY 2017 and $0.109 in FY 2021, a decrease of 

only 3.2 percent. Unit revenue for Outside County was $0.275 in FY 2017 and $0.277 in FY 

2021, a slight increase of 0.6 percent.

 

50 See Library Reference PRC-LR-ACR2021-5, Excel file “FY 2021 CH3 Periodicals.xlsx.”

51 These new rate authorities are described in more detail in Section II.B.
Docket No. ACR2021 - 30 -

Figure III-1

Periodicals Unit Revenue, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-5.

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 87.8 

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. As detailed below in Table III-2, average 

weight for Outside County decreased by 11.7 percent and average advertising content 

decreased by 6.8 percentage points over the last 5 fiscal years. Not only did weight 

decrease, but in FY 2021, the Postal Service sought to enable publishers to increase 

editorial content by keeping the pound price stable (while raising other pricing 

components).52 These factors directly limited the revenue that the Postal Service earned 

from the Outside County product.

 

52 Library Reference USPS-FY21-44, December 29, 2021, PDF file “USPS-FY21-44 Preface.Report.pdf,” at 2 (Periodicals Pricing Report). In 

response to prior ACD directives, the Postal Service has previously discussed trends in Periodicals, mail mix changes, and impacts of pricing 

strategies as part of its Perodicals Pricing Report. In the FY 2020 ACD, the Commission directed the Postal Service to include an updated version 

of the Periodicals Pricing Report in its FY 2021 ACR. FY 2020 ACD at 28. The updated report included an analysis of how price changes during the 

fiscal year impacted the cost, contribution, and revenue of Periodicals in FY 2021 and whether the new prices improved the efficiency of 

Periodicals pricing in FY 2021.

$0.112 $0.111 $0.113 $0.109 $0.109 

$0.275 $0.272 $0.275 $0.275 $0.277 

 $-

 $0.050

 $0.100

 $0.150

 $0.200

 $0.250

 $0.300

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Unit Revenue (dollars)

In-County Outside County
Docket No. ACR2021 - 31 -

Table III-2

Periodicals Outside County Revenue Elements, FY 2017–FY 2021

Fiscal Year Weight (Ounces) Advertising Content

FY 2017 5.96 37.5%

FY 2018 5.75 35.8%

FY 2019 5.59 34.2%

FY 2020 5.32 31.9%

FY 2021 5.26 30.7%

Source: Library Reference PRC-LR-ACR2021-5.

The Postal Service continued implementing a second pricing strategy in FY 2021. In an 

effort to encourage sorting to the delivery route, it increased Carrier Route piece prices by 

only 5 to 7 percent, while other presort levels’ prices increased by more than 10 percent. 

Id.

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 the 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.

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.

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 as 

required by 39 C.F.R. § 3050.50 relate to Periodicals. See Library Reference USPS-FY21-45. 

As discussed further in Chapter VI., the Postal Service has been unable to quantify the 

expected impact of those operational initiatives and changes. See Chapter VI. Therefore, the 

Commission is unable to determine the impact of these initiatives on the cost of Periodicals 

but notes that, despite these initiatives, the cost of handling Periodicals continues to 

increase.
Docket No. ACR2021 - 32 -

Figure III-2

Periodicals Unit Attributable Cost, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-5.

As detailed in Figure III-2, from FY 2017 to FY 2021, Periodicals unit attributable cost has 

increased annually. Unit attributable cost for In-County was $0.164 in FY 2017 and $0.242 

in FY 2021, an increase of 47.4 percent. Unit attributable cost for Outside County was 

$0.397 in FY 2017 and $0.514 in FY 2021, an increase of 29.6 percent.

$0.164 $0.163 

$0.193 $0.213 

$0.242 

$0.397 $0.403 

$0.428 

$0.480 

$0.514 

 $-

 $0.100

 $0.200

 $0.300

 $0.400

 $0.500

 $0.600

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Unit Attributable Cost (dollars)

In-County Outside County
Docket No. ACR2021 - 33 -

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

cost resulted in a lower unit contribution and an increasing total negative contribution for 

Periodicals.

Figure III-3

Periodicals Unit Contribution, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-5.

$(0.052) $(0.052)

$(0.080)

$(0.104)

$(0.133)

$(0.122) $(0.131)

$(0.153)

$(0.205)

$(0.237)

 $(0.300)

 $(0.250)

 $(0.200)

 $(0.150)

 $(0.100)

 $(0.050)

 $-

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Unit Contribution (dollars)

In-County Outside County
Docket No. ACR2021 - 34 -

In FY 2021, Outside County constituted 87.8 percent of all Periodicals volume and 93.9 

percent of total Periodicals attributable cost.53 Figure III-4 shows that Outside County unit 

attributable cost increased by 11.73 cents from FY 2017 to FY 2021.

Figure III-4

Periodicals Outside County Unit Attributable Cost, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-5.

In FY 2021, the unit attributable cost increased for mail processing, delivery, purchased 

transportation, and other costs.54 The Postal Service expects Periodicals domestic air cost 

to decrease due to new service standards introduced in Docket No. N2021-1. However, 93 

percent of Periodicals volume will stay at its current standard, leaving 7 percent of 

Periodicals volume that could potentially yield domestic air cost savings. In addition, in FY 

2021, domestic air only accounted for 8.9 percent of total purchased transportation cost for 

Periodicals.55 Since the new service standards were implemented on October 1, 2021, the 

full impact of the change on Periodicals attributable cost will not be clear until the end of 

FY 2022.

 

53 See Library Reference PRC-LR-ACR2021-5, Excel file “FY 2021 CH3 Periodicals.xlsx.”

54 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 includes cost segments 1, 2, 8, 11, 12, 13, 15, 16, 17, 18, 19, and 20. The figure does not account for piggyback factors.

55 See Library Reference PRC-LR-ACR2021-5, Excel file “FY 2021 CH3 Periodicals.xlsx.”

12.7 12.5 13.2 13.7 15.0

10.9 11.2 12.0

15.0 16.1

3.6 4.1 4.7

4.6

12.4 12.4 5.5

13.0

14.8

39.7 14.8 40.3

42.8

48.0

51.4

0

10

20

30

40

50

60

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Unit Attributable Cost (cents)

Mail Processing Delivery Transportation Other Total
Docket No. ACR2021 - 35 -

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

decreased since FY 2017. In FY 2017, mailer presortation of Outside County Carrier Route 

was at 62.3 percent and had decreased to 58.7 percent by FY 2021. In addition, mailer 

dropship of Outside County decreased from 75.0 percent in FY 2017 to 72.8 percent in FY 

2021. This is likely due to declining subscriber bases and lower density of publications. The 

Postal Service states that “[d]eclining volume results in reduced density, regardless of the 

reason for the decline, which leads to a reduction in the number of pieces qualifying for 

higher presort containers.” Periodicals Pricing Report at 2. This increases mail processing 

costs for the Postal Service, because it is forced to do processing work that used to be 

avoided.

Table III-3

Periodicals Outside County Mail Mix, FY 2017–FY 2021

Fiscal Year Presortation -

Carrier Route Basic

Dropship -

All Levels

FY 2017 62.3% 75.0%

FY 2018 61.2% 74.0%

FY 2019 59.9% 72.4%

FY 2020 58.9% 71.9%

FY 2021 58.7% 72.8%

Source: Library Reference PRC-LR-ACR2021-5.

On a positive note, in FY 2021, the Postal Service observes that relatively more mail was 

prepared in Carrier Route pallets, and the usage of high-cost sacks was reduced. Periodicals 

Pricing Report at 3. The Commission notes that although mail processing cost for these 

pieces decreased, the decline was small and not sufficient to balance out the other cost 

increases and shifts in the mail mix to less presorted categories described above. 

Therefore, there was no noticeable improvement in cost coverage for the Periodicals class 

as a whole.

All of the Commission recommendations pertaining to reducing flat-shaped mail costs in 

Chapter VI. of this Report apply to Periodicals. In Chapter VI., the Commission reiterates its 

longstanding finding that despite numerous cost-reduction initiatives designed to reduce flatshaped mail costs, these costs continue to rise.
Docket No. ACR2021 - 36 -

Package Services

a. Introduction

FY 2021 was the third fiscal year in a row that the Package Services class did not cover its 

costs. In FY 2021, the cost coverage for Package Services was 93.2 percent, which was a less 

than 1 percentage point improvement from the class cost coverage of 92.5 percent in FY 

2020.

The Package Services class consists of four products. Two of those products, Alaska Bypass 

Service and BPM Flats, covered their costs in FY 2021. However, the positive contribution 

from those products was insufficient to offset the negative contribution from the other two 

products, BPM Parcels and Media Mail/Library Mail. Table III-4 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-4

Package Services Cost Coverage, FY 2017–FY 2021

Fiscal Year Package Services 

Overall

Alaska Bypass

Service

Bound Printed 

Matter Flats

Bound Printed 

Matter Parcels

Media Mail/ 

Library Mail

FY 2017 103.5% 193.4% 152.1% 110.5% 75.7%

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%

Source: Library Reference PRC-LR-ACR2021-6.

As Table III-4 shows, the cost coverage for the Package Services class decreased by 10.3 

percentage points between FY 2017 and FY 2021, from a cost coverage of 103.5 percent in 

FY 2017 to a cost coverage of 93.2 percent in FY 2021. Table III-4 further illustrates that 

cost coverages for all Package Services products except Media Mail/Library Mail decreased 

between FY 2017 and FY 2021. Media Mail/Library Mail’s cost coverage improved by 8.6 

percentage points between FY 2017 and FY 2021; however, this product continues to have 

the lowest cost coverage of all Package Services products.

Below, the Commission discusses the FY 2021 financial results for the two Package Services 

products that did not cover their costs in FY 2021, BPM Parcels and Media Mail/Library 

Mail.
Docket No. ACR2021 - 37 -

b. Bound Printed Matter Parcels

Introduction

In FY 2021, as in FY 2020, the BPM Parcels product failed to cover its attributable cost. In 

the FY 2020 ACD, the Commission recommended that the Postal Service propose a price 

increase for BPM Parcels above the class average for the Package Services class. FY 2020 

ACD at 54. In addition, the Commission stated that the Postal Service should explore and 

implement opportunities to reduce the unit cost of BPM Parcels and report on those 

opportunities and results in the FY 2021 ACR. Id. As detailed below, the Commission finds 

that the Postal Service’s response to the FY 2020 ACD was inadequate and is concerned 

that BPM Parcels did not cover its costs for a second consecutive year.

FY 2021 Results

In FY 2021, the cost coverage for BPM Parcels was 94.6 percent, a slight increase from FY 

2020 when cost coverage was 94.0 percent. Library Reference PRC-LR-ACR2021-6. The 

Postal Service explains that this improvement was due to a 3.3 cent increase in unit 

revenue, which outpaced the 2.8 cent increase in unit cost. FY 2021 ACR at 41. A CHIR was 

issued asking the Postal Service to explain why unit cost increased in FY 2021.56 In 

response, the Postal Service states that the unit cost increase was primarily due to an 

increase in mail processing unit cost with mail processing costs not falling in proportion to 

BPM Parcels’ volume decline.57 The Postal Service also notes that there were changes in 

presort and dropship profiles for BPM Parcels over the same period, which would be 

expected to increase mail processing unit costs. Response to CHIR No. 11, question 19. 

However, the Postal Service also notes that “the cost difference is not statistically 

significant because the coefficient of variation (CV) for these estimates . . . was 7.1 percent 

in FY 2021 and 6.7 percent in FY 2020.” Id.

In response to the Commission’s recommendation in the FY 2020 ACD that the Postal 

Service explore and implement opportunities to reduce the unit cost of BPM Parcels and 

report on those opportunities and results in the FY 2021 ACR, the Postal Service only 

mentions that a potential shift of volumes from NDCs to processing and distribution 

centers (P&DCs) “should have a beneficial effect on BPM Parcels unit costs” without 

elaborating further. FY 2021 ACR at 41. A CHIR was issued asking for more details about 

this and any other initiatives considered or planned in FY 2021 and FY 2022 to reduce the 

unit cost of BPM Parcels.58 In response, the Postal Service states that the shift of BPM 

Parcels’ processing to P&DCs is part of a shape-based processing strategy that is tentatively 

set for implementation in January 2023.59 The Postal Service expects this processing 

change would “reduce processing and logistics costs by reducing allied time, building 

 

56 Chairman’s Information Request No. 11, February 4, 2022, question 19 (CHIR No. 11).

57 Responses of the United States Postal Service to Questions 1-21 of Chairman’s Information Request No. 11, February 11, 2022, question 19 

(Response to CHIR No. 11).

58 Chairman’s Information Request No. 5, January 24, 2022, question 4 (CHIR No. 5).

59 Responses of the United States Postal Service to Questions 1-11 of Chairman’s Information Request No. 5, January 31, 2022, question 4.a. 

(Response to CHIR No. 5).
Docket No. ACR2021 - 38 -

higher density mail containers, and increasing the utilization of surface trips[;]” however, 

the Postal Service is unable to provide quantitative support demonstrating these expected 

cost reductions. Response to CHIR No. 5, question 4.b. The Postal Service represents that no 

other initiatives were considered in FY 2021 or are being considered in FY 2022 to reduce 

the unit cost of BPM Parcels. Id. question 4.c., 4.f.

In the FY 2020 ACD, the Commission also recommended that the Postal Service propose an 

above-average price increase for BPM Parcels. FY 2020 ACD at 54. However, in Docket No. 

R2021-2, the Postal Service proposed a price increase for BPM Parcels that was more than 

2 percentage points below the class average. Order No. 5937 at 116.

In the FY 2021 ACR, the Postal Service states that it “remains committed to improving 

Package Services cost coverage.” FY 2021 ACR at 41. However, the Postal Service does not 

commit to above-average price increases for BPM Parcels in FY 2022 and states that it “will 

evaluate its [BPM] Parcels pricing strategy following the conclusion of Docket No. MC2021-

78,” where it proposed to transfer the product to the Competitive product list.60

Comments on BPM Parcels

The Public Representative notes that BPM Parcels did not receive price increases above the 

class average in recent rate adjustments. PR Comments at 13. He recommends that if the 

transfer of BPM Parcels to the Competitive product list is denied, the Postal Service should 

increase prices for BPM Parcels above the class average in its next rate adjustment. Id.

Commission Analysis

As noted above, in FY 2021, BPM Parcels did not cover its attributable cost and had a cost 

coverage of 94.6 percent. Although this was a slight improvement from the FY 2020 cost 

coverage of 94.0 percent, it is still a notable decrease from its cost coverage of 106.1 

percent in FY 2019. Table III-5 shows the volume, unit revenue, unit attributable cost, unit 

contribution, and overall cost coverage of BPM Parcels since FY 2017.

 

60 Id.; Docket No. MC2021-78, United States Postal Service Request to Transfer Bound Printed Matter Parcels to the Competitive Product List, 

March 26, 2021.
Docket No. ACR2021 - 39 -

Table III-5

Bound Printed Matter Parcels Financial Results, FY 2017–FY 2021

Fiscal Year Volume 

(Millions)

Unit 

Revenue 

(Cents)

Unit 

Attributable 

Cost (Cents)

Unit 

Contribution 

(Cents)

Cost 

Coverage

FY 2017 277.6 107.6 97.4 10.2 110.5%

FY 2018 294.8 108.1 99.2 8.9 109.0%

FY 2019 285.9 110.1 103.8 6.3 106.1%

FY 2020 260.6 111.0 118.1 -7.1 94.0%

FY 2021 227.2 114.4 120.9 -6.5 94.6%

Source: Library Reference PRC-LR-ACR2021-6.

Table III-5 shows that the cost coverage for BPM Parcels decreased by 15.9 percentage 

points over the last 5 fiscal years as the change in unit revenue has not kept pace with the 

change in unit cost. Unit revenue for BPM Parcels increased by only 6.3 percent over the 

last 5 fiscal years compared to an increase of 24.1 percent in unit cost over the same time 

period.

As noted above, in the FY 2020 ACD, the Commission recommended that the Postal Service 

explore and implement opportunities to reduce the unit cost of BPM Parcels and report on 

its progress in the FY 2021 ACR. FY 2020 ACD at 54. The Postal Service’s response 

demonstrated that the Postal Service made no efforts in FY 2021 to address rising unit 

costs for BPM Parcels. In the FY 2021 ACR, although the Postal Service indicated a possible 

beneficial effect from a potential shift in BPM Parcels’ processing, it failed to elaborate on 

those or any other plans or explain why and how any such change would reduce unit cost. 

FY 2021 ACR at 41. When asked, the Postal Service was unable to provide any quantitative 

support for its hypothesis that BPM Parcels’ unit cost would decline as a result of this 

processing change. Response to CHIR No. 5, question 4.b. The Postal Service also 

acknowledged that this change is not expected to be implemented until January 2023, and 

that no other initiatives were considered in FY 2021 or are being considered in FY 2022 to 

reduce the unit cost of BPM Parcels. Id. question 4.a., 4.c., 4.f.

In Docket No. RM2017-3, the Commission was concerned that classes of mail that did not 

cover their attributable costs threatened the financial integrity of the Postal Service. Order 

No. 5763 at 189. The Commission noted that the overall financial results of noncompensatory classes are dominated by non-compensatory products. Id. Because noncompensatory classes create unique issues, the Commission provides for an additional 2 

percentage points of rate authority for any class of mail that does not cover its attributable 

costs. Id.; 39 C.F.R. § 3030.222(a).

In the FY 2020 ACD, the Commission recommended that the Postal Service propose a price 

increase for BPM Parcels that was above the class average for the Package Services class 

due to the product’s non-compensatory status. FY 2020 ACD at 54. However, in Docket 
Docket No. ACR2021 - 40 -

No. R2021-2, the Postal Service proposed a price increase for BPM Parcels that was the 

lowest among the products in the Package Services class and more than 2 percentage 

points below the class average despite utilizing the 2 percentage points of additional rate 

authority granted to Package Services as a non-compensatory class. Order No. 5937 at 116. 

To explain its proposed price increase for BPM Parcels, the Postal Service referenced its 

request to transfer BPM Parcels to the Competitive product list in Docket No. MC2021-78 

and stated that it was balancing “the need to address the product’s cost coverage against 

the need to ensure that a non-compensatory class’s price cap space is not wasted on a 

product that may not remain on the market-dominant list.”61

In the order approving the Docket No. R2021-2 price increases, the Commission noted that 

the Postal Service was not required to give BPM Parcels an above-average price increase. 

Order No. 5937 at 119. However, the Commission expressed “concern that the Postal 

Service has elected not to give BPM Parcels an above average price increase given the 

amount of rate authority available to Package Services” and noted that “[i]f BPM Parcels are 

not transferred to the Competitive product list, the Commission expects to look closely at 

the cost coverage of BPM Parcels in the next ACD and consider whether further regulatory 

action is needed at that time.” Id. at 119-20. On February 10, 2022, the Commission denied 

the Postal Service’s request to transfer BPM Parcels to the Competitive product list.62

The Commission finds that FY 2021 revenue for BPM Parcels was not sufficient to cover 

attributable cost and that the Postal Service did not take adequate steps in FY 2021 to 

improve the cost coverage for this product. As a result, the Commission directs the Postal 

Service to increase BPM Parcels’ prices by at least 2 percentage points above the class average 

in each Market Dominant rate adjustment affecting the Package Services class through the 

issuance of the FY 2022 ACD. In addition to an above-average price increase, the Commission 

directs the Postal Service to further explore initiatives to reduce the unit cost of BPM Parcels 

in FY 2022. In the FY 2022 ACR, the Postal Service must explain in detail the initiatives it 

considered but did not implement in FY 2022 as well as the initiatives it implemented in FY 

2022 or plans to implement in FY 2023. For any initiative that was implemented or is planned 

to be implemented, the Postal Service must describe the actual or expected effects on BPM 

Parcels’ unit cost and provide any available quantitative support.

 

61 Docket No. R2021-2, United States Postal Service Notice of Market-Dominant Price Change, May 28, 2021, at 25.

62 Docket No. MC2021-78, Order Denying Request to Transfer Bound Printed Matter Parcels to the Competitive Product List, February 10, 2022 

(Order No. 6105).
Docket No. ACR2021 - 41 -

c. Media Mail/Library Mail

Introduction

In FY 2021, the Media Mail/Library Mail product failed to cover its attributable cost. FY 

2021 was the fifteenth consecutive year that Media Mail/Library Mail did not generate 

sufficient revenue to cover its attributable cost. See FY 2020 ACD at 51.

FY 2021 Results

In FY 2021, Media Mail/Library Mail had a cost coverage of 84.3 percent, a 5.0 percentage 

point increase compared with FY 2020. FY 2021 ACR at 40. The Postal Service states that 

the increase in cost coverage for Media Mail/Library Mail in FY 2021 is the result of a 15 

cent increase in unit revenue and an 8 cent decrease in unit cost. Id.

The Postal Service has consistently increased the prices for Media Mail/Library Mail faster 

than the prices for Package Services as a class. See Table III-7, infra. 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 class average for the Package Services class as a whole. 

Id.; Order No. 5937 at 116. The Postal Service states that the Docket No. R2021-2 price 

increase should have a significant effect on cost coverage in FY 2022 and that it intends to 

continue to improve the cost coverage of Media Mail/Library Mail through above-average 

price increases. FY 2021 ACR at 41.

Comments on Media Mail/Library Mail

The Public Representative notes that the cost coverage of Media Mail/Library Mail has 

improved for 2 consecutive years and that the Postal Service gave the product price 

increases above the class average in recent rate adjustment proceedings. PR Comments at 

14. He states the Docket No. R2021-2 price increase “should have a more substantial 

impact on cost coverage in FY 2022” and encourages the Postal Service to continue 

increasing Media Mail/Library Mail prices above the class average until the product covers 

its attributable cost. 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 2021. Table III-6 contains the volume, unit 

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

Mail since FY 2017.
Docket No. ACR2021 - 42 -

Table III-6

Media Mail/Library Mail Financial Results, FY 2017–FY 2021

Fiscal Year Volume 

(Millions)

Unit 

Revenue 

(Cents)

Unit 

Attributable 

Cost (Cents)

Unit 

Contribution 

(Cents)

Cost 

Coverage

FY 2017 76.5 349.2 461.1 -111.9 75.7%

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%

Source: Library Reference PRC-LR-ACR2021-6.

Although Media Mail/Library Mail only covered 84.3 percent of its attributable cost in FY 

2021, as Table III-6 demonstrates, the product’s financial results have improved 

considerably over the last 5 fiscal years. Between FY 2017 and FY 2021, Media 

Mail/Library Mail’s unit revenue increased by 23.6 cents and its unit cost decreased by 

19.1 cents, leading to an improved unit contribution of 42.7 cents. This improved 

contribution is also reflected in the product’s cost coverage, which improved by 8.6 

percentage points between FY 2017 and FY 2021.

Table III-7 shows the history of price increases for Media Mail/Library Mail under 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.
Docket No. ACR2021 - 43 -

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%

Source: Library Reference PRC-LR-ACR2021-6.

According to the Postal Service, it intends to continue applying above-average price 

increases to Media Mail/Library Mail. FY 2021 ACR at 41.

The Commission finds that the FY 2021 revenue for Media Mail/Library Mail was not 

sufficient to cover attributable cost. The Commission strongly recommends that the Postal 

Service continue to apply above-average price increases to Media Mail/Library Mail in rate 

adjustment proceedings consistent with the FY 2021 ACR’s pricing plan for Media 

Mail/Library Mail.
Docket No. ACR2021 - 44 -

Non-Compensatory Products in 

Compensatory Classes

First-Class Mail

a. Introduction

As a class, First-Class Mail covered its attributable costs in FY 2021 and had an overall cost 

coverage of 193.69 percent. Table III-8 provides the cost coverage for each First-Class Mail 

product as well as the overall class for the last 5 fiscal years. As Table III-8 shows, FirstClass Mail Flats was the only First-Class Mail product that did not cover its costs in FY 

2021.

Table III-8

First-Class Mail Cost Coverage, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-3.

b. First-Class Mail Flats

Introduction

In FY 2021, First-Class Mail Flats had a cost coverage below 100 percent for the first time. 

The product’s unit costs increased steadily over the past 5 years, while unit contribution 

steadily decreased over the same time period. FY 2021 ACR at 8-10. The Commission is 

concerned that First-Class Mail Flats appear to be moving in the same direction as other 

flat-shaped products that have not historically covered their attributable costs (i.e., InCounty Periodicals, Outside County Periodicals, USPS Marketing Mail Flats, and USPS 

Marketing Mail Carrier Route). Because this is the first time that First-Class Mail Flats is 

non-compensatory, there are no prior Commission directives for this product.

FY 2021 Results

In FY 2021, First-Class Mail Flats’ cost coverage fell to 98.9 percent from 100.2 percent in 

FY 2020. Library Reference PRC-LR-ACR2021-3. The Postal Service states that unit cost 

exceeded unit revenue by 1.7 cents in FY 2021. FY 2021 ACR at 8. The Postal Service 

explains that between FY 2020 and FY 2021, First-Class Mail Flats’ volume fell by 2.4 

Fiscal 

Year

First-Class 

Mail Overall

Single-Piece 

Letters/Postcards

Presorted 

Letters/Postcards Flats

Outbound 

Single-Piece 

International

Inbound 

Letter Post

FY 2017 208.81% 162.83% 319.52% 129.92% 165.89% 63.36%

FY 2018 204.22% 160.70% 309.76% 123.17% 142.04% 83.97%

FY 2019 195.62% 156.14% 292.88% 108.99% 145.72% 78.72%

FY 2020 198.16% 163.26% 280.96% 100.23% 128.27% 87.98%

FY 2021 193.69% 148.49% 279.92% 98.93% 152.77% 122.10%
Docket No. ACR2021 - 45 -

percent and the mail mix within the product continued to change. Id. Specifically, the share 

of Single-Piece First-Class Mail Flats decreased from 56.4 percent in FY 2020 to 52.7 

percent in FY 2021, while the share of Presorted First-Class Mail Flats increased from 43.6 

percent in FY 2020 to 47.3 percent in FY 2021. Id. The Postal Service states that this shift in 

the mail mix from Single-Piece to Presorted First-Class Mail Flats “had a moderating effect 

on the unit revenue[,]” which resulted in unit revenue increasing from $1.282 in FY 2020 to 

$1.310 in FY 2021, a 2.1 percent increase. Id. at 8-9. However, the unit cost rose at a higher 

pace: from $1.282 to $1.326 between FY 2020 and FY 2021, an increase of 3.4 percent. Id.

at 9.

The Postal Service states that the increase in unit cost was driven by increases in mail 

processing and surface transportation unit costs. Id. It further states that in the last 4 fiscal 

years, First-Class Mail Flats’ mail processing unit costs increased on average by 6.4 percent 

annually, coinciding with overall volume declines. Id. The Postal Service explains that as 

flat-shaped products’ volumes decreased, the productivities for various mail processing 

operations also declined, resulting in higher mail processing costs. Id. In regard to higher 

transportation costs, the Postal Service states that between FY 2020 and FY 2021, 

purchased transportation unit costs increased by 13.4 percent. Id. The Postal Service 

attributes this increase to the higher variabilities approved in Docket No. RM2021-1 as well 

as the possibility that declining volumes resulted in fewer average pieces per container and 

thus higher transportation unit costs. Id.

The Postal Service acknowledges that the disparity between unit revenue and unit cost for 

First-Class Mail Flats grew in recent years and states that it increased the product’s prices 

by 10.3 percent in Docket No. R2021-2 in response. Id. at 9-10. The Postal Service states 

that it “does not anticipate that revenue per piece and cost per piece will continue to 

diverge following the latest price increase for First-Class Mail Flats.” Id. at 10.

Postal Service’s Plan to Improve Cost Coverage

A CHIR was issued asking the Postal Service to provide a plan to improve cost coverage for 

First-Class Mail Flats.63 In response, the Postal Service states that besides compliance with 

39 C.F.R. § 3030.221, which will require price increases for First-Class Mail Flats that are 2 

percentage points above the class average, the Postal Service will consider higher price 

increases “subject to workshare and other constraints within the rate design and subject to 

an overall aim to maximize revenue and contribution at the class level.” Response to CHIR 

No. 3, question 2.b.

The Postal Service also describes efforts that it maintains should reduce the costs of FirstClass Mail Flats. Id. Specifically, the Postal Service states that the new service standards 

enacted in October 2021 transitioned mail from air transportation to surface 

transportation, which the Postal Service states “should provide some relief for purchased 

transportation unit costs.” Id. In addition, the Postal Service notes that it established 

several mail processing initiatives aimed at alleviating the upward trend in mail processing 

 

63 Chairman’s Information Request No. 3 and Notice of Filing Under Seal, January 19, 2022, question 2.b. (CHIR No. 3).
Docket No. ACR2021 - 46 -

costs. Id. The Postal Service explains that initiatives are targeted at flat-shaped products 

generally and should reduce attributable costs for all flat-shaped products, including FirstClass Mail Flats. Id. These initiatives are discussed in more detail in Chapter VI. of this 

Report.

Comments on First-Class Mail Flats

The Public Representative notes that in FY 2021, First-Class Mail Flats’ cost coverage fell 

below 100 percent, and that unit cost increased more than unit revenue. PR Comments at 6. 

The Public Representative acknowledges that the Postal Service expects the cost coverage 

of First-Class Mail Flats to improve as a result of the price increase approved in Docket No. 

R2021-2. Id. at 7. He states that the Postal Service must comply with 39 C.F.R. § 3030.221 

and increase prices by a minimum of 2 percentage points above the class average, which he 

states “should be sufficient to achieve compensatory prices.” Id.

NPPC comments that First-Class Mail Flats’ unit costs rose in recent years despite changes 

in the mail mix that increased the proportion of Presorted First-Class Mail Flats and should 

have reduced unit costs. NPPC Comments at 16. NPPC notes that none of the reasons the 

Postal Service gives for increases in unit costs “are the fault of those First-Class [Mail] Flats 

that remain in the system” or “due to the pieces themselves.” Id. at 17. NPPC suggests that 

the Commission should address unit costs by trying to increase volumes by lowering 

prices, since higher rates and reporting requirements were not successful in improving the 

cost coverage of other flat-shaped products. Id. at 17-18. NPPC is concerned that 39 C.F.R. 

§ 3030.221 does not allow the Postal Service any discretion to not increase First-Class Mail 

Flats’ prices above the class average and requests that the Commission address that 

inflexibility. Id. at 18.

NAPM also questions whether 39 C.F.R. § 3030.221 should be strictly applied to require 

price increases at a minimum of 2 percentage points above the class average for First-Class 

Mail Flats. NAPM Comments at 5-7. NAPM notes that the rule requires such price increases 

“even if a product should become non-compensatory by a fraction of a percent” and 

suggests that the Commission should reconsider its rule and grant flexibility to the Postal 

Service “to judiciously determine the price.” Id. at 6-7.
Docket No. ACR2021 - 47 -

Commission Analysis

Figure III-5 displays the cost coverage for First-Class Mail Flats over the last 10 fiscal years.

Figure III-5

First-Class Mail Flats Cost Coverage, FY 2012–FY 2021

Source: Library Reference PRC-LR-ACR2021-3.

As Figure III-5 shows, cost coverage dropped by 60.7 percentage points since First-Class 

Mail Flats’ peak cost coverage of 159.6 percent in FY 2014. The cost coverage for First-Class 

Mail Flats decreased over the last 5 fiscal years by an average of 6.2 percentage points each 

year.

90%

100%

110%

120%

130%

140%

150%

160%

170%

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Cost Coverage

Cost Coverage
Docket No. ACR2021 - 48 -

Table III-9 contains the volume, unit revenue, unit attributable cost, unit contribution, and 

overall cost coverage of First-Class Mail Flats for the last 5 fiscal years.

Table III-9

First-Class Mail Flats Financial Results, FY 2017–FY 2021

Fiscal Year Volume (Millions) Unit Revenue Unit Attributable 

Cost Unit Contribution Cost Coverage

FY 2017 1,448.3 $1.38 $1.06 $0.32 129.92%

FY 2018 1,381.9 $1.39 $1.13 $0.26 123.17%

FY 2019 1,295.3 $1.28 $1.17 $0.11 108.99%

FY 2020 1,204.7 $1.28 $1.28 $0.00 100.23%

FY 2021 1,176.3 $1.31 $1.33 $(0.02) 98.93%

Source: Library Reference PRC-LR-ACR2021-3.

As Table III-9 shows, unit contribution for First-Class Mail Flats decreased in each year 

between FY 2017 and FY 2021, which resulted in a decline in cost coverage of over 30 

percentage points over the same period. Since FY 2017, unit revenue decreased by 7 cents, 

while unit cost increased by 27 cents. Table III-9 further illustrates the decline in FirstClass Mail Flats’ volumes in each year between FY 2017 and FY 2021.

As stated above, the Postal Service represents that the 10.3 percent price increase for FirstClass Mail Flats approved in Docket No. R2021-2 will improve the growing disparity 

between unit revenues and costs. FY 2021 ACR at 10. A CHIR was issued asking the Postal 

Service to estimate the effects of this price increase on FY 2022 volume, revenue, cost, and 

contribution for First-Class Mail Flats.64 In response, the Postal Service estimates that the 

Docket No. R2021-2 price increase will result in First-Class Mail Flats covering its costs and 

having a positive contribution of $99.84 million in FY 2022.65 The Postal Service’s estimate 

projects that volumes will continue to decline in FY 2022, yet assumes that unit cost will 

remain constant in FY 2022 and makes no allowances for inflation. Response to CHIR No. 2, 

question 34.

The Commission is concerned that the Postal Service’s estimate uses FY 2021 unit cost as a 

proxy for FY 2022 unit cost. As Table III-9 shows, the product’s unit cost steadily increased 

in each year over the last 5 fiscal years, and inflationary pressures have been a prominent 

feature of the economy thus far in FY 2022.66 As a result, the Postal Service’s estimate does 

 

64 Chairman’s Information Request No. 2 and Notice of Filing Under Seal, January 18, 2022, question 34 (CHIR No. 2).

65 Responses of the United States Postal Service to Questions 1-36 of Chairman’s Information Request No. 2, January 25, 2022, question 34 

(Response to CHIR No. 2).

66 See, e.g., Gabriel T. Rubin, The Wall Street Journal, Inflation Reached 7.9% in February; Consumer Prices Are the Highest in 40 Years, March 

10, 2022, available at https://www.wsj.com/articles/us-inflation-consumer-price-index-february-2022-11646857681; Jeff Cox, CNBC, Inflation 

rose 7.9% in February, as food and energy costs push prices to highest in more than 40 years, March 10, 2022, available at 

https://www.cnbc.com/2022/03/10/cpi-inflation-february-2022-.html.
Docket No. ACR2021 - 49 -

not capture an accurate picture of likely contribution and cost coverage for First-Class Mail 

Flats in FY 2022.

The Postal Service also identifies several operational initiatives that are intended to reduce 

attributable costs for flat-shaped products, including First-Class Mail Flats. See, e.g.,

Response to CHIR No. 3, question 2.b. In Chapter VI. of this Report, the Commission reviews 

the operational changes and initiatives the Postal Service identified to reduce costs for flatshaped mailpieces in general. See Chapter VI., infra. The Postal Service could improve FirstClass Mail Flats’ cost coverage through cost reductions. However, flat-shaped products’ 

costs have continued to rise despite initiatives designed to improve them, and the Postal 

Service did not quantify any efforts to reduce First-Class Mail Flats’ costs. See id.

NPPC and NAPM suggest that the Commission not enforce 39 C.F.R. § 3030.221, which 

requires price increases of least 2 percentage points above the class average for First-Class 

Mail Flats. NPPC Comments at 18; NAPM Comments at 6-7. As a preliminary matter, the 

Commission notes that First-Class Mail Flats’ failure to cover its costs in FY 2021 appears to 

be part of a longer term trend given that First-Class Mail Flats has experienced a steady 

decline in cost coverage over the last 7 fiscal years. See Figure III-5, supra. The Commission 

expects that price increases and unit cost reductions will be key to reversing this trend. The 

new regulations adopted in Docket No. RM2017-3, including 39 C.F.R. § 3030.221, were a 

comprehensive modification to the system for regulating rates and classes for Market 

Dominant products after the Commission determined the prior system was not achieving 

the objectives of 39 U.S.C. § 3622(b).67 The modifications were determined to be necessary 

to achieve the objectives. Order No. 5763 at 23. The modified ratemaking system has been 

in effect for slightly more than a year, and only one rate adjustment proceeding has 

concluded under the new regulations. In Docket No. RM2017-3, the Commission 

determined it would review the effects of the modified ratemaking system after 5 years. Id. 

at 267. In determining 5 years was the appropriate time period for review, the Commission 

found that data from multiple rate cycles were likely needed for “[a] thorough and 

insightful review.” Id. Thus, the Commission determines that revisiting 39 C.F.R. § 3030.221 

when it has been in effect for only a partial rate cycle is premature at this time and notes 

that 39 C.F.R. § 3030.221 may be reconsidered as part of the 5 year review.

The Commission finds that FY 2021 revenue for First-Class Mail Flats was not sufficient to 

cover attributable cost. Consistent with 39 C.F.R. § 3030.221, the Commission requires that the 

Postal Service increase First-Class Mail Flats’ prices by at least 2 percentage points above the 

class average in each Market Dominant rate adjustment affecting First-Class Mail through the 

issuance of the FY 2022 ACD. In addition to above-average price increases, the Postal Service 

must continue to explore and implement opportunities to further reduce the unit costs of flatshaped mail products, including First-Class Mail Flats, as further discussed in Chapter VI. of 

this Report.

 

67 See 39 U.S.C. § 3622(d)(3); Order No. 4257; Order No. 5763.
Docket No. ACR2021 - 50 -

USPS Marketing Mail

As a class, USPS Marketing Mail covered its attributable costs in FY 2021 and had an overall 

cost coverage of 130.5 percent. Table III-10 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-10 

shows, three products within the class (USPS Marketing Mail Flats, USPS Marketing Mail 

Carrier Route, and USPS Marketing Mail Parcels) did not cover costs in FY 2021.

Table III-10

USPS Marketing Mail Cost Coverage, FY 2017–FY 2021

Fiscal Year

USPS 

Marketing 

Mail Overall

Carrier 

Route Letters Flats Parcels HD/Sat Flats EDDM HD/Sat Letters

FY 2017 146.7% 124.3% 195.4% 74.0% 64.5% 157.5% 268.7% 212.3%

FY 2018 142.4% 108.6% 195.0% 68.7% 58.5% 145.2% 267.6% 206.6%

FY 2019 139.1% 99.9% 190.0% 67.7% 56.9% 138.2% 259.5% 204.7%

FY 2020 129.5% 96.2% 171.4% 63.3% 76.5% 129.9% 257.7% 188.6%

FY 2021 130.5% 94.6% 174.7% 60.3% 73.1% 125.4% 248.3% 182.4%

Source: Library Reference PRC-LR-ACR2021-4.

a. USPS Marketing Mail Flats

Introduction

In FY 2021, USPS Marketing Mail Flats experienced its worst cost coverage since the 

product was established in FY 2007. Given that the product has never covered its costs, the 

Commission has issued specific directives related to the cost coverage of USPS Marketing 

Mail Flats since the FY 2010 ACD:

 FY 2010 ACD directive: The Commission found that USPS Marketing Mail Flats 

prices did not comply with 39 U.S.C. § 101(d)68 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.

 

68 39 U.S.C. § 101(d) requires the costs of postal operations to be apportioned to postal users on a fair and equitable basis.
Docket No. ACR2021 - 51 -

 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,69 in 

FY 2015 the Commission found that sufficient progress was no longer being made 

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. The 

Postal Service’s response to the FY 2015 directive is discussed in more detail in 

Chapter VI. of this Report.

 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.70 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 and FY 2020 ACD directives: The Commission found USPS Marketing Mail 

Flats continued to violate 39 U.S.C. § 101(d), and in both 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. The Commission 

noted in FY 2020 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.

Despite these directives, the Postal Service has failed to halt this product’s cost coverage 

decline or to identify a timeline to phase out the subsidy received by USPS Marketing Mail 

Flats.

FY 2021 Results

In FY 2021, USPS Marketing Mail Flats had a cost coverage of 60.3 percent, 3 percentage 

points lower than in the prior year and a new low.71 As shown in Figure III-6, cost coverage 

for USPS Marketing Mail Flats has steadily declined since FY 2017, when the cost coverage 

was 74.0 percent. Library Reference PRC-LR-ACR2021-4.

 

69 See FY 2012 ACD at 116; FY 2013 ACD at 54; FY 2014 ACD at 47.

70 FY 2016 ACD at 57; FY 2017 ACD at 59; FY 2018 ACD at 70-71.

71 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-ACR2021-1.
Docket No. ACR2021 - 52 -

Figure III-6

USPS Marketing Mail Flats Cost Coverage and Contribution, FY 2017–FY 202172

Source: Library Reference PRC-LR-ACR2021-4.

While unit revenue grew by 2.9 percent, it was more than offset by an 8 percent increase in 

unit cost. Id. As a result, negative contribution increased by $37.2 million in FY 2021. Id.

This increase in negative contribution is troubling, given that volume plunged 10 percent 

between FY 2020 and FY 2021. Id. The cumulative contribution loss from USPS Marketing 

Mail Flats between FY 2008 and FY 2021 has climbed to negative $8.3 billion. Id.

The Postal Service ascribes the decrease in cost coverage to “sharp volume decline in [USPS 

Marketing Mail] Flats” which caused “mail processing costs [to continue] to rise at a faster 

rate than wages.” FY 2021 ACR at 20. The Postal Service notes that total pieces fed (TPF) 

has fallen by 60 percent and productivity has fallen by 37 percent between 2009 and 2021 

on the Automated Flat Sorting Maching (AFSM) 100. See id. AFSM 100 productivity declined 

by 3 percent while Flats Sequencing System (FSS) productivity declined by 4 percent in the 

last year. Id. The Postal Service also notes that volume declines necessitate higher unit mail 

 

72 Complete USPS Marketing Mail Flats data for FY 2008 to FY 2019 can be found in Library Reference PRC-LR-ACR2019-4.

-$5.18

-$5.93

-$6.67

-$7.45

-$8.27

60.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

 $(9)

 $(8)

 $(7)

 $(6)

 $(5)

 $(4)

 $(3)

 $(2)

 $(1)

 $-

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Contribution (billions)

Loss Since 2007 Contribution Cost

Coverage
Docket No. ACR2021 - 53 -

processing costs because “setup and breakdown activities are largely invariant to 

processed volume.” Id.

The Postal Service also asserts that “[c]o-mailing, which shifts pieces toward [USPS 

Marketing Mail] High Density, is a secondary influence contributing to the volume decline 

in [USPS Marketing Mail] Flats.” Id. USPS Marketing Mail Flats’ share of all flat-shaped 

products in USPS Marketing Mail decreased by 1.1 percentage points in FY 2021, while the 

share of USPS Marketing Mail High Density/Saturation Flats was relatively constant the 

same period. Id. at 21. The Postal Service also notes that price increases are somewhat 

offset by changes in the nonprofit mail mix. Id. at 20. The nonprofit share of USPS 

Marketing Mail Flats volume has grown by 9.2 percentage points between FY 2017 and FY 

2021. Id.

Postal Service Responses to Prior ACD Directives

The Postal Service has complied with the FY 2010 directives for additional reporting, some 

of which will be discussed below in Chapter VI. Of note, the Postal Service points to two 

methodology changes that slightly affected USPS Marketing Mail Flats costs in FY 2021. FY 

2021 ACR at 34-36. Had they been in place during FY 2020, they would have resulted in a 

slightly smaller year-over-year unit cost increase in FY 2021. Id. at 34-35. Furthermore, the 

Postal Service comments on the historical and current subsidy of USPS Marketing Mail 

Flats, providing 14 years of product cost coverage shortfall and noting that the rule changes 

adopted as part of Docket No. RM2017-3 make plausible the prospect of future unit 

revenue increases exceeding or keeping pace with future unit cost increases. However, the 

Postal Service is unable to provide an estimated timeline for phasing out the subsidy.

In response to the FY 2020 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 each of the Market Dominant rate increases 

in FY 2021. Id. at 32. Specifically, the Postal Service raised rates on USPS Marketing Mail 

Flats by 3.553 percent in January 2021, and by 8.819 percent in August 2021.73

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 rule 3030.221 or the 

Commission otherwise revises its pricing directives. Id. at 32-33.

Comments on USPS Marketing Mail Flats

MPA discusses the rising unit costs of USPS Marketing Mail Flats, noting that the average 

annual increase in unit cost was 6.2 percent between FY 2015 and FY 2021. MPA 

Comments at 1. The Public Representative notes the cumulative loss accrued from USPS 

Marketing Mail Flats increased by 4.9 percent in FY 2021. PR Comments at 9. He also notes 

that declines in cost coverage are partially due to the change in the commercial versus 

nonprofit mail mix. Id. at 9-10.

 

73 Id. The class average rate increases were 1.519 percent and 6.814 percent, respectively. See id.
Docket No. ACR2021 - 54 -

The American Catalog Mailers Association, Inc. (ACMA) analyzes changes in the mail mix in 

greater detail.74 ACMA notes that when combining USPS Marketing Mail Flats, USPS 

Marketing Mail Carrier Route, and USPS Marketing Mail High Density Flats, the commercial 

mailpieces covered their cost in FY 2020 and had a cost coverage of 99.29 percent in FY 

2021. See ACMA Comments at 3. It also notes that the nonprofit share of all flat-shaped 

products increased dramatically in FY 2021. See id. at 4. ACMA suggests that unit costs 

should be indexed to correct for changes in the mail mix, and that measuring cost in this 

way shows unit costs have grown much faster than inflation over the past 23 years. See id.

at 5-6. ACMA points out that rate increases affect commercial and nonprofit mailpieces 

differently, going on to say that the commercial component of USPS Marketing Mail Carrier 

Route accrued a smaller rate increase than its nonprofit counterpart in FY 2021. The net 

effect of mail mix shifts is a blunting of unit revenues, “the shift toward Nonprofit is the 

principal reason the per-piece revenue for [Carrier Route] increased 1.9% instead of 

2.811%” in line with the annualized rate increase for the product. See id. at 8-9.

PostCom notes the increasing shortfall of USPS Marketing Mail Flats and suggests the 

Postal Service should hold prices for flat-shaped pieces constant to limit volume loss. 

PostCom Comments at 7. PostCom is concerned about the Commission’s emphasis on 

product-level cost coverages, noting that non-compensatory products accounted for less 

than 12 percent of USPS Marketing Mail revenue in FY 2021. Id. at 9. PostCom also notes 

that raising the cost coverage of every non-compensatory product would not close the 

contribution gap. Id.

Commission Analysis

The Commission’s analysis of USPS Marketing Mail Flats examines cost coverage, the intraclass subsidy, changes in the product-level mail mix, and major cost segments.

(a) FY 2021 Cost Coverage and Unit Contribution

As described above, the cost coverage for USPS Marketing Mail Flats fell to 60.3 percent in 

FY 2021, a new low since it was established as a product and the seventh consecutive year 

of decline. Library Reference PRC-LR-ACR2021-4. As shown in Figure III-7, the unit 

contribution of USPS Marketing Mail Flats was -28.5 cents in FY 2021, a 4.1 cent decline 

from FY 2020 and, similar to the product’s cost coverage, the lowest ever for the product. 

Since cost coverage and unit contribution are both functions of cost and revenue, the 

Commission also shows cost and revenue trends in Figure III-7. The Postal Service was 

successful at increasing unit revenues by 1.2 cents in FY 2021. However, this slight increase

was eclipsed by an increase in the unit attributable cost of 5.3 cents.

 

74 Initial Comments of the American Catalog Mailers Association (ACMA), January 31, 2022 (ACMA Comments).
Docket No. ACR2021 - 55 -

Figure III-7

USPS Marketing Mail Flats Unit Revenue, Attributable Cost, 

and Contribution, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-4.

The Commission finds that the Postal Service has been unsuccessful at improving the cost 

coverage of USPS Marketing Mail Flats as required by the Commission’s FY 2010 and FY 2018 

through FY 2020 ACD directives.

(b) Intra-Class Cross-Subsidy

In the FY 2010 ACD, as part of its findings of noncompliance, 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.”75 The Commission issued the FY 2010 ACD directive with the 

intent of enabling the Postal Service to reduce the contribution gap between these 

products.76

 

75 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).

76 Order No. 1427 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.

-$0.40

-$0.20

$0.00

$0.20

$0.40

$0.60

$0.80

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Dollars

Unit

Revenue

Unit Attributable Cost Unit

Contribution
Docket No. ACR2021 - 56 -

However, as Figure III-8 shows, despite the FY 2010 ACD directive, the contribution gap 

between USPS Marketing Mail Letters and USPS Marketing Mail Flats has continued to 

increase and has done so at an accelerated rate. In FY 2010, the contribution gap between 

USPS Marketing Mail Letters and USPS Marketing Mail Flats was 16.8 cents. In FY 2021, the 

contribution gap between these two products more than doubled to 37.8 cents.

Figure III-8

USPS Marketing Mail Flats and Letters Unit Contribution

and Contribution Gap, FY 2010–FY 2021

Source: Library Reference PRC-LR-ACR2021-4.

Since the Commission first issued the FY 2010 directive 11 years ago, cost coverage of USPS 

Marketing Mail Flats has declined by 21.5 percentage points to 60.3 percent; the 

cumulative negative contribution between FY 2008 through FY 2021 totals $8.3 billion; and 

the unit contribution has decreased by 26.3 cents. During the same period, the unit 

contribution for USPS Marketing Mail Letters was roughly unchanged.

The Commission finds that USPS Marketing Mail Flats continues to violate 39 U.S.C. § 101(d) 

and possesses an unacceptable deficient cost coverage that continues to constitute an intraclass subsidy, unfairly burdening other mailers within the USPS Marketing Mail class.

0.09 0.09 0.09 0.09 0.10 0.11 0.11 0.10 0.10 0.10 0.09 0.09

-0.08

-0.09 -0.09 -0.07

-0.08

-0.10 -0.10

-0.14

-0.18 -0.19

-0.24

-0.28

-0.400

-0.300

-0.200

-0.100

0.000

0.100

0.200

0.300

0.400

0.500

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Dollars

Letters Flats Letters/Flats Contribution Gap
Docket No. ACR2021 - 57 -

(c) Changes in the Product-Level Mail Mix

The Commission notes, as part of its analysis for USPS Marketing Mail Flats, that changes in 

the mail mix have occurred in recent years. Figure III-9 shows the distribution of USPS 

Marketing Mail Flats, USPS Marketing Mail Carrier Route, and USPS Marketing Mail High 

Density/Saturation Flats volumes. USPS Marketing Mail High Density/Saturation Flats have 

continued to occupy an increasing share of flat-shaped USPS Marketing Mail. The Postal 

Service opines that this trend is due to the increase in co-mailing, which shifts mail toward 

USPS Marketing Mail High Density and finer presort levels. FY 2021 ACR at 20. While all 

three products experienced volume decreases in absolute terms in FY 2021, USPS 

Marketing Mail Flats volumes declined by 10.3 percent whereas USPS Marketing Mail 

Saturation Flats only declined by 4.1 percent. Id. at 20-21. These unequal volume declines 

in combination with the mail mix shifts cause the changes in volume distribution seen in 

Figure III-9.

Figure III-9

Volume Distribution of USPS Marketing Mail Flats, Carrier Route,

and High Density/Saturation Flats, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-4.

47.9% 51.0% 53.3% 55.8% 55.8%

31.0% 31.1% 29.2% 27.0% 28.2%

21.1% 17.9% 17.5% 17.1% 16.0%

0%

20%

40%

60%

80%

100%

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Percentage of Total Volume

High Density/Saturation Flats Carrier Route Flats
Docket No. ACR2021 - 58 -

The increasing volume share of USPS Marketing Mail High Density/Saturation Flats leaves 

fewer mailpieces in both USPS Marketing Mail Flats and USPS Marketing Mail Carrier 

Route. The Postal Service argues that this trend makes it difficult for it to contain costs for 

these two already non-compensatory products because costs for operations setup and 

breakdown (which the Postal Service refers to as fixed costs) are now being spread over 

fewer mailpieces. The Commission observes, however, that the Postal Service estimates 

that only 6.1 percent of AFSM 100 costs were accrued from setup and breakdown activities 

in FY 2021. Response to CHIR No. 3, question 5.

Additional changes have occurred in the mail mix within the USPS Marketing Mail Flats 

product. Figure III-10 shows the distribution of nonprofit and commercial mail percentages 

within USPS Marketing Mail Flats volumes. The nonprofit share of USPS Marketing Mail 

Flats has been increasing by an average of 2 percentage points between FY 2018 and FY 

2021. Changes in the mail mix of commercial and nonprofit mail can serve to blunt the 

effects of rate increases on unit revenue of the USPS Marketing Mail Flats product as 

nonprofit pieces have lower prices. The Commission notes that the Postal Service should 

utilize trends in the mail mix that have occurred in recent years as a factor in its 

operational decisions.

Figure III-10

USPS Marketing Mail Flats Commercial-Nonprofit Mail Mix, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-4.

77% 74% 72% 71% 68%

23% 26% 28% 29% 32%

0%

20%

40%

60%

80%

100%

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Commercial Percentage Nonprofit Percentage
Docket No. ACR2021 - 59 -

(d) Major Unit Cost Segments

From FY 2020 to FY 2021, USPS Marketing Mail Flats’ unit attributable costs increased by 

5.3 cents, or by 8.0 percent. As co-mailing increases and pieces shift away to other 

products, the pieces remaining in USPS Marketing Mail Flats face upward pressure on their 

mail processing costs. Figure III-11 shows that mail processing increased more than other 

major cost segments, although unit delivery costs increased by a faster rate in FY 2021.

Figure III-11

Unit Cost of Major Cost Segments, FY 2017–FY 202177

Source: Library Reference PRC-LR-ACR2021-4.

 

77 Mail processing cost per unit is calculated as piggybacked mail processing cost segment components. See Library Reference USPS-FY21-24. 

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-FY21-2.

 $-

 $0.050

 $0.100

 $0.150

 $0.200

 $0.250

 $0.300

 $0.350

 $0.400

 $0.450

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Unit Cost

Delivery per unit Mail Processing per unit Transportation per unit
Docket No. ACR2021 - 60 -

The Postal Service has been unable to estimate the impact of its cost-reduction efforts in 

general, let alone isolate those impacts to specific products. The Commission reviews the 

operational changes and initiatives the Postal Service has identified for flat-shaped 

mailpieces in general, including USPS Marketing Mail Flats, and examines mail processing 

and delivery costs for flat-shaped products in greater detail in Chapter VI.

The Commission finds that the Postal Service’s cost-reduction efforts with regard to USPS 

Marketing Mail Flats have been unsuccessful. In Chapter VI., the Commission explains its 

continued concerns with the Postal Service’s inability to quantify the cost savings of its 

initiatives to reduce costs for flat-shaped mail products, including USPS Marketing Mail Flats.

FY 2021 Directive

As a result of the Postal Service’s failure to comply with the Commission’s FY 2010 ACD 

directive as well as subsequent directives to increase the cost coverage of USPS Marketing 

Mail Flats, and because the product continues to violate 39 U.S.C. § 101(d), the Commission 

again directs further corrective action. The Commission makes this determination based on 

its past ACD findings, as well as the analysis above that shows continued cost coverage 

declines, substantial unit cost increases, insufficient cost reductions, inadequate unit 

revenue increases, and persistent unit contribution declines. The Commission’s analysis 

further shows that the intra-class cross-subsidy has grown within the USPS Marketing Mail 

class; the Postal Service has been unable to measure the impact of operational initiatives on 

USPS Marketing Mail Flats’ costs; and minimal above class-average price adjustments 

historically have been insufficient to outweigh unit cost increases.

The Commission determines that once again requiring a price adjustment for USPS 

Marketing Mail Flats of at least 2 percentage points above the class average is an 

appropriate remedy given this product’s cost coverage shortfall and the likelihood that a 

price increase of at least 2 percentage points above the class average will have a positive 

cost coverage effect on the product. Compliance with this directive will also satisfy the 

requirements of 39 C.F.R. § 3030.221. This is the same remedy that the Commission 

ordered for USPS Marketing Mail Flats in FY 2018 through FY 2020, and the Commission 

continues that approach this year.

The new, above-CPI rate authority available to the Postal Service as a result of Docket No. 

RM2017-3 first took effect in August 2021, meaning that its full impact will not be apparent 

until FY 2022 data are available. Combined with the FY 2021 directive (and the 

requirement of 39 C.F.R. § 3030.221) to increase rates by at least 2 percentage points above 

the class average, the Commission is hopeful that improvements in cost coverage and a 

decrease in the intra-class subsidy will be observed in FY 2022. At the same time, the 

Commission recognizes that price increases alone will not result in the product’s 

compliance with section 101(d). The full solution must come from a combination of 

revenue increases and cost reductions, and the Postal Service must continue to pursue such 

cost reductions.
Docket No. ACR2021 - 61 -

The Commission notes that PostCom’s recommendation that the Postal Service should hold 

rates constant to limit volume loss would conflict with the requirement of 39 C.F.R. 

§ 3030.221 that the Postal Service raise rates by at least 2 percentage points above the 

class average on products whose attributable costs exceed revenue in classes that are 

compensatory. 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 even harder 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 to revise existing methodology to index unit costs to correct for changes 

in the mail mix is outside the scope of this proceeding.

USPS Marketing Mail Flats is particularly emblematic of the problems that can occur when 

a non-compensatory product continues to exist for a prolonged period. As noted above, 

since FY 2008, this product has contributed negative $8.3 billion to the institutional costs of 

the Postal Service.

The Commission finds that the issues initially raised in the FY 2010 ACD regarding USPS 

Marketing Mail Flats have continued to worsen and that the product did not cover its 

attributable costs in FY 2021. Consistent with 39 C.F.R. § 3030.221, and in line with the 

FY 2018 through FY 2020 directives, the Commission requires that the Postal Service propose 

a price increase for USPS Marketing Mail Flats that is at least 2 percentage points above the 

average for the class. The Postal Service is encouraged to remain cognizant of mail mix 

changes when adjusting prices. Additionally, the Postal Service must continue responding to 

the requirements of the FY 2010 ACD directive by reducing USPS Marketing Mail Flats’ costs 

and providing required documentation of those efforts in future Annual Compliance Reports. 

Moreover, the Postal Service must continue to comply with the FY 2015 directive, as further 

discussed in Chapter VI. of this Report.

b. USPS Marketing Mail Carrier Route

Introduction

In FY 2021, USPS Marketing Mail Carrier Route had a cost coverage below 100 percent for 

the third time since the product was established. Unit attributable cost has been increasing 

steadily over the past 5 years, while unit revenue has decreased. The Commission is 

extremely concerned that the cost coverage of USPS Marketing Mail Carrier Route appears 

to be moving in the same problematic direction as USPS Marketing Mail Flats and USPS 

Marketing Mail Parcels. However, the Commission expects that more aggressive price 

increases will help prevent this product’s unit contribution from dropping even further 

into negative territory.
Docket No. ACR2021 - 62 -

FY 2021 Results

In FY 2021, USPS Marketing Mail Carrier Route had a cost coverage of 94.6 percent, down 

from 96.2 percent in FY 2020. Library Reference PRC-LR-ACR2021-4. The Postal Service 

states that unit revenue increased by 1.9 percent and unit cost rose by 3.5 percent, while 

volume remained relatively unchanged between FY 2020 and FY 2021. Id. at 18. The Postal 

Service attributes the declining cost coverage to changes in the mail mix within the 

product, noting that commercial volume dropped by 4.0 percent while nonprofit volumes 

rose by 39.5. Id.

Comments on USPS Marketing Mail Carrier Route

The Public Representative notes that this is the third consecutive year when USPS 

Marketing Mail Carrier Route did not cover its attributable cost. PR Comments at 10. He 

observes: “the most recent price increase went into effect at the end of FY 2021, and will 

have a greater impact on cost coverage in FY 2022.” Id. The Public Representative, 

however, anticipates that the price increase from Docket No. R2021-2 will be sufficient to 

allow USPS Marketing Mail Carrier Route to cover its costs in FY 2022. Id. at 10-11.

PostCom asserts that price increases are not having the intended effect, noting that USPS 

Marketing Mail Carrier Route cost coverage has continued to decline while revenue per 

piece has been increasing. See PostCom Comments at 6. PostCom also points out USPS 

Marketing Mail Carrier Route unit attributable cost has increased by 78 percent since FY 

2009. Id. at 6-7. PostCom suggests the Postal Service should hold prices constant to limit 

volume loss and is concerned about the Commission’s emphasis on product-level cost 

coverages. Id. at 7. PostCom also notes that raising the cost coverage of every noncompensatory product would not close the contribution gap. Id.

Commission Analysis

As Figure III-12 shows, unit contribution for USPS Marketing Mail Carrier Route has been 

falling steadily. While the Postal Service has preserved 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.78 Since FY 2017, unit cost increased by 7.6 cents, while unit revenue increased 

by 0.9 cents.

 

78 Note that in 2017, the Postal Service decreased prices for USPS Marketing Mail Carrier Route. Docket No. R2017-1, Order on Price 

Adjustments for First-Class Mail, Standard Mail, Periodicals, and Package Services Products and Related Mail Classification Changes, November 

15, 2016, at 29 (Order No. 3610).
Docket No. ACR2021 - 63 -

Figure III-12

USPS Marketing Mail Carrier Route

Unit Revenue, Unit Attributable Cost, and Unit Contribution, FY 2017–FY 202179

Source: Library Reference PRC-LR-ACR2021-4.

 

79 Complete FY 2008 to FY 2021 USPS Marketing Mail Carrier Route data can be found in Library Reference PRC-LR-ACR2021-4.

-$0.05

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Dollars

Unit Revenue Unit Attributable Cost Unit Contribution
Docket No. ACR2021 - 64 -

Figure III-13 illustrates the steady decline in cost coverage for USPS Marketing Mail Carrier 

Route. Since its peak of 151.2 percent in FY 2008, cost coverage has dropped by 56.6 

percentage points. The cost coverage for USPS Marketing Mail Carrier Route has steadily 

decreased since FY 2016 by an average of 8.6 percentage points each year.

Figure III-13

USPS Marketing Mail Carrier Route Cost Coverage, FY 2008–FY 2021

Source: Library Reference PRC-LR-ACR2020-4.

In Chapter VI. of this Report, the Commission reviews the operational changes and 

initiatives the Postal Service has identified to reduce costs for flat-shaped mailpieces in 

general, including USPS Marketing Mail Carrier Route. However, as explained in Chapter 

VI., the Postal Service is still unable to quantify the impact of any of its operational 

initiatives or operational changes. See Chapter VI., infra.

The Commission is extremely concerned about the steady decline of cost coverage for USPS 

Marketing Mail Carrier Route. This is the third consecutive year that USPS Marketing Mail 

Carrier Route has not generated enough revenue to cover its attributable cost. It is possible, 

as the Public Representative concludes, that the price increases in Docket No. R2021-2 will 

cause the product to cover its costs in FY 2022, but as that price increase was implemented 

in August 2021, the full impact of that price increase does not yet appear in the available 

data.

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

Cost Coverage
Docket No. ACR2021 - 65 -

The Commission finds that FY 2021 revenue for USPS Marketing Mail Carrier Route was not 

sufficient to cover attributable cost. The Commission finds it appropriate to continue to direct 

above class-average price increases as the Commission did in its FY 2020 directive. In each 

generally applicable Market Dominant price adjustment, and in compliance with the 

requirements of 39 C.F.R. § 3030.221, the Postal Service must propose a price increase for 

USPS Marketing Mail Carrier Route that is at least 2 percentage points above the class 

average for the USPS Marketing Mail class. In addition, the Postal Service shall continue to 

explore and implement opportunities to further reduce the unit costs of flat-shaped mail 

products, including USPS Marketing Mail Carrier Route, as further discussed in Chapter VI. of 

this Report.

c. USPS Marketing Mail Parcels

Introduction

As with USPS Marketing Mail Flats, USPS Marketing Mail Parcels have a long history of 

deficient cost coverage. As part of its FY 2020 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 in the next Market Dominant price adjustment, which the 

Postal Service did. FY 2020 ACD at 46; Order No. 5937 at 91, Table VI-1. The actual results 

of the Docket No. R2021-2 price adjustment will not be seen until FY 2022 data become 

available. Unfortunately, the cost coverage and contribution for USPS Marketing Mail 

Parcels declined in FY 2021. The Commission remains concerned about the cost coverage 

for this product.

FY 2021 Results

In FY 2021, USPS Marketing Mail Parcels had a cost coverage of 73.1 percent, down 3.4 

percentage points from FY 2020.80 The Postal Service explains that unit revenue increased 

by 13.0 percent while unit cost increased by a “significant” 18.2 percent. FY 2021 ACR 

at 18-19. 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. In Docket No. R2021-2, the Postal Service proposed, and the Commission 

approved, a price increase of 9.367 percent for this product. Order No. 5937 at 91, Table VI1.

Comments on USPS Marketing Mail Parcels

The Public Representative confirms the price increase for USPS Marketing Mail Parcels was 

far above the class average. PR Comments at 9. However, he concludes cost coverage did 

not improve in FY 2021 and “USPS Marketing Mail Parcels rates appear to continue to be 

unfair and unequitable.” Id. He recommends the Commission make no change to its FY 

2020 directive. Id.

 

80 See FY 2021 ACR at 18. The Commission’s cost coverage calculation differs from the Postal Service’s calculation by 1 percent because the 

Commission includes fees in the revenue for each product and the Postal Service does not.
Docket No. ACR2021 - 66 -

Commission Analysis

In FY 2021, USPS Marketing Mail Parcels did not produce sufficient revenues to cover its

attributable costs. 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 2020 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 2020 ACD at 46. The Postal Service complied, 

but the full impact of the FY 2021 rate increases, including the additional rate authority 

available as a result of Docket No. RM2017-3, will not be seen until FY 2022 data are 

available.

The Commission also required the Postal Service to, commensurate with the small size of 

the product, explore and implement opportunities to further reduce the unit costs of USPS 

Marketing Mail Parcels and report on those opportunities and results. Id. The Postal Service 

stated the small size of the product impeded the practicality of management efforts focused 

on this product alone, but noted that the Postal Service is considering in FY 2022 whether 

to shift processing of certain package volume that could include USPS Marketing Mail 

Parcels from NDCs to local P&DCs, with potential gains in service performance and unit 

costs.81

Despite compliance with directives related to pricing and cost reporting, cost coverage for 

the product remains an issue. Figure III-14 displays the unit revenue, unit attributable cost, 

and unit contribution for USPS Marketing Mail Parcels from FY 2017 through FY 2021.

 

81 FY 2020 ACR at 30-31 (referencing further explanation in Library Reference USPS-FY21-29).
Docket No. ACR2021 - 67 -

Figure III-14

USPS Marketing Mail Parcels Financial Comparison, FY 2017–FY 202182

Source: Library Reference PRC-LR-ACR2021-4.

As illustrated in Figure III-14, unit attributable cost increased by 32.2 cents while unit 

revenue increased by 17.6 cents, resulting in a total negative unit contribution of 56.2 

cents. Average weight per piece and volume also decreased slightly. The large increase in 

unit attributable cost was largely driven by increases in unit mail processing costs. In FY 

2021, piggybacked unit mail processing costs for USPS Marketing Mail Parcels increased by 

26 percent.83 The Postal Service attributes this large change in unit mail processing costs to 

IOCS sampling variation. Response to CHIR No. 10, question 2.b. Mail processing costs for 

this product have been experiencing high variance—in FY 2020, there was a reduction in 

unit mail processing costs of 28 percent.84

 

82 Complete FY 2008 to FY 2020 USPS Marketing Mail Parcels data can be found in Library Reference PRC-LR-ACR2020-4.

83 See Responses of the United States Postal Service to Questions 1-3 of Chairman’s Information Request No. 10, February 9, 2022, question 2.a. 

(Response to CHIR No. 10).

84 See Docket No. ACR2020, Library Reference USPS-FY20-2, December 29, 2020; Docket No. ACR2019, Library Reference USPS-FY19-2, 

December 27, 2019.

-$1.50

-$1.00

-$0.50

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Dollars

Unit Revenues Unit Attributable Costs Unit Contribution
Docket No. ACR2021 - 68 -

Figure III-15 shows the annual cost coverage for USPS Marketing Mail Parcels. In FY 2021, 

cost coverage for USPS Marketing Mail Parcels dropped to 73.1 percent. While in FY 2020, 

cost coverage improved 20 percentage points, cost coverage decreased 3 percentage points 

in FY 2021. Contributing to this decline in cost coverage was an increase in unit 

attributable cost of 17 percent.

Figure III-15

USPS Marketing Mail Parcels Cost Coverage, FY 2012–FY 2021

Source: Library Reference PRC-LR-ACR2021-4.

The Commission continues to be concerned about the repeated failure of USPS Marketing 

Mail Parcels to cover its costs. Despite year-to-year variation, the fact remains that there is 

an ongoing cost coverage shortfall that 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.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Parcels Cost Coverage
Docket No. ACR2021 - 69 -

The Commission finds that FY 2021 revenue for USPS Marketing Mail Parcels was not 

sufficient to cover attributable costs. The Commission finds it appropriate to continue to 

direct above class-average price increases as the Commission did in its FY 2019 and FY 2020 

directives. In each generally applicable Market Dominant price adjustment, and in compliance 

with 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 class average for the 

USPS Marketing Mail class. In addition, the Postal Service is encouraged 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 shall report 

on those opportunities and results in the FY 2022 ACR.

Special Services

a. Introduction

As a class, Special Services covered its attributable cost in FY 2021 and had an overall cost 

coverage of 141.0 percent. Table III-11 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.85 As Table III-11 shows, Money Orders was the only 

Special Services product that did not cover its costs in FY 2021.

Table III-11

Special Services Cost Coverage, FY 2017–FY 2021

Fiscal 

Year

Total 

Special 

Services 

Mail

Ancillary 

Services

International 

Ancillary 

Services

Address 

Management 

Services

Money 

Orders

Post 

Office 

Box 

Service

Stamp 

Fulfillment 

Services

FY 2017 137.4% 142.7% 86.2% 232.3% 97.4% 120.7% 97.2%

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%

Source: Library Reference PRC-LR-ACR2021-7.

 

85 Cost coverage information for products not appearing in Table III-11 can be found in Library Reference PRC-LR-ACR2021-7.
Docket No. ACR2021 - 70 -

b. Money Orders

The Money Orders product was the only product in the Special Services class that did not 

cover its attributable costs in FY 2021. 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. Table III-12 shows the unit revenue, unit attributable cost, unit 

contribution, and cost coverage for the Money Orders product from FY 2017 to FY 2021.

Table III-12

Money Orders Financial Results, FY 2017–FY 2021

Fiscal 

Year

Unit 

Revenue 

(Cents)

Unit 

Attributable 

Cost (Cents)

Unit 

Contribution 

(Cents)

Cost 

Coverage

FY 2017 175.5 180.1 -4.6 97.4%

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%

Source: Library Reference PRC-LR-ACR2021-7.

As Table III-12 shows, the FY 2021 cost coverage for Money Orders was 88.5 percent, a 

notable decrease from the cost coverage of 97.7 percent in FY 2020. The Postal Service 

attributes the decrease in cost coverage to a decline in the imputed interest earned on the 

money order float, increases in Clerk and Mailhandler costs, and increases in debit card 

costs. FY 2021 ACR at 44. The Postal Service explains that the calculated value of the float 

fell from $7.8 million in FY 2020 to $0.4 million in FY 2021, and that Clerk and Mailhandler 

costs increased by $7.2 million, driven largely by an increase in window costs. Id. In 

response to a CHIR, the Postal Service further elaborates that the value of the money order 

float decreased due to a change in computation made to better reflect changes in 

borrowing activities and interest earned. Response to CHIR No. 11, question 20.a.ii. The 

Postal Service also notes that debit card costs increased by $2.1 million and explains that 

while the Postal Service tries to minimize these costs to the extent feasible, “debit card 

expenses are dynamic and are dependent on the specific debit cards used by customers.” 

FY 2021 ACR at 44-45.
Docket No. ACR2021 - 71 -

The Postal Service notes that Money Orders received an 11.514 percent price increase in 

Quarter 4 of FY 2021 as a result of Docket No. R2021-2. Id. at 45. The Postal Service expects 

the price increase to have a larger effect in FY 2022, noting that “[i]f all money orders 

purchased during FY 2021 had paid the rates implemented as part of Docket No. R2021-2 . . 

., an additional $11.4 million in fee revenue would have been collected[,]” and cost coverage 

would have improved from 88.5 percent to 95.3 percent. Id. However, the Postal Service 

also notes that there is a question as to whether the positive effects of the price increase on 

cost coverage will be offset by the effects of shifting consumer behavior. Id.

In the FY 2020 ACD, the Commission stated that “the Postal Service should expend a 

reasonable amount of resources proportionate to the size of the product to explore the 

reasons behind any shift in consumer behavior contributing to the decrease in revenue for 

Money Orders, and report on the results of this investigation in the FY 2021 ACR.” FY 2020 

ACD at 55. In the FY 2021 ACR, the Postal Service shares its findings, stating that 

inconsistent financial results may be due to factors such as “the increased availability of 

convenient and secure online payment and transaction options, money order fees, and the 

effects of the on-going pandemic.” FY 2021 ACR at 46 (footnotes omitted). In addition, the 

Postal Service references a Federal Deposit Insurance Corporation report, which contains 

survey results reflecting a pre-pandemic downward trend in the demand for Money 

Orders.86

The Public Representative notes that the Postal Service increased Money Orders’ prices in 

the two most recent rate adjustment proceedings by more than the average increase for the 

Special Services class as a whole. PR Comments at 15. He recommends that the Postal 

Service continue to increase prices for Money Orders at a higher rate than the class as a 

whole until the Money Orders product covers its attributable cost. Id.

The Commission finds that FY 2021 revenue for Money Orders was not sufficient to cover 

attributable cost. Consistent with 39 C.F.R. § 3030.221, the Commission requires that the 

Postal Service increase Money Orders’ prices 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 2022 ACD.

 

86 Id. at 46-47; see Mark Kutzbach, Alicia Loro, Jeffrey Weinstein, Karyen Chu, How America Banks: Household Use of Banking and Financial 

Services, 2019 FDIC Survey, Center for Financial Research, Division of Insurance and Research, Federal Deposit Insurance Corporation (October 

2020).
Docket No. ACR2021 - 72 -

Other Issues

First-Class Mail Non-Machinable Surcharge

The Greeting Card Association (GCA) requests that the Commission undertake a further 

review of its approval of a 50 percent increase in the non-machinable surcharge for FirstClass Mail Single-Piece Letters in Docket No. R2021-2 pursuant to 39 C.F.R. § 3030.126(j).87

First, GCA takes issue with the Commission’s characterization of the non-machinable 

surcharge as an add-on rather than a standalone price and the Commission’s conclusion 

that the actual price increase for mailers was approximately 17 percent as opposed to 50 

percent. GCA Comments at 2-3. GCA asserts this characterization was inconsistent with the 

Commission’s finding that the increased non-machinable surcharge disincentivized 

mailpieces requiring manual processing and states that the non-machinable surcharge is 

“an economically independent price charged specifically for non-machinability.” Id.

Second, GCA points to factor 3 (effect of rate increases) and objectives 2 (stable and 

predictable rates) and 8 (just and reasonable schedule for rates and classifications) (39 

U.S.C. § 3622(c)(3), (b)(2), and (b)(8)) as statutory provisions that it believes weighed 

against approval of the increase in the non-machinable surcharge and asserts that the 

Commission did not adequately address those provisions in Docket No. R2021-2. Id. at 3-8. 

GCA requests that the Commission find the increase in the non-machinable surcharge not 

compliant with one or more of these statutory provisions. Id. at 8. In response, the Postal 

Service asserts that the Commission should reject GCA’s view of the non-machinable 

surcharge as a standalone price and affirm its conclusions from Docket No. R2021-2. Postal 

Service Reply Comments at 7-8.

With regard to GCA’s position that the non-machinable surcharge must be viewed as a 

standalone price that increased 50 percent, the Commission has a different view. As the 

Commission explained in Docket No. R2021-2, the non-machinable surcharge is not a 

standalone price, but a surcharge added onto the price for a Single-Piece First-Class Mail 

Letter, if such a letter is non-machinable. Order No. 5937 at 86. Thus, no mailpiece is 

charged only the non-machinable surcharge (30 cents), but instead each non-machinable 

Single-Piece First-Class Mail Letter is charged the Stamped Single-Piece price (58 cents) 

plus the non-machinable surcharge (30 cents) for a total price of 88 cents. As the 

Commission explained in Order No. 5937, the total price a mailer would pay for a nonmachinable Single-Piece First-Class Mail Letter increased from 75 cents to 88 cents, an 

increase of approximately 17 percent and a difference of 13 cents for a given nonmachinable mailpiece. Id. The Commission confirms that, in this context, it is appropriate to 

consider the total price change experienced by the mailer since GCA’s concerns are focused 

on the effects on individual mailers. This approach is not inconsistent with viewing the 

amount of the non-machinable surcharge (that is the price difference between a standard 

 

87 Initial Comments of the Greeting Card Association, January 31, 2022, at 1 (GCA Comments).
Docket No. ACR2021 - 73 -

machinable Single-Piece First-Class Mail Letter and a non-machinable one) as an incentive 

to encourage machinable mailpieces over non-machinable ones.

Although the Commission views the non-machinable surcharge as a surcharge included in 

the total price and considers the entire price a mailer pays for a given mailpiece to be 

relevant, the Commission never stated, as GCA implies, that the non-machinable surcharge 

cannot be “subject to separate analysis or criticism.” GCA Comments at 6. As such, the 

Commission also considers the increase in the non-machinable surcharge with regard to 

the specific concerns raised by GCA.

As a preliminary matter, the Commission notes that the modified system of ratemaking 

adopted in Docket No. RM2017-3 was specifically designed to properly balance the 

objectives and factors of 39 U.S.C. § 3622(b) and (c) across the entire ratemaking system. 

Order No. 5763 at 260. Accordingly, the Commission found that proposed rate adjustments 

that complied with the new regulations adopted in Docket No. RM2017-3 would be 

consistent with the statutory objectives and factors. Id. Nonetheless, 39 C.F.R. § 3030.126(j) 

allows for subsequent review of that finding with regard to the policies of 39 U.S.C. chapter 

36, subchapter I, which includes 39 U.S.C. § 3622(b) and (c). As a result, the Commission 

considers the one factor and two objectives raised by GCA related to the increase in the 

non-machinable surcharge approved in Docket No. R2021-2.

In relevant part, factor 3 concerns “the effect of rate increases upon the general public” and 

“business mail users.” 39 U.S.C. § 3622(c)(3). GCA states that the personal correspondence 

of households and small businesses is most likely to be adversely affected by the nonmachinable surcharge increase given that the substantial majority of non-machinable 

mailpieces are Single-Piece. GCA Comments at 3-4. The Commission notes (as it did in 

Docket No. R2021-2) that increases in postal prices affect all mailers, that some increases 

may affect some mailers more than others, and that the Commission considered this when 

implementing increased pricing authority in Docket No. RM2017-3. Order No. 5937 at 68.

The Commission agrees that households and small businesses are most likely to be affected 

by the increase in the non-machinable surcharge alone. However, this does not necessarily 

cause the non-machinable surcharge to run afoul of factor 3 since factor 3 calls for 

consideration of the effects of rate increases more broadly. When a broader view is taken, it 

is clear that household and small business mailers were not disportionately affected by the 

increases approved in Docket No. R2021-2. For example, First-Class Mail Single-Piece 

Letters/Postcards, a product more likely to be used by households and small businesses, 

received a 5.001 percent overall price increase, which was below the First-Class Mail 

average increase of 6.814 percent. Id. at 75. First-Class Mail Presorted Letters/Postcards, a 

product more likely to be used by larger businesses and commercial mailers, received a 

7.440 percent overall price increase. Id. This increase was above the class average. Thus, 

the Commission finds that the increases it approved for First-Class Mail in Docket No. 

R2021-2 balanced the effect of the rate increases among the various types of mailers. 

Although household and small business mailers were more affected by the non-machinable 

surcharge alone, they likely also experienced smaller increases for other aspects of their 
Docket No. ACR2021 - 74 -

mailings given the overall below average increase for First-Class Mail Single-Piece 

Letters/Postcards.

Objective 2 calls for “predictability and stability in rates.” 39 U.S.C. § 3622(b)(2). GCA states 

that the Docket No. R2021-2 increase in the non-machinable surcharge caused what was 

for 7 years a predictable and stable rate with little fluctuation to become unstable. GCA 

Comments at 5. The Commission notes that, although the non-machinable surcharge 

increased by 10 cents (or 50 percent) as a result of Docket No. R2021-2, this was after 

many years of that particular surcharge holding relatively steady and even decreasing, as 

the graph provided by GCA shows. See id. It can hardly be considered unpredictable or 

unstable for that surcharge to increase substantially after remaining relatively flat, given 

that rates are generally expected to increase over time. The Commission reiterates that the 

increase was 10 cents (50 percent) for the surcharge alone and 13 cents (17 percent) for 

the entire mailpiece.

To compare, in a past rate adjustment proceeding, the Commission found that an 

exceptional planned price increase appeared to be discriminatory on its face and observed 

that the Postal Service failed to meaningfully address objective 2 with respect to its plan to 

increase the subscription fee for Platinum tier mailing agents by 963 percent (more than

$225,000 annually).88 Generally, it is not outside the realm of mailer experience for certain 

products or categories to have price increases more than the class average in some years 

and to have price increases less than the class average in other years. In fact, the operation 

of the annual limitation at the class level necessarily means that the Postal Service must, in 

order to follow any pricing strategy that does not have each product moving lock step with 

the available class-level pricing authority, vary the size of increases among products within 

each class and among rates within products. For these reasons, the Commission finds that 

the increase in the non-machinable surcharge was consistent with objective 2.

Objective 8 calls for a “just and reasonable schedule for rates and classifications,” but states 

that the objective “shall not be construed to prohibit the Postal Service from making 

changes of unequal magnitude within, between, or among classes of mail.” 39 U.S.C. 

§ 3622(b)(8). With regard to objective 8, GCA questions whether the non-machinable 

surcharge increase is “necessary and appropriate” to disincentivize non-machinable SinglePiece First-Class Mail Letters, and states that if it is not, it is excessive to mailers. GCA 

Comments at 7. GCA also notes that not all non-machinable letters require manual 

processing. Id. at 7, 8. In Docket No. R2021-2, the Commission noted that the nonmachinable surcharge is charged to pieces that generally require manual processing and 

therefore are more costly for the Postal Service to process. Order No. 5937 at 87. It found 

that assigning higher price increases to less efficient rate cells is consistent with objective 

1. Id. Although the Commission agrees that not all non-machinable pieces require manual 

processing, it is also true that many of them do and such processing comes at higher costs 

to the Postal Service. Objective 8 endeavors to strike a balance between rates that are 

excessive to mailers and rates that threaten the financial integrity of the Postal Service, but 

 

88 Docket No. R2009-2, Order Reviewing Postal Service Market Dominant Price Adjustments, March 16, 2009, at 72 n.59 (Order No. 191).
Docket No. ACR2021 - 75 -

does not require, as GCA implies, any kind of calculation or finding that the amount of the 

rate precisely incentivizes a particular behavior or outcome. See Order No. 5763 at 351. 

Instead, objective 8 endeavors to ensure rates are both adequately compensatory and not 

excessive and explicitly permits changes of unequal magnitude. The increase in the nonmachinable surcharge appears to strike that balance; as discussed above, the surcharge 

increase approved in Docket No. R2021-2 occurred after many years of the surcharge 

remaining relatively steady and even decreasing. For these reasons, the Commission finds 

that the increase in the non-machinable surcharge was consistent with objective 8.

Thus, the Commission concludes that its initial findings regarding the non-machinable 

surcharge should be affirmed and that there is no basis to find the price increase noncompliant with 39 U.S.C. § 3622(c)(3), (b)(2), or (b)(8).

Separately, GCA also requests that the Commission further review its approval of different 

prices for the non-machinable surcharge and the extra-ounce charge in Docket No. R2021-

2. GCA Comments at 9-10. Prior to the implementation of the Docket No. R2021-2 prices, a 

Butterfly Stamp would pay for either the non-machinable surcharge or a second ounce. Id.

at 10. GCA asserts that 39 U.S.C. § 3622(c)(6), which calls for “simplicity of structure for the 

entire schedule and simple, identifiable relationships between the rates or fees charged the 

various classes of mail for postal services,” was not considered by the Commission in 

Docket No. R2021-2 and should have been in relation to these prices. Id. at 9-10; 39 U.S.C. 

§ 3622(c)(6). In response, the Postal Service objects to GCA’s request and states that the 

Commission should not disturb its conclusions from Docket No. R2021-2 related to these 

prices. Postal Service Reply Comments at 8.

Although the ability to apply one stamp for either the non-machinable surcharge or an 

extra ounce may be simpler for mailers, factor 6 is targeted at the understandability of the 

rate structure as a whole and the understandability of relationships between rates. As the 

Commission explained in Docket No. R2021-2, it was understandable that the Postal 

Service delinked the non-machinable surcharge and the extra-ounce charge because nonmachinable pieces are generally more costly for the Postal Service to process than pieces 

weighing an additional ounce. Order No. 5937 at 87. Further, in Docket No. R2021-2, the 

Commission found that the Postal Service’s decision to charge more for a non-machinable 

mailpiece than for an extra ounce was consistent with objectives 1, 4, and 8. Id. Thus, the 

Commission concludes that delinking the non-machinable surcharge and extra-ounce 

charge was permissible under the relevant statutory criteria. The Commission nonetheless 

encourages the Postal Service to consider GCA’s concerns when setting Single-Piece FirstClass Mail Letters’ rates in the future.
Docket No. ACR2021 - 76 -

CHAPTER IV. COMPETITIVE PRODUCTS

Introduction

In this chapter, the Commission reviews Competitive products to determine whether any 

rates or fees in effect during FY 2021 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 2021 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 2021, thereby satisfying 39 U.S.C. § 3633(a)(1).

 Revenues for three 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), and International Ancillary Services.

 Collectively, Competitive products satisfied the appropriate share requirement of 39 

U.S.C. § 3633(a)(3) during FY 2021.

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.89

 

89 See Docket No. RM2007-1, Order Proposing Regulations to Establish a System of Ratemaking, August 15, 2007, at 65 (Order No. 26).
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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.90 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.

Pitney Bowes states that Competitive products fully comply with all applicable pricing 

requirements, noting that Competitive product revenues continue to exceed incremental 

costs by a substantial margin, and concluding that Competitive products were not 

cross-subsidized by Market Dominant products in FY 2021. Pitney Bowes Comments at 3.

The Public Representative also notes that Competitive product group revenues exceeded 

incremental costs and concludes that Market Dominant products did not subsidize 

Competitive products in FY 2021. PR Comments at 21.

As it did in the FY 2020 ACD, the Commission notes that the purpose of the ACD is to 

determine compliance with existing regulations using established methodology. 

Recommendations for improving specific cost attribution methodologies are appropriately 

addressed in dockets considering changes to those methodologies.91

In FY 2021, the incremental costs of Competitive products were $21.040 billion and the 

total revenues of Competitive products were $34.233 billion.92 Accordingly, in FY 2021, 

revenues from Competitive products exceeded incremental costs.

The Commission finds Competitive products satisfied 39 U.S.C. § 3633(a)(1) in FY 2021.

 

90 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).

91 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).

92 See Library Reference PRC-LR-ACR2021-1, Excel file “FY21 Summary_NPLR-1.xlsx,” tab “Appendix A (Incremental Costs),” cells C24:D24.
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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 2021 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 2021, 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;93 Premium Forwarding 

Service; Post Office Box Service; and Shipping and Mailing Supplies.

The Commission finds that, in FY 2021, every Competitive domestic product with rates of 

general applicability covered its attributable cost94 and, thereby, satisfied the statutory 

requirements of 39 U.S.C. § 3633(a)(2).

Competitive Domestic Products Consisting of 

NSAs

As shown in Table IV-1, in FY 2021, there were 800 Competitive domestic products 

consisting of NSAs.95 Pursuant to 39 U.S.C. § 3633(a)(2), the Commission finds that all 

Competitive domestic NSAs covered their attributable costs in compliance with this 

statutory requirement. In addition, Pitney Bowes and the Public Representative note that 

nearly every competitive product maintained a “cost coverage of at least 100 percent.” See 

PR Comments at 21; see also Pitney Bowes Comments at 4. Although 11 agreements had 

 

93 The Competitive Ancillary Services product consists of the following services: Adult Signature, Package Intercept Service, and Premium Data 

Retention and Retrieval Service. See MCS Section 2645.

94 See Library Reference PRC-LR-ACR2021-1, Excel file “FY21 Summary_NPLR-1.xlsx,” tab “Total All Mail Appendix A.”

95 The 800 products include agreements that were extended via amendment.
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components that failed to cover their attributable costs, the agreements covered total costs. 

FY 2021 ACR at 84.96

Table IV-1

Competitive Domestic NSA Products in Effect During FY 2021

Competitive Domestic NSA Product Groupings Number of Productsa

First-Class Package Service Contracts 28

Parcel Return Service Contracts 6

Parcel Select & Parcel Return Service Contracts 7

Parcel Select Contracts 17

Priority Mail—Non-Published Ratesb Contracts 257

Priority Mail & First-Class Package Service Contracts 120

Priority Mail Contracts 247

Priority Mail Express & Priority Mail Contracts 44

Priority Mail Express Contracts 19

Priority Mail Express, Priority Mail & First-Class Package Service Contracts 40

Priority Mail & Parcel Select Contracts 3

Priority Mail Express & First-Class Package Service Contracts 1

Priority Mail, First-Class Package Service and Parcel Select Contracts 2

Priority Mail Express, Priority Mail, First-Class Package Service & Parcel 

Select Contracts 9

Total 800

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-FY21-NP27, December 29, 2021; see also Revised Library Reference USPS-FY21-NP27, January 13, 2022.

The Commission commends the Postal Service for further improving the quality of the data 

provided on NSAs in FY 2021. The Commission encourages the Postal Service to continue 

to fully account for all of its active NSAs and remove inactive NSAs from the Competitive 

product list. The Postal Service also increased the number of NSAs utilizing observed data 

instead of projected data.97 The Commission notes that the Postal Service should continue 

 

96 See Response to CHIR No. 2, question 35; see also Library Reference USPS-FY21-NP34, January 25, 2022.

97 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.
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to increase the use of new and more accurate data to estimate the costs of NSAs. The use of 

accurate, observed data, as opposed to projected 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. 2. The overall themes involved the need for 

further clarification on topics such as, requesting explanation of data due to insufficient 

source notes; requesting additional information to clarify the various different types of 

premium services; and inquiries exploring a new cost file presented. The Commission 

encourages the Postal Service to continue to improve the explanation of its NSA financial 

materials provided as part of its ACR.

The Postal Service included a new file in Library Reference USPS-FY21-NP27 that 

disaggregated costs for First-Class Package Service to finer levels, but failed to mention the 

file in the preface. See Library Reference USPS-FY21-NP27. The Commission finds that the 

content of the new file does not alter the final results of the FY 2021 cost files. Therefore, 

the Commission concludes that this new file does not represent a change in analytical 

principles, and instead would be considered a change in quantification technique. The 

Commission reminds the Postal Service that before it can use the data 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.

Additionally, the Postal Service filed an errata, which resulted in revised versions of the 

financial files in the multiple library reference materials, in particular Revised Library 

Reference USPS-FY21-NP27. See also Revised Library Reference USPS-FY21-NP27. The 

Commission commences its review of library reference material as soon as they are filed. In 

the event of an errata that revises multiple files of library references, the Commission 

essentially has to review two versions of the impacted files in order to evaluate the errors 

and corrections made in each file. The Commission encourages the Postal Service to review 

all library reference material before submission in order to avoid filing multiple revised 

library references, which may lead to confusion between multiple versions of library 

reference materials as any errata would only contain revised files.
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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;98 IMTS—Inbound;99 and International Ancillary Services.100

The Commission finds that three products, IMTS—Inbound, IMTS—Outbound, and 

International Ancillary Services, did not satisfy 39 U.S.C. § 3633(a)(2).101

a. International Money Transfer Service—Inbound

In FY 2021, the IMTS—Inbound product did not cover its attributable cost. FY 2021 ACR at 

86. The Postal Service states that it “has attempted” to address the product’s cost coverage 

by “terminating or modifying” IMTS—Inbound agreements. Id. at 87. To report on its 

progress with “terminating or modifying” IMTS—Inbound agreements in FY 2021, the 

Postal Service states that it “has taken steps towards terminating agreements with thirteen 

foreign postal operators,” as listed in Postal Bulletin 22577 and Postal Bulletin 22583.

102

Only the Public Representative provided comments related to this product, stating that the 

Postal Service has made “reasonable progress” in addressing the cost coverage for IMTS—

Inbound by discontinuing the exchange of international postal money orders with 13 

foreign postal operators (FPOs). PR Comments at 21-22. However, he also points out that 

the reported terminations “had no impact on the [product’s] FY 2021 cost coverage” since 

the respective FPOs “did not stop selling international postal money orders destined for the 

United States until FY 2022.” Id. at 21. The Public Representative anticipates that the 

 

98 IMTS—Outbound enables customers in the United States to make payments or transfer funds to individuals or firms in foreign destinations. 

See MCS Section 2620.

99 IMTS—Inbound provides a service to designated operators of foreign countries for payment of money orders to recipients in the United 

States. See MCS Section 2625.

100 International Ancillary Services consists of International Certificate of Mailing; Competitive International Registered Mail; Outbound 

International Return Receipt; Restricted Delivery; Outbound International Insurance; and Customs Clearance and Delivery Fee. See MCS Section 

2615.

101 See FY 2021 ACR at 85-88; see also Library Reference USPS-FY21-NP2, December 29, 2021.

102 Id. at 87-88. See United States Postal Service, Postal Bulletin 22577, July 29, 2021, available at https://about.usps.com/postalbulletin/2021/pb22577/html/updt_005.htm (Postal Bulletin 22577); see also United States Postal Service, Postal Bulletin 22583, October 21, 

2021, available at https://about.usps.com/postal-bulletin/2021/pb22583/html/updt_001.htm (Postal Bulletin 22583). The Commission notes 

that in July 2020, the Postal Service notified the Commission that it had obtained a delegation of authority from the Department of State under 

the Circular 175 process to terminate agreements included within the IMTS—Inbound product, and that it was “in the process of preparing 

initial communications concerning the termination of the agreements [within this] product.” See Docket No. ACR2019, Third Response of the 

United States Postal Service to Commission Requests for Additional Information in the FY 2019 Annual Compliance Determination, July 23, 

2020, question 2 (Docket No. ACR2019 Third Response). In the FY 2020 ACR, the Postal Service reported that its management sent “notices of 

termination to 11 foreign postal operators.” See Docket No. ACR2020, United States Postal Service Fiscal Year 2020 Annual Compliance Report, 

December 29, 2020, at 70 (FY 2020 ACR).
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termination of the aforementioned 13 agreements “will have a positive effect on FY 2022 

cost coverage” for the IMTS—Inbound product. Id.

In its reply comments, the Postal Service acknowledges the Public Representative’s 

expectation regarding the product’s FY 2022 cost coverage, as well as his conclusion 

regarding the Postal Service’s progress in addressing the product’s cost coverage shortfall. 

Postal Service Reply Comments at 9.

The Commission finds the Postal Service’s progress towards the termination of 13 

agreements previously included within the IMTS—Inbound product to be an improvement 

in addressing the product’s cost coverage and encourages the Postal Service to continue its 

efforts towards termination of the remaining IMTS—Inbound agreements, if any, during FY 

2022.

However, the Commission notes that the Postal Service provided no information 

concerning IMTS—Inbound agreements’ modifications, or any other relevant information 

that would explain the decrease in the number of transactions for the IMTS—Inbound 

product between FY 2020 and FY 2021.103 In addition, it is unclear whether inbound 

international money orders other than those reported under the IMTS—Inbound product 

might be processed at Postal Service retail windows.104 The Commission’s concern with 

these uncertainties is exacerbated by the reported increase in overall IMTS costs between 

FY 2020 and FY 2021. Library Reference USPS-FY21-NP2; see also Library Reference USPSFY20-NP2.

The recent terminations of IMTS—Inbound agreements with 13 FPOs did not take effect 

until FY 2022, and thus do not explain the decrease in IMTS—Inbound transactions 

between FY 2020 and FY 2021. This indicates that the decrease in IMTS—Inbound 

transactions might be associated with IMTS—Inbound agreements’ modifications 

referenced by the Postal Service. FY 2021 ACR at 87. More specifically, money orders 

destined for the United States pursuant to the modified terms of IMTS—Inbound 

agreements (so that payment of a commission to the Postal Service is no longer required), 

would no longer generate IMTS—Inbound revenues, or constitute IMTS—Inbound 

 

103 As the Public Representative noted, the previously mentioned termination of the agreements with 13 FPOs did not take effect until FY 2022.

PR Comments at 21. Postal Bulletin 22577 and Postal Bulletin 22583 list effective dates for the discontinuation of sales and for the 

discontinuation of cashing of money orders issued by the FPOs of these countries and destined to the United States. The discontinuation of 

sales of international postal money orders by 12 of the 13 FPOs became effective on October 1, 2021; the Postal Service will stop cashing 

international postal money orders issued by these FPOs effective October 1, 2022. See Postal Bulletin 22577. The discontinuation of sales of 

international postal money orders by one of the 13 FPOs became effective on January 1, 2022; the Postal Service will stop cashing international 

postal money orders issued by this FPO effective January 1, 2023. See Postal Bulletin 22583. Consequently, the progress made towards the

termination of IMTS agreements with 13 FPOs should not have led to the reported decrease in the number of transactions for IMTS—Inbound 

between FY 2020 and FY 2021. Library Reference USPS-FY21-NP2. See Docket No. ACR2020, Library Reference USPS-FY20-NP2, February 22, 

2021.

104 See Docket No. RM2015-13, Order Approving Analytical Principles Used in Periodic Reporting (Proposal Five), November 19, 2015, at 12 

(Order No. 2825). In Order No. 2825, the Commission directed the Postal Service to include “the number of money orders cashed on which a 

commission is paid” to the Postal Service when reporting financial results for the IMTS—Inbound product in future Annual Compliance Review

dockets. Order No. 2825 at 12.
Docket No. ACR2021 - 83 -

transactions. However, for those money orders that continue to be processed at Postal 

Service retail windows, the Postal Service continues to incur window services costs. 

In addition, the Postal Service responded to certain CHIRs issued in this docket indicating 

that its efforts have been focused on international postal money order agreements that 

include sales by a foreign postal operator of international paper money orders destined for 

the United States, which include some form of a commission to the Postal Service, stating 

that these agreements generate revenue for the IMTS—Inbound product.105 However, the 

MCS describes Inbound International Money Transfer Service as a service to foreign postal 

administrations, commercial banks, or other money-transfer operators of foreign countries 

for payment of electronic and paper money orders to recipients in the United States. See

MCS Section 2625.1. This suggests that money orders other than those that the Postal 

Service describes as generators of the IMTS—Inbound revenue might be processed at 

Postal Service retail windows, and contribute to the reported IMTS cost increases.

The Commission emphasizes that IMTS costs are distributed between the IMTS—Inbound 

and IMTS—Outbound products based on the number of transactions for each product.106

As reportable IMTS—Inbound transactions decrease, the proportion of total IMTS costs 

distributed to the IMTS—Inbound product decreases, and the proportion of these costs 

distributed to the IMTS—Outbound product increases. Thus, any costs that the Postal 

Service might incur cashing foreign-issued money orders at its retail windows that do not, 

or no longer, constitute IMTS—Inbound transactions, are included in IMTS costs 

distributed to the IMTS—Outbound product.

The Commission finds that the IMTS—Inbound product was not in compliance with 39 U.S.C. 

§ 3633(a)(2) in FY 2021. The Commission encourages the Postal Service to continue its efforts 

towards termination of the remaining agreements comprising the IMTS—Inbound product, if 

any, during FY 2022. 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 agreements’ modifications, including the impact on 

the IMTS—Inbound product’s reportable transactions and revenues, as part of its FY 2022 

ACR filing. In addition, the Commission 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 2022, as part of its FY 2022 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 a foreign postal operator or other financial 

institution. These data shall additionally include information on the number of money orders 

cashed at Postal Service retail windows and those cashed at United States banks, as well as 

information on whether a fee or a commission was paid to the Postal Service, to the extent 

possible.

 

105 See Responses of the United States Postal Service to Questions 1-14 of Chairman’s Information Request No. 7, February 3, 2022, question 9

(Response to CHIR No. 7); see also Responses of the United States Postal Service to Questions 1-6 of Chairman’s Information Request No. 14, 

February 18, 2022, question 1 (Response to CHIR No. 14).

106 See Order No 2825 at 6. Library Reference USPS-FY21-NP2, Excel file “FY21 IMTS Calculations for NP2.xlsx.”
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b. International Money Transfer Service—Outbound

In FY 2021, the IMTS—Outbound product did not cover its attributable cost. FY 2021 ACR 

at 86. The Postal Service notes that the methodology for distributing IMTS costs to IMTS—

Outbound and IMTS—Inbound is based on the Commission’s approval of Proposal Five in 

Order No. 2825. Id.; see Order No. 2825 at 10-11. This methodology was adopted to 

compensate for the Postal Service’s inability to distribute the costs to IMTS—Inbound due 

to the lack of IMTS—Inbound In-Office Cost System (IOCS) tallies in some fiscal years. FY 

2021 ACR at 86. For FY 2021, the Postal Service reports five IOCS tallies, three for the 

IMTS—Outbound and two for the IMTS—Inbound, and concludes that “IMTS costing 

remains subject to variation.” Id. In addition, the Postal Service reports an increase in 

window services costs for IMTS and maintains that the 15.8 percent increase in prices for 

International Postal Money Orders and Money Transfer Service, implemented in January 

2022, “should further improve the financial performance of [IMTS].” Id. at 87.

Only the Public Representative commented on the IMTS—Outbound product. The Public 

Representative cites Order No. 2825, in which the Commission stated that “‘[t]he use of 

IOCS tallies is the preferred methodology to develop reliable estimates of attributable costs 

for the IMTS—Outbound and Inbound products,’” assuming that “a robust number of tallies 

[could] be obtained.” PR Comments at 22. He then notes that, because the FY 2021 IOCS 

tallies for IMTS were insufficient to produce reliable cost estimates for the two products 

based on the IOCS methodology, the Postal Service distributed IMTS costs to IMTS—

Outbound and IMTS—Inbound based on transaction volume, as approved by the 

Commission in Order No. 2825. Id. The Public Representative further points to the Postal 

Service’s acknowledgement of window services cost increases in FY 2021 and expresses a 

concern over the “persistent cost coverage shortfall of IMTS—Outbound.” Id. He concludes 

that the Postal Service “did not explain how it intends to bring IMTS—Outbound into 

compliance” with applicable provisions of Title 39 in the future. Id.

The Postal Service responds that the recent termination of international postal money 

order agreements with 13 countries “should not only lead to a significant reduction in the 

volume” for the IMTS—Inbound product, but also “hopefully lead to a decrease in reported 

costs for international postal money orders for IMTS—Outbound in FY 2022.” Postal 

Service Reply Comments at 9-10. The Postal Service adds that “sampling variation could 

potentially interfere with realization of that expectation.” Id. at 10.

With respect to IMTS—Outbound volume decreases, the Commission notes that the IMTS—

Outbound product includes two components: hardcopy International Money Orders and 

Electronic Money Transfers. See MCS Section 2620. In its Response to CHIR Nos. 7 and 14, 

and in its reply comments, the Postal Service describes recent IMTS—Inbound agreements’ 

terminations as concerning international paper money orders only.107 The Postal Service 

clarifies further that only those terminated agreements that include sales of international 

 

107 See Response to CHIR No. 7, question 9; see also Postal Service Reply Comments at 9-10; Response to CHIR No. 14, question 1.
Docket No. ACR2021 - 85 -

paper money orders by the Postal Service should have an impact on revenue for 

International Money Orders under the IMTS—Outbound product.108

With respect to the Postal Service’s expectation that a decrease in costs will occur as a 

result of a decrease in International Money Orders transactions, the Commission observes 

that the opposite occurred in FY 2021. Specifically, the large decrease in total IMTS 

transactions (both inbound and outbound) between FY 2020 and FY 2021 was 

accompanied by an increase in total IMTS volume-variable costs.109 Moreover, the increase 

in reported costs was of a larger magnitude than the decrease in reported transactions.110

As noted in Section IV.C.3.a. supra, the Commission is concerned that under the current 

methodology for distributing the IMTS costs to its two products, as IMTS—Inbound 

transactions decrease, the proportion of volume-variable and certain product-specific costs 

distributed to International Money Orders under IMTS—Outbound increases.111

While the Commission agrees that the 15.8 percent price increase for IMTS—Outbound 

should have a positive impact on the product’s FY 2022 financial performance,112 the 

Commission emphasizes that this average price increase comprises comparable price 

increases for the product’s two components, International Money Orders and Electronic 

Money Transfers.113 Such comparable price increases do not adequately account for the

 

108 See Response to CHIR No. 7, question 9.d.; see also Response to CHIR No. 14, question 1. More specifically, the Postal Service states that 

some agreements include sales of international paper money orders by both parties to the agreement, while others include sales by only one 

party to the agreement. Id. Consequently, only terminations of agreements within the IMTS—Inbound product that include sales by both 

parties to the agreement can be expected to lead to a reduction of International Money Orders transactions within the IMTS—Outbound 

product.

109 Library Reference USPS-FY21-NP2; see Docket No. ACR2020, Library Reference USPS-FY20-NP2, February 22, 2021.

110 Id. The Postal Service provides two reasons for IMTS cost increases: increases in window services costs, and the number of IOCS tallies (five) 

that determined the share of total window costs distributed to the two IMTS products (IMTS—Inbound and IMTS—Outbound). Response to 

CHIR No. 14, question 2.a.-b.

111 The Commission notes that under the current IMTS cost distribution methodology, the Postal Service separately develops volume-variable 

costs for Electronic Money Transfers, based on an average transaction time and unit transaction cost for this service. See Order No 2825 at 6. 

Library Reference USPS-FY21-NP2, Excel file “FY21 IMTS Calculations for NP2.xlsx.” The Postal Service distributes the remaining amount of total 

IMTS volume-variable costs (i.e., the difference between total IMTS volume-variable costs and volume-variable costs distributed to Electronic 

Money Transfers) between IMTS—Inbound, based on the number of reportable transactions for this product, and IMTS—Outbound, based on 

the number of hardcopy International Money Orders under this product. Id. This leads to more stable and more predictable cost increases (such 

as those associated with increases in hourly wages) for the Electronic Money Transfers component of IMTS—Outbound, with any IMTS cost 

increases due to sampling variations or other underlying causes absorbed by reported transaction volumes for IMTS—Inbound and

International Money Orders under IMTS—Outbound. With reportable IMTS—Inbound transactions decreasing, an increasing proportion of 

IMTS costs, including cost changes associated with sampling variations, is distributed to International Money Orders, which negatively impacts 

IMTS—Outbound product’s cost coverage.

112 In its Response to CHIR No. 14, the Postal Service states that “when FY 2021 costs became available, it became clear that the 15.8 percent 

increase would probably not be sufficient for the IMTS-Outbound product to cover its costs in FY 2022.” Response to CHIR No. 14, question 2.a.-

b. However, the Postal Service also explains that it is the number of IOCS tallies that determine the share of total window costs distributed to 

the two IMTS products, and that the number of IOCS tallies for FY 2022 will not be known until the filing of the FY 2022 Annual Compliance 

Report in late December 2022. Id.

113 See Docket No. CP2022-22, Notice of Erratum, December 22, 2021, at 2. Excel file “Intl SpecServ Calc.xlsx.”
Docket No. ACR2021 - 86 -

impact that the decrease in IMTS—Inbound transactions has on the proportions of total 

IMTS costs distributed to the two components of the IMTS—Outbound product.114

The Commission finds that the IMTS—Outbound product was not in compliance with 39 U.S.C. 

§ 3633(a)(2) in FY 2021. The Commission directs 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.

c. International Ancillary Services

In FY 2021, the International Ancillary Services product did not cover its attributable 

cost.115 More specifically, Inbound Competitive International Registered Mail and 

Outbound International Insurance did not cover their attributable costs.116 FY 2021 ACR at 

85-86.

Inbound Competitive International Registered Mail

The remuneration that the Postal Service receives for the provision of registered mail 

service under Inbound Competitive International Registered Mail is governed by the 

Universal Postal Convention.117 To address the FY 2021 cost coverage for Inbound 

Competitive International Registered Mail, the Postal Service lists the per-item rates that 

applied in Calendar Year (CY) 2020 (1.3 SDR118 per item) and in CY 2021 (1.4 SDR per 

item). FY 2021 ACR at 85; see Second Additional Protocol, Article 28 Amended, ¶ 8. The 

Postal Service further describes revenue it receives due to its participation in the UPU 

“voluntary supplementary remuneration” program (SRP), as well as under the “Inbound 

Competitive PRIME Registered Service Agreement 1,” as representing separate sources of 

additional revenue associated with inbound registered items. Id. at 85-86. The Postal 

Service further reports a decrease in costs and a concurrent decrease in volume associated 

with Competitive International Registered Mail between FY 2020 and FY 2021. Id. at 85. 

 

114 See n.111, supra. More specifically, with costs for Electronic Money Transfers developed separately, a decrease in IMTS—Inbound 

transactions does not impact IMTS costs distributed to Electronic Money Transfers, while it is associated with an increase in IMTS costs 

distributed to International Money Orders, under the IMTS—Outbound product.

115 FY 2021 ACR at 85. International Ancillary Services consists of International Certificate of Mailing, Competitive International Registered Mail, 

Outbound International Return Receipt, Restricted Delivery, Outbound International Insurance, and Customs Clearance and Delivery Fee. See

MCS Section 2615.

116 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 subcomponent of the International Ancillary Services product. As for Outbound International Insurance, the Commission will refer to it as a 

component of the International Ancillary Services product.

117 See Universal Postal Union (UPU), Second Additional Protocol to the Universal Postal Convention, Geneva 2019 (Second Additional Protocol), 

Article 28 Amended, ¶ 8. See also Draft Acts of the Abidjan Congress 2021, August 2021 (Draft Acts of the Abidjan Congress), Article 28, ¶ 8. The 

Commission notes that per the Universal Postal Convention, letter post items that receive registered service are treated as format E items for 

operational, statistical, and accounting purposes, regardless of their shape. See Universal Postal Union, Regulations to the Convention, Berne 

2017, Article 17-116, ¶ 13.

118 The Special Drawing Right (SDR) is an international reserve asset created by the International Monetary Fund. Its value is based on a basket 

of five currencies: the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling. As of February 18, 2022, the 

International Monetary Fund exchange rate for 1 SDR was $1.40 U.S. dollars. See https://www.imf.org/external/np/fin/data/rms_sdrv.aspx.
Docket No. ACR2021 - 87 -

However, the Postal Service explains that the decrease in volume outpaced the decrease in 

costs, which it states contributed to the continued negative contribution for Inbound 

Competitive International Registered Mail in FY 2021. Id.

To address future cost coverage for Inbound Competitive International Registered Mail, the 

Postal Service lists UPU per-item rates that will apply in CY 2022 through CY 2025, and 

states that these scheduled CY rate increases “should help to improve [its] cost coverage.”

FY 2021 ACR at 85; see Draft Acts of the Abidjan Congress, Article 28, ¶ 8.

Only the Public Representative commented on Inbound Competitive International 

Registered Mail. The Public Representative expresses concern that the failure of Inbound 

Competitive International Registered Mail to cover its costs “will continue to persist.” PR 

Comments at 23. He notes that the Postal Service does not provide an explanation for how 

it expects to improve cost coverage for Inbound Competitive International Registered Mail 

and, instead, merely lists the scheduled calendar year increases in per-item remuneration 

for this ancillary service through CY 2025. Id. He recommends that the Commission seek 

additional information from the Postal Service regarding its plan to address cost coverage 

for Inbound Competitive International Registered Mail. Id.

The Postal Service responded that it had subsequently provided additional information to 

the Commission concerning inbound registered items in its Response to CHIR No. 10,

119

and that the provided information supports its statements in the FY 2021 ACR regarding 

additional sources of revenue for inbound registered items. Postal Service Reply Comments 

at 10-11.

The Commission observes that the Postal Service has expressed its expectation for 

improved cost coverage for Inbound International Registered Mail based on calendar year 

increases in per-item UPU remuneration since at least FY 2017.120 However, although cost

coverage for Inbound International Registered Mail improved between FY 2017 and FY 

2018, cost coverage for the product has declined ever since.121

Additionally, during the same period, the Postal Service has referred to revenues earned 

under the UPU SRP and under the Inbound Market Dominant Registered Service 

 

119 Responses of the United States Postal Service to Questions 1-3 of Chairman’s Information Request No. 10, February 9, 2022, question 3

(Response to CHIR No. 10).

120 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 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.

121 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; Library Reference PRC-LR-ACR2021-NP2.
Docket No. ACR2021 - 88 -

Agreement 1,122 or the Inbound Competitive PRIME Registered Service Agreement 1,123 as 

separate sources of additional revenue for inbound registered items.124 The Postal Service 

has provided no additional information to explain why the Commission should consider 

revenue received under a separate product on the MCS to evaluate the financial 

performance of Inbound International Registered Mail. 

In response to Commission directives and requests for information in Docket No. 

ACR2020125 and in the instant docket,126 the Postal Service provides additional information 

concerning cost coverage calculations for inbound registered items that enter the Postal 

Service’s mail stream under various MCS sections, including items under Inbound 

Competitive International Registered Mail. In the referenced responses, the Postal Service 

separately addresses attribution of costs and attribution of revenues between inbound 

registered items under respective MCS sections, and attempts to justify its past statements 

regarding separate sources of revenue for inbound registered items. See generally Docket 

No. ACR2020 Fourth Response; Response to CHIR No. 10, question 3. However, additional 

clarifications are necessary to identify a reasonable path towards improved cost and 

revenue attribution methodology for inbound registered items, including Inbound 

Competitive International Registered Mail.

The Commission finds that the International Ancillary Services product was not in compliance 

with 39 U.S.C. § 3633(a)(2) in FY 2021, and that one of its sub-components, Inbound 

Competitive International Registered Mail, did not cover cost. The Commission directs 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. This detailed analysis shall 

separately describe the attribution of costs and revenues associated with the delivery of host 

mail pieces and those associated with the provision of registered service (ancillary to delivery 

of host mail pieces), and be supported with data sources from the FY 2021 International Cost 

and Revenue Analysis. Additionally, the analysis shall identify any potential new methodology 

that would improve the accuracy of cost and revenue attribution for inbound registered items 

included under the applicable MCS sections, including items under Inbound Competitive 

International Registered Mail.

 

122 Previously listed as a product on MCS Section 1602.5.

123 Currently listed on MCS Section 2515.10, under the Inbound Competitive Multi-Service Agreements with Foreign Postal Operators 1 product.

124 See FY 2017 ACR at 44; FY 2018 ACR at 43; FY 2019 ACR at 35-36; FY 2020 ACR at 68; FY 2021 ACR at 85-86.

125 See Docket No. ACR2020, Fourth Response of the United States Postal Service to Commission Requests for Additional Information in the FY 

2020 Annual Compliance Determination, July 27, 2021 (Docket No. ACR2020 Fourth Response).

126 See Response to CHIR No. 10, question 3.
Docket No. ACR2021 - 89 -

Outbound International Insurance

FY 2021 revenue for Outbound International Insurance did not cover its attributable cost. 

FY 2021 ACR at 86. The Postal Service reports increases in window services costs and in 

international indemnities, stating that pieces and revenues for this component of the 

International Ancillary Services product remained “almost unchanged” from their FY 2020 

levels. Id. To address future cost coverage for Outbound International Insurance, the Postal 

Service maintains that the 4.8 percent price increase for the component, which went into 

effect in January 2022, “should further improve [its] financial performance.” Id.

Only the Public Representative commented on Outbound International Insurance. The 

Public Representative suggests that in the next request to adjust prices of general 

applicability for Competitive products, the Postal Service set prices for Outbound 

International Insurance “that are compensatory” and do not “hinder the ability of the 

International Ancillary Services product to cover its cost.” PR Comments at 23.

The Postal Service responded to the Public Representative’s suggestion by stating that his 

comments “do not provide an analysis of how practicable such an increase in prices for 

Outbound International Insurance would be.” Postal Service Reply Comments at 11.

The Commission acknowledges the large increases in window services costs and in 

international indemnities between FY 2020 and FY 2021 noted by the Postal Service. The 

Commission agrees with the Public Representative that the Postal Service should propose 

prices for Outbound International Insurance that are compensatory in the next request to 

adjust prices of general applicability for Competitive products. Furthermore, the 

Commission encourages the Postal Service to investigate the causes for reported increases 

in international indemnities and in window service costs, which may provide the 

opportunity for additional, potentially more adequate corrective actions. Resorting to a 

price increase as the only remedy could leave some of these underlying causes 

unaddressed, in particular those associated with international indemnities.127

The Commission finds that the International Ancillary Services product was not in compliance 

with 39 U.S.C. § 3633(a)(2) in FY 2021, and that one of its components, Outbound 

International Insurance, did not cover cost. The Commission recommends that the Postal 

Service investigate the increases in window service costs and international indemnities, and 

take adequate and appropriate corrective action that would lead to compensatory Outbound 

International Insurance. Such corrective action might not be limited to a price increase for 

Outbound International Insurance in the next request to adjust prices of general applicability 

for Competitive products.

 

127 Outbound International Insurance is an optional insurance that may be purchased in addition to the insurance amount included with the 

base products (Priority Mail International, Priority Mail Express International, and Global Express Guaranteed) to protect against loss, damage, 

or missing content. See MCS Section 2615.5. An increase in international indemnities for Outbound International Insurance, with pieces almost 

unchanged, could indicate higher occurrences of loss, damage, or missing content for underlying parcels. FY 2021 ACR at 86. An investigation 

might reveal an operational issue that would not be corrected with a price increase. 
Docket No. ACR2021 - 90 -

Competitive International Products Consisting of 

NSAs

Competitive international mail also includes products with rates and fees not of general 

applicability that are established pursuant to one or more NSAs.

At the request of the Postal Service, and to address administrative concerns involving 

product reporting and classification on the Competitive product list, the Commission 

permitted the grouping of functionally equivalent international NSAs with the express 

understanding that each NSA within a product must cover its attributable cost.128

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-FY21-NP2. For FY 2021, the Postal Service provided data for 499 

international NSAs, 482 of which include negotiated rates for outbound mail and 17 of 

which include negotiated rates for inbound mail.129

The financial results for Competitive outbound and inbound international products 

consisting of NSAs are discussed below.

 

128 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).

129 Library Reference USPS-FY21-NP2; Library Reference PRC-LR-ACR2021-NP2. The Commission counts each serial-numbered agreement 

included under the Global Expedited Package Services—Non-Published Rates (GEPS—NPR) products as one NSA in this summary value.
Docket No. ACR2021 - 91 -

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.130 Additional postal services may be available for products 

with rates and fees not of general applicability.131 Table IV-2 shows the FY 2021 product 

category for each of these products for which the Postal Service reports FY 2021 financial 

results.132

 

130 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. 

131 See, e.g., MCS Section 2510.7.5 for additional services available to products included in the Global Reseller Expedited Package Contracts 

category.

132 The Postal Service does not report FY 2021 volume or financial results for the following Competitive outbound international products: 

Priority Mail International Regional Rate Boxes—Non-Published Rates; Competitive International Merchandise Return Service Agreements with 

Foreign Postal Operators 2; Global Plus 2C; Global Reseller Expedited Package Services 1; International Priority Airmail Contract 1; Priority Mail 

Express International, Priority Mail International, First-Class Package International Service & Commercial ePacket Contract 7; Priority Mail 

Express International, Priority Mail International, First-Class Package International Service & Commercial ePacket Contract 9; International 

Priority Airmail, Commercial ePacket, Priority Mail Express International, Priority Mail International & First-Class Package International Service 

Contract 10; GEPS—NPR 2; GEPS—NPR 3; GEPS—NPR 4; GEPS—NPR 5; GEPS—NPR 6; GEPS—NPR 7; GEPS—NPR 8; GEPS—NPR 9; GEPS—NPR 

10; GEPS—NPR 11; GEPS—NPR 12; and GEPS—NPR 13.
Docket No. ACR2021 - 92 -

Table IV-2

Competitive Outbound International Products by Category, FY 2021133

Product Category Product Name

Global Reseller Expedited Package Contracts Global Reseller Expedited Package Services 2

Global Expedited Package Services (GEPS)—Non-Published 

Rates

GEPS—Non-Published Rates 14

GEPS—Non-Published Rates 15

Priority Mail Express International, Priority Mail International, 

First-Class Package International Service & Commercial 

ePacket (PMEI, PMI, FCPIS & CeP) Contracts 

PMEI, PMI, FCPIS & CeP Contract 2

PMEI, PMI, FCPIS & CeP Contract 3

PMEI, PMI, FCPIS & CeP Contract 4

PMEI, PMI, FCPIS & CeP Contract 5

PMEI, PMI, FCPIS & CeP Contract 6

PMEI, PMI, FCPIS & CeP Contract 8

PMEI, PMI, FCPIS & CeP Contract 10

International Priority Airmail, Commercial ePacket, Priority 

Mail Express International, Priority Mail International & FirstClass Package International Service (IPA, CeP, PMEI, PMI & 

FCPIS) Contracts

IPA, CeP, PMEI, PMI & FCPIS Contract 1

IPA, CeP, PMEI, PMI & FCPIS Contract 2

IPA, CeP, PMEI, PMI & FCPIS Contract 3

IPA, CeP, PMEI, PMI & FCPIS Contract 4

IPA, CeP, PMEI, PMI & FCPIS Contract 5

IPA, CeP, PMEI, PMI & FCPIS Contract 6

IPA, CeP, PMEI, PMI & FCPIS Contract 7

IPA, CeP, PMEI, PMI & FCPIS Contract 8

IPA, CeP, PMEI, PMI & FCPIS Contract 9

International Priority Airmail, Commercial ePacket, Priority 

Mail Express International, Priority Mail International & FirstClass Package International Service (IPA, CeP, PMEI, PMI & 

FCPIS) with Reseller Contracts

IPA, CeP, PMEI, PMI & FCPIS with Reseller Contract 1

IPA, CeP, PMEI, PMI & FCPIS with Reseller Contract 2

IPA, CeP, PMEI, PMI & FCPIS with Reseller Contract 3

IPA, CeP, PMEI, PMI & FCPIS with Reseller Contract 4

IPA, CeP, PMEI, PMI & FCPIS with Reseller Contract 5

International Priority Airmail, International Surface Air Lift, 

Commercial ePacket, Priority Mail Express International, 

Priority Mail International & First-Class Package International 

Service (IPA, ISAL, CeP, PMEI & FCPIS) with Reseller Contracts 

IPA, ISAL, CeP, PMEI, PMI & FCPIS with Reseller 

Contract 1

IPA, ISAL, CeP, PMEI, PMI & FCPIS with Reseller 

Contract 2

International Priority Airmail, International Surface Air Lift, 

Commercial ePacket, Priority Mail Express International, 

Priority Mail International & First-Class Package International 

Service (IPA, ISAL, CeP, PMEI, PMI & FCPIS) Contracts

IPA, ISAL, CeP, PMEI, PMI & FCPIS Contract 1

IPA, ISAL, CeP, PMEI, PMI & FCPIS Contract 2

Source: MCS Section 2510.

 

133 This table presents outbound international products by product category as they appear in the MCS.
Docket No. ACR2021 - 93 -

The Postal Service reports financial results for each outbound international NSA within 

these products.134 In FY 2021, each outbound Competitive international product consisting 

of NSAs and each outbound Competitive international NSA within these products covered 

its attributable cost. See Library Reference USPS-FY21-NP2; Library Reference PRC-LRACR2021-NP2.

The Commission concludes that Competitive outbound 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 outbound international NSA and take steps to terminate or 

renegotiate agreements that are not compensatory.

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. Table IV-3 shows the product category for each inbound international 

product for which the Postal Service reports FY 2021 financial results.135

Table IV-3

Competitive Inbound International Products by Category, FY 2021136

Product Category Product Name

International Business Reply Service (IBRS) 

Competitive Contracts IBRS Contract 3

Inbound Express Mail Service (EMS) Inbound EMS 2

Inbound Competitive Multi-Service Agreements with 

Foreign Postal Operators 

Inbound Competitive Multi-Service Agreements with 

Foreign Postal Operators 1

Source: MCS Section 2515.

The Postal Service reports financial results for each inbound Competitive NSA within these 

products.137 In FY 2021, each inbound Competitive international product and each inbound 

Competitive NSA within these products covered its attributable cost.

 

134 In FY 2021, the Postal Service reports financial results for 411 outbound international NSAs and serial-numbered agreements. For the 

remaining 71 outbound international NSAs and serial-numbered agreements, the Postal Service reports no activity. See Library Reference USPSFY21-NP2.

135 The Postal Service does not report FY 2021 volume or financial results for one Competitive inbound international product: International 

Business Reply Service Competitive Contract 1.

136 This table presents inbound international products by product category as they appear in the MCS.

137 In FY 2021, the Postal Service reports financial results for 12 inbound international NSAs. For the remaining 5 inbound international NSAs, 

the Postal Service reports no activity. See Library Reference USPS-FY21-NP2.
Docket No. ACR2021 - 94 -

The Commission observes an increase in the proportion of inbound international mail

volume that entered the Postal Service’s network under Competitive inbound international 

NSAs between FY 2020 and FY 2021. See Library Reference PRC-LR-ACR2021-NP2; see also

Library Reference PRC-LR-ACR2020-NP2. This necessitates continued monitoring of these 

agreements’ financial performance in order to ensure their compliance with the provisions 

of 39 U.S.C. § 3633(a)(2) in FY 2022.

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 not compensatory.

Competitive Nonpostal Services

In FY 2021, Competitive nonpostal services138 generated $150.923 million in revenue and 

incurred $60.895 million in expenses, which resulted in a contribution of $90.027 million. 

Revised Library Reference USPS-FY21-NP27, Preface. This figure represents a 6-percent 

decrease in contribution compared to FY 2020, but an overall cost coverage of 247.8 

percent.

The Commission concludes that Competitive Nonpostal Services satisfied 39 U.S.C. 

§ 3633(a)(2) because revenues exceeded attributable cost for each product.

Appropriate Contribution Provision: 

39 U.S.C. § 3633(a)(3)

39 U.S.C. § 3633(a)(3) requires the Commission to “ensure that all competitive products 

collectively cover what the Commission determines to be an appropriate share of the 

institutional costs of the Postal Service.” 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.139 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.140

 

138 The seven Competitive nonpostal products are: (1) Licensing of Intellectual Property other than Officially Licensed Retail Products; (2) Mail 

Service Promotion; (3) Officially Licensed Retail Products (OLRP); (4) Passport Photo Service; (5) Photocopying Service; (6) Rental, Leasing, 

Licensing or other Non-Sale Disposition of Tangible Property; and (7) Training Facilities and Related Services. Docket No. MC2010-24, Order 

Approving Mail Classification Schedule Descriptions and Prices for Nonpostal Service Products, December 11, 2012, at 4 (Order No. 1575).

139 See Docket No. RM2007-1, Order Establishing Ratemaking Regulations for Market Dominant and Competitive Products, October 29, 2007, 

at 90-92 (Order No. 43).

140 See Docket No. RM2012-3, Order Reviewing Competitive Products’ Appropriate Share Contribution to Institutional Costs, August 23, 2012, 

at 24-25 (Order No. 1449).
Docket No. ACR2021 - 95 -

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.141 Under this approach, the appropriate share was to be 

updated annually as part of the ACD. Order No. 4963 at 27. FY 2019 was the first year to 

which the new methodology was applicable, and the formula-derived appropriate share for 

FY 2019 was 8.8 percent. FY 2018 ACD at 112, 116. The Commission determined in the 

FY 2018 ACD that the appropriate share for FY 2020 would remain at 8.8 percent. Id. at 

116-17. The Commission determined in the FY 2019 ACD that the appropriate share for 

FY 2021 would be 9.1 percent. FY 2019 ACD at 87-89.

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 a particular aspect of the Commission’s interpretation of 39 U.S.C. § 3633.142 On 

November 18, 2021, the Commission issued a Supplemental Notice of Proposed 

Rulemaking addressing the remanded issues and re-proposing the formula-based approach 

to determining the appropriate share.143 Order No. 6043 simultaneously initiated the 

Commission’s third review of the appropriate share requirement. Order No. 6043. As the 

Commission explained in the FY 2020 ACD, the Commission will not use the formuladerived appropriate share amount for purposes of determining compliance with 39 U.S.C. 

§ 3633(a)(3) until a final rule has been issued. FY 2020 ACD at 91. However, because the 

formula is recursive, the Commission will continue 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 is being addressed. Id.

Comments on Appropriate Contribution 

Provision

The Postal Service asserts that the total Competitive product contribution for FY 2021 was 

$13.193 billion, or 39.2 percent of total institutional costs, an amount that complies with 

the requirements of 39 U.S.C. § 3633(a)(3). FY 2021 ACR at 88-89.

The Public Representative and Pitney Bowes concur that Competitive products’ 

contribution to institutional costs in FY 2021 complies with 39 U.S.C. § 3633(a)(3). PR 

Comments at 23-24; Pitney Bowes Comments at 3-4.

The Lexington Institute takes issue with the level of Competitive product contribution to 

institutional costs in FY 2021, suggesting that Competitive products should be responsible 

for more than 39.2 percent of institutional costs “[g]iven the dramatically lower 

 

141 See Docket No. RM2017-1, Order Adopting Final Rules Relating to the Institutional Cost Contribution Requirement for Competitive Products, 

January 3, 2019 (Order No. 4963).

142 See United Parcel Serv., Inc. v. Postal Regul. Comm’n, 955 F.3d 1038 (D.C. Cir. 2020).

143 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 (Order No. 6043).
Docket No. ACR2021 - 96 -

profitability of packages.” Lexington Institute Comments at 1. It states “[i]t is disingenuous 

for [the Postal Service] to say that the 39.2 percent figure should apply to both Fiscal Year 

2020 and 2021 when there is 12.2 percent, or $3.5 billion, growth in the competitive 

business.” Id. at 2. Lexington Institute also takes issue with how costs are attributed based 

on cubic weight, and states that there are “[f]undamental [c]oncerns” with the Postal 

Services cost system and suggests a “Greenfield Costing Methodology” based on growing 

data analytics capabilities. Id. at 4.

In reply, the Postal Service disputes “the claim that the institutional cost recovery share 

should be linked to revenue....” Postal Service Reply Comments at 12. The Postal Service 

also states that the Lexington Institute’s assertions of “disingenuousness” with respect to 

the 39.2 percent figure are based on a misunderstanding of the Postal Service’s 

representations in the ACR. Id. at 13-14.

Commission Analysis

a. FY 2021 Appropriate Share

In FY 2021, the total institutional costs of the Postal Service were $33.634 billion.144 In 

FY 2021, the total contribution made by Competitive products collectively to institutional 

costs was $13.193 billion145 (approximately 39.2 percent of total institutional costs), which 

would have met either the 5.5 percent requirement or the formula-derived 9.1 percent

requirement. Therefore, the Postal Service was compliant with 39 U.S.C. § 3633(a)(3).

As the Commission has explained in previous ACDs, comments pertaining to the 

methodology to determine the appropriate amount of contribution for Competitive 

products to make to institutional costs, as well as how the amount of institutional costs are 

determined, are outside the scope of the ACD, which determines compliance with statutory 

requirements using established methodologies. See, e.g., FY 2020 ACD at 92. Such 

comments are appropriately addressed in separate dockets pertaining to that issue. See, 

e.g., Order No. 6043. 

With respect to the Lexington Institute’s assertion that the Postal Service’s representations 

are misleading, the Lexington Institute appears to misunderstand the Postal Service’s 

Report. The Lexington Institute appears to assert that Competitive product contribution to 

institutional costs remained unchanged from FY 2020 to FY 2021 despite increases in 

Competitive product revenue during FY 2021. The Commission notes this is not the case. In 

fact, Competitive product contribution to institutional costs did increase from FY 2020 to 

FY 2021; from $11.185 billion in FY 2020 to $13.193 billion in FY 2021. As the Postal 

Service indicates, this represents an increase of 17.95 percent. Compare FY 2020 ACD at 92 

with FY 2021 ACR at 88.

 

144 Library Reference PRC-LR-ACR2021-1, Excel file “FY21 Summary_NPLR-1.xlsx,” tab “Total All Mail Appendix A,” cell D84.

145 Id. tab “Total All Mail Appendix A,” cell E24.
Docket No. ACR2021 - 97 -

Moreover, the assertion that increases in Competitive product revenue should necessarily 

result in corresponding increases in Competitive contribution to institutional costs does 

not account for the role of attributable costs. Attributable costs associated with 

Competitive products also increased from FY 2020 to FY 2021; from $19.426 billion in FY 

2020 to $21.040 billion in FY 2021, representing an increase of 8.3 percent. Compare FY 

2020 ACD at 94 with FY 2021 ACR at 88. Thus, much of the increase in Competitive product 

revenue in FY 2021 was offset by increases in the attributable costs associated with 

Competitive products. The Lexington Institute does not address these increased 

attributable costs in its comments. The Commission notes that Order No. 6043 addresses 

Lexington Institute’s concerns about how costs are attributed to individual Competitive 

products. Finally, and with respect to profitability of Competitive (packages) and Market 

Dominant (mail) products, the Commission points out that overall Competitive product 

cost coverage in FY 2021 was 162.7 percent and greater than overall Market Dominant cost 

coverage which was 153.3 percent.146

The Commission finds that in FY 2021 Competitive products satisfied 39 U.S.C. § 3633(a)(3) by 

covering an appropriate share of the Postal Service’s institutional costs.

b. FY 2022 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 2020, which was carried out during FY 2021, the 

Commission applied the formula and determined that the appropriate share for FY 2022 

would be 10.0 percent. FY 2020 ACD at 93-95.

c. FY 2023 Appropriate Share

In this section, the Commission applies the formula to determine what the appropriate 

share would be for FY 2023 under the formula-based approach. The appropriate share 

requirement for FY 2023 would be 10.4 percent under the formula-based approach. The 

formula and the calculation are explained in greater detail below.

 

146 Library Reference PRC-LR-ACR2021-1, Excel file “FY21 Summary_NPLR-1.xlsx,” tab “Total All Mail Appendix A,” cells I24 and I60.
Docket No. ACR2021 - 98 -

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,147 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.

 

147 Revenue data for the Postal Service are obtained from the Product Finances Analysis, which the Commission produces each year as part of 

the ACD. Revenue data for the Postal Service’s competitors are obtained from the United States Census Bureau. Order No. 4963 at 25. In its 

comments in a different Commission proceeding, the Postal Service observes that the Commission includes, in its Library References with each 

ACD, “a quarterly value for the last calendar quarter of the preceding year” for the revenue data of competitors, but does not use that value in 

calculations until the following ACD’s calculation of the appropriate share. Docket Nos. RM2017-1 and RM2022-2, Initial Comments of the 

United States Postal Service in Response to Order No. 6043, February 25, 2022, at 74 (Docket Nos. RM2017-1 and RM2022-2 Postal Service 

Comments). This is because the final calendar quarter responds to the next year’s first fiscal quarter. As such, the values are locked and do not 

“reflect any of the subsequent revisions made by the Census Bureau.” Docket Nos. RM2017-1 and RM2022-2 Postal Service Comments at 75. 

The Postal Service characterizes this locking as “premature” and suggests using an updated Quarter 4 figure as part of the calculation of 

appropriate share in the instant docket. Id. at 75-77. The Commission acknowledges this suggestion and will take it under consideration as part 

of Docket Nos. RM2017-1 and RM2022-2. However, consistent with the methodology in prior years, this year’s calculation uses the Quarter 4 

2020 number that was locked in. Docket No. ACR2020, Library Reference PRC-LR-ACR2020-10, March 29, 2021.
Docket No. ACR2021 - 99 -

With the forgoing component values, the appropriate share for a given fiscal year can be 

calculated using the formula adopted by the Commission in Order No. 4963. 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 

year, this will always be the fiscal year immediately following the fiscal year under review. 

For example, this ACD evaluates compliance for FY 2021, but is being conducted in 

FY 2022, and, as it relates to the formula, is being used to determine what the appropriate 

share will be in FY 2023. “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 2021). “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 2023).

For the Competitive Contribution Margin, in FY 2021, the total Competitive product 

revenue was $34.233 billion. The FY 2021 total attributable cost incurred in producing 

Competitive products was $21.040 billion. Therefore, the Competitive Contribution Margin 

value was:

$34.233 billion−$21.040 billion

$34.233 billion

= 0.385,

representing a 5.5 percent increase from FY 2020.148

 

148 The following calculations can also be found in a library reference accompanying this Report. See Library Reference PRC-LR-ACR2021-10.
Docket No. ACR2021 - 100 -

For the Competitive Growth Differential, the Commission calculates the revenue growth 

rates for both the Postal Service and its competitors in FY 2021. In FY 2020, the Postal 

Service’s total real Competitive product revenue was $24.523 billion, while in FY 2021 it 

was $26.194 billion. The percentage change from FY 2020 to FY 2021 was 6.8 percent. In 

FY 2020, the total real revenue earned by the Postal Service’s competitors collectively was 

$88.756 billion, while in FY 2021 it was $102.469 billion. The percentage change from 

FY 2020 to FY 2021 was 15.5 percent. The Postal Service’s market share was 21.6 percent. 

The Competitive Growth Differential value for FY 2021 was thus:

21.6% ∗ (6.8% − (15.5%)) = −1.9%.

See Library Reference PRC-LR-ACR2021-10.

When the component values are plugged into the formula, the result is:

10.0% ∗ (1 + 5.5% + (−1.9%)) = 10.4%.

Therefore, the appropriate share requirement for FY 2023 would be 10.4 percent under the 

formula-based approach.

Pilot Program – Gift Cards

In FY 2014, the Commission 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.149 In the Docket 

No. MC2014-26 Request, the Postal Service stated that it “d[id] not intend to use th[e] filing 

as a step into offering banking services,” and if any Postal Service proposal should ever 

offer banking services, “such proposals would be done in a separate filing.” See Docket No. 

MC2014-26 Request at 3, n.2.

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. 

The Postal Service initiated the Pilot Program 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."150 The Postal 

Service states that in order to gain insight into this market, it considered secondary 

 

149 See Docket No. MC2014-26, Request of the United States 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 (Docket No. MC2014-26 Request). See also Docket No. MC2014-26, Order Granting 

Request to Add Gift Cards to the Competitive Product List, August 8, 2014 (Order No. 2145).

150 See Response to CIR No. 1, questions 1.a.-b. 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 Ave NE, 

Washington, DC 20002; and, Baltimore Post Office, 900 E Fayette Street, Baltimore, MD 21233. Since all four locations already offered Gift 

Cards, the Postal Service asserts that minimal training was necessary for the 28 clerks and 8 management staff to allow for the additional form 

of payment. The training was in partnership with a major postal union and consisted of content providing a background of the pilot, discussions 

of check handling processes, standard work instruction for the transaction including Point-of-Sale workflow, and FAQs. Id.
Docket No. ACR2021 - 101 -

research, including a 2019 survey by the Federal Deposit Insurance Corporation called 

“How America Banks: Household Use of Banking and Financial Services” as well as USPS 

Office of Inspector General reports on potential postal financial services. Id.

Under the Pilot Program, additional forms of payment accepted for Gift Cards at the four 

test sites are payroll or business checks, defined as a printed check with a company’s name 

pre-printed, made payable to the customer, and accepted in accordance with Handbook F101.151 The 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), the total amount 

loaded on the Gift Card(s) cannot exceed $500 per day per customer, and no cash is 

disbursed to the customer. As with the policy for all Gift Card purchases, once the Gift Card 

is activated it cannot be returned for a refund or credit. See Response to CIR No. 1, 

questions 1.a.-q.

While the Pilot Program only accepts business and payroll checks made payable to the 

customer in connection with the sale of Gift Cards at the four test sites, the Postal Service 

notes that for many years it has cashed or redeemed salary checks or Money Orders in a 

limited number of circumstances. See Response to CIR No. 2, question 5. Specifically, the 

Postal Service has been issuing Money Orders since the Civil War, and for the past 50 years, 

the Postal Service has been cashing Postal Service-issued salary checks and Money Orders 

at no additional charge. Id. The Postal Service also notes that in the last 10 years, and “in 

cooperation with the United States Treasury, the Postal Service has cashed Treasury checks 

for a nominal fee.” Id. It further notes that “[c]ommerical checks have long been accepted as 

payment for purchase of postage.” Id.

From September 13, 2021, to January 12, 2022, a total of six Gift Cards were purchased 

under the Pilot Program (using the business or payroll check payment method) generating 

a total fee revenue of $35.70. See Response to CIR No. 1, question 1.n.

The Postal Service states that the Pilot Program will assess consumer usage and whether 

there is a benefit to the communities involved, operational capabilities, number of business 

and payroll checks cashed, and funds transferred to a Gift Card. See Response to CIR No. 1, 

question 1.l. Based on the review of the Pilot Program thus far, the Postal Service 

ascertained that 100 percent of the transactions have 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 cards. See Response to CIR No. 2, question 2. The Postal Service 

states that it does not track whether Gift Cards are mailed, regardless of the payment type.

See Response to CIR No. 1, question 2.b. The Postal Service indicates that its management 

has not made a determination regarding potential surveys or other means to determine 

whether a Pilot Program customer purchasing a Gift Card will enter the card into the mail 

 

151 See Response to CIR No. 1, questions 1.a.-q.; see also Response to CIR No. 2, question 5.
Docket No. ACR2021 - 102 -

stream.152 The Postal Service states that it continues to monitor the Pilot Program and 

anticipates that more Gift Cards may be purchased using the additional forms of payment 

being tested. See Response to CIR No. 2, question 1. Furthermore, it notes that decisions or 

definitive plans regarding terminating, changing, or expanding the Pilot Program are 

pending further evaluation of the Pilot Program, although the original schedule for the Pilot 

Program proposed an end date in March 2022. See Response to CIR No. 1, questions 1.a.-q.; 

see also Response to CIR No. 2, question 7.

In response to the Commission’s concern that a new form of accepted payment for Gift 

Cards may amount to a change to the product, the Postal Service describes the Pilot 

Program as a short-term test that is limited in geographic scope and is “merely testing a 

new form of payment for an established postal product – [G]ift [C]ards,” which does not 

require a change to the MCS and does not constitute the provision of financial services. 

Response to CIR No. 1, questions 1.a.-q.

The Commission then asked the Postal Service to “explain with a full degree of specificity 

why the Postal Service believes that this program is not a market test as described in the 

Statutes and Commission regulations.” See CIR No. 2, question 6. In response, the Postal 

Service states that it “considers the application of Commission rules pertaining to market 

tests to be inapplicable,” arguing that “no new products or services are involved in the 

current [Pilot Program],” and that the “only products being sold are the existing gift cards 

[...] previously authorized by the Commission.” Id. The Postal Service further states that the 

focus of the Pilot Program does not relate to the “market response to the sale of an 

innovative product or service not currently listed in the [MCS],” but instead relates to the 

“limited acceptance of an additional form of payment,” which it maintains “are not products 

or services themselves.” Id. In addition, the Postal Service argues that because “acceptable 

forms of payment for [G]ift [C]ards are not set forth in the [MCS],” they are “governed by 

Postal Service discretion and regulations.” Id. 

Questions remain with regard to this time-limited test and specifically whether it 

represents a change in the use or nature of the Gift Cards product that may require 

additional classification action. The Postal Service states that “no new products or services 

are involved” but the market research referred to in Response to CIR No. 1, suggests that 

the new payment option is targeted specifically at a market looking for financial services. 

See Response to CIR No. 1, question 1.b. The Postal Service’s own promotional materials 

 

152 When the Commission initially authorized the Gift Card market test, the Commission noted that an “important consideration in [the] 

decision” was the “requirement that the Postal Service collect data to support its supposition that the gift cards will be mailed.” See Docket No. 

MT2011-2, Order Authorizing Gift Card Market Test, April 28, 2011, at 8 (Order No. 721). Furthermore, the Commission asserted that “[i]t is 

imperative that the Postal Service collect data on the sale of gift cards to demonstrate the portion of gift cards mailed (or likely to be mailed).” 

Order No. 721 at 11 (footnote omitted). In Order No. 2145, the Commission noted that “[o]n the basis of the reports filed pursuant to Order No. 

721, the Postal Service concludes that there is a nexus between the use of gift cards and the use of the mails for sending gift cards because a 

majority of gift cards purchased at post offices will be mailed.” Order No. 2145 at 10. In the Commission’s analysis as to whether Gift Cards are 

a Postal Product, the Commission noted that “[i]n short, a majority of Postal Service gift cards are mailed and their sale fosters the use of the 

mails.” Id. at 12. When the Commission concluded that “the sale of gift cards in postal facilities is ancillary to the delivery of letters and mailable 

packages and is a postal service” the Commission highlighted that “[a]lso significant is the similarity of gift cards to Postal Service money orders, 

long regarded as a postal service on the basis of a court ruling that they are likely to be mailed.” Id. (footnote omitted).
Docket No. ACR2021 - 103 -

market the product using the language “need to ‘cash’ a check?”153 Changes in the 

marketing and planned usage of the product have the potential to change the nature of the 

product.

Additionally, although the Postal Service asserts that the Gift Card product was already 

approved by the Commission, the Commission stresses that the approval of the product 

was based on the premise that the availability of gift cards “stimulates demand for postal 

services, and enhances the use of the mail.” See Order No. 2145 at 4. The Postal Service’s 

evidence in Docket No. MC2014-26 demonstrated at the time that the majority of Gift Card 

sales not only involved the purchase of other postal items but were likely to be mailed. Id.

at 5-6. In the current Pilot Program, none of the transactions have involved the sale of other 

postal products. Furthermore, the Postal Service does not track whether gift cards are 

mailed (regardless of the method of purchase) and has not made an attempt as of yet to 

determine via surveys or other tools whether customers are likely to mail the gift cards 

purchased under the Pilot Program. See Response to CIR No. 2, questions 2-3.

The Commission is monitoring the Pilot Program with interest and instructs the Postal 

Service to ensure that future changes and additions that have an impact on a product’s use 

or classification be filed with the Commission. The Commission reminds the Postal Service 

that the Commission regulates what products may be offered and controls the addition and 

removal of products through the MCS. It further notes that 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.

The Commission will continue to monitor the attributes of the Pilot Program and 

determine if further classification action may be necessary.

The Commission directs 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 remains in effect. In addition, the Commission directs 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 program past its initially anticipated end date of March 2022. Should the 

Pilot Program remain in effect after March 2022, the Commission will initiate a Mail 

Classification proceeding pursuant to 39 C.F.R. § 3040 to explore and review the issues 

discussed in this section.

 

153 See Response to CIR No. 2, PowerPoint file “CIR.2.Q.4.Pictures of Promo Items.pptx.”
Docket No. ACR2021 - 104 -

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.154 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.155 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 2007.156 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.”157 The Postal Service has since revised these standards, most 

recently 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).

158

 

154 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).

155 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).

156 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).

157 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.

158 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 an advisory opinion from the Commission 

regarding revisions to service standards for a Competitive Product, First-Class Package Service, but has not implemented the new standards yet. 

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); Response to CIR No. 3, question 4.
Docket No. ACR2021 - 105 -

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 percent on-time 

performance targets.

159 Targets are set by the Board of Governors of the Postal Service 

each fiscal year. See Response to CHIR No. 18, question 1.a.i. The Postal Service has since 

updated these on-time targets annually and, until FY 2021, gradually increased them over 

time for most products. See, e.g., FY 2018 ACD at 164, 178, 185, 187, 191. The Postal Service 

is required to include its targets for the preceding year in its ACR and must notify the 

Commission of any changes in targets at least 30 days prior to implementation.160 The 

Postal Service is not required to gain approval from the Commission for these changes, but 

the Commission is permitted, if it sees fit, to initiate a separate proceeding to consider 

them. See 39 C.F.R. § 3055.5.

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). The 

PAEA does not explicitly contain any principle by which to make this decision, but rather 

commits this determination to the discretion of the Commission.161

To make this assessment, the Commission has traditionally compared the percentage of 

mailpieces that achieve the stated service standard against the targets established by the 

Postal Service. FY 2016 ACD at 90. The D.C. Circuit upheld as reasonable the Commission’s 

use of the Postal Service targets as the benchmark to evaluate compliance on a nationwide 

basis for each product.162 However, if those targets are unreasonable, the Commission has 

reserved the right to initiate a rulemaking.

163

 

159 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[]”).

160 See 39 C.F.R. § 3055.2(d); 39 C.F.R. § 3055.5. Each year, including this one, the Postal Service includes these targets in Library Reference 29.

161 See Am. Postal Workers Union, AFL-CIO v. Postal Regul. Comm'n, 842 F.3d 711, 718 (D.C. Cir. 2016).

162 See Am. Postal Workers Union, AFL-CIO, 842 F.3d at 718.

163 See Am. Postal Workers Union, AFL-CIO, 842 F.3d at 718 (“The PAEA does not, however, contain any governing principle by which to 

distinguish compliance from noncompliance. Rather, by its silence, the PAEA commits to the PRC’s discretion the development of legal 

benchmarks necessary for determining whether the Postal Service violated its service standards.”); 39 C.F.R. § 3055.5 (“The Commission may 

initiate a proceeding at any time to consider such changes if it appears that the changes might have a material impact on the accuracy, 

reliability, or utility of the reported measurement, or if the changes might have a material impact on the characteristics of the underlying 

product.”); see also Docket No. C2013-10, Order Granting Motion for Reconsideration and Granting Motion to Dismiss, May 27, 2015, at 11 n.20 

(Order No. 2512) (“Although the Postal Service establishes its own goals, the Commission reserves the right to intervene if the goals are 

contrary to the objectives of title 39, or significantly change the nature of a postal product. Thus far, the Commission has found no instance of 

this occurring.”); Docket No. RM2009-11, Order Establishing Final Rules Concerning Periodic Reporting of Service Performance Measurements 

and Customer Satisfaction, May 25, 2010, at 26 (Order No. 465) (“...the Commission will have an indirect role in reviewing Postal Service 

initiated performance standard and target changes to these baselines as this may affect the nature of the underlying service, or the rates 

associated with the service in regard to the price cap.”).
Docket No. ACR2021 - 106 -

The Postal Service did not establish targets for FY 2021 until the third quarter of the 

year.164 According to the Postal Service, it deferred setting service performance targets to 

ensure that its targets were meaningful, considering the extraordinary conditions brought 

on by the COVID-19 pandemic. FY 2021 ACR at 51. As the Commission previously stated, 

the delayed filing left insufficient time for a full Commission review.165

During FY 2021, the Postal Service lowered its targets for First-Class Mail, USPS Marketing 

Mail, and Periodicals.166 The Postal Service explains the change in targets by stating that, 

historically, it has been unable to meet service performance targets for most Market 

Dominant products, and notes that “regulators have requested the Postal Service establish 

realistic targets instead of what were determined to be aspirational.” Response to CHIR No. 

1, question 24.a. According to the Postal Service, its FY 2021 targets were based on 

historical data and “an operational performance improvement factor predicated on known 

network and operational changes.” Id. question 24.b. It explains that when the FY 2021 

targets were established, they were expected to be only single-year targets to take into 

account the exceptional circumstances surrounding the COVID-19 pandemic. Response to 

CHIR No. 6, question 15.a. The Postal Service asserts that “[t]his was done with an 

expectation targets would be adjusted upward for FY 2022 with the continued 

implementation of the 10-Year Strategic Plan, which will ultimately provide an opportunity 

for the Postal Service to achieve service excellence by meeting or exceeding 95 percent ontime delivery." Id.

The Postal Service will be changing its First-Class Mail, USPS Marketing Mail, and 

Periodicals targets once again in FY 2022. See id. question 15.d. The Postal Service expects

on-time service performance for each Market Dominant product to meet or exceed its 

applicable service performance target in FY 2022, but observes that achievement may be 

hampered due to continuing COVID-19 pandemic-related impacts and uncertainties such as 

employee availability and contract transportation constraints. See id. question 15.f.

The Postal Service intends to eventually raise its service performance targets to 95 percent 

on-time for all Market Dominant products and categories. See Response to CHIR No. 18, 

question 1.a. It currently aims to transition targets to 95 percent over approximately the 

next 2 to 3 years. See id. question 1.a.i.1. It states that targets are typically established at or 

near the beginning of each fiscal year and that targets will be based on a forecast (using 

historical performance data) and applying expected operational improvement predicated 

on known network and operational changes. See id. question 1.a.i.3.

 

164 See Docket No. ACR2020, Notice of the United States Postal Service of Supplements to Annual Compliance Report Folders 17 and NP30 --

Errata, May 14, 2021.

165 Docket No. ACR2020, Analysis of the Postal Service’s FY 2020 Annual Performance Report and FY 2021 Performance Plan, June 2, 2021, at 

20-21 (FY 2020 Analysis).

166 Compare Docket No. ACR2020, Library Reference USPS-FY20-29, December 29, 2020, file “FY20-29 Service Performance Report.pdf,” at 4, 

14, 17, with Library Reference USPS-FY21-29, December 29, 2021, file “FY21-29 Service Performance Report.pdf,” at 4, 10, 14.
Docket No. ACR2021 - 107 -

Figure V-1 categorizes Market Dominant products according to whether or not they 

achieved their annual service performance targets for FY 2021.

Figure V-1

Market Dominant Products Service Performance Results, FY 2021

Source: Library Reference USPS-FY21-29, December 29, 2021, PDF file “FY21-29 Service Performance Report.pdf,” at 4, 14, 21, 25 (FY 2021 

Service Performance Report).

USPS Marketing Mail

- High Density and Saturation 

Letters

- Letters

Package Services

- Bound Printed Matter Parcels

Special Services

- International Ancillary Services

- Money Orders

- Stamp Fulfillment Services

First-Class Mail

Single-Piece Letters/Postcards

- 2-Day

- 3-5-Day

Presorted Letters/Postcards 

- Overnight

- 2-Day 

- 3-5-Day

Flats

- Overnight

- 2-Day

- 3-5-Day

Outbound Single-Piece 

International (Combined)

Inbound Letter Post (Combined)

USPS Marketing Mail

- High Density and Saturation Flats

- Carrier Route

- Flats

- Parcels

- Every Door Direct Mail—Retail

Periodicals

- In-County

- Outside County

Package Services

- Bound Printed Matter Flats

- Media Mail/Library Mail

Special Services

- Ancillary Services

- Post Office Box Service

Met or Exceeded Target (6 Products)

Failed to Meet Target (21 Products)
Docket No. ACR2021 - 108 -

To put these results into context, this chapter begins with an overview of the events in 

FY 2021 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 2021 service performance results by class of mail. Finally, the Commission describes the 

findings of the special study regarding offshore service performance.

FY 2021 Events Affecting Service Performance 

for All Market Dominant Products

a. Overview

In FY 2021 (October 1, 2020 through September 30, 2021), the most significant event 

affecting the Postal Service, and the logistics industry more broadly, remained the 

COVID-19 pandemic. Because Postal Service employees perform an essential function as 

part of the nation’s critical infrastructure, they have continued to process and deliver the 

nation’s mail. The Commission expresses its appreciation for the continuous efforts of the 

frontline Postal Service workers, who are performing essential work that allows millions of 

Americans to minimize their exposure to the COVID-19 pandemic by maximizing their 

hours spent at home.

The COVID-19 pandemic had a substantial impact on the Postal Service, which became 

widespread and significant in Quarters 3 and 4 of FY 2020 (April 1, 2020 through 

September 30, 2020) and continued throughout FY 2021. The Postal Service reports that 

the COVID-19 pandemic primarily impacted service performance by reducing employee 

availability, disrupting its contract transportation arrangements, and altering the usual

mail mix. Each of these factors, which are discussed separately below, had significant 

impacts on the Postal Service’s Market Dominant service performance results. Moreover, 

because the timing of these events overlapped—and coincided with the Postal Service’s 

peak season—their combination exacerbated the extent and duration of the individual 

impacts.

b. The COVID-19 Pandemic

(1) Reduced Employee Availability

The Postal Service explains that the COVID-19 pandemic reduced employee availability on 

a national level leading to significant absenteeism in “hot spots,” which led to problems in 

the processing, transporting, and delivering of normal volume. See Response to CHIR No. 1, 

question 13.a. On average, individual usage of COVID-19 pandemic-related leave was 

slightly more than 2 weeks (87.6 hours). Response to CHIR No. 8, question 2.

Figure V-2 presents overall employee availability by month for FY 2019, FY 2020, and 

FY 2021.
Docket No. ACR2021 - 109 -

Figure V-2

Employee Availability, by Month, FY 2019–FY 2021

Source: Response to CHIR No. 6, question 4, Excel file “ChIR.6 Q.4_Data_ChIR.1 Q.13b;” 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 increased from FY 2019 to FY 2020 and decreased from 

FY 2020 to FY 2021.167 In FY 2019, the Postal Service reported an average employee 

availability of approximately 78.39 percent, which increased to 79.97 percent in FY 2020. 

Id. Employee availability then decreased to 78.30 percent in FY 2021. Id. In FY 2019, the 

maximum employee availability occurred in April at 81.36 percent, while the minimum 

employee availability occurred in July at 74.98 percent. In both FY 2020 and FY 2021, the 

maximum employee availability occurred in December, at 83.12 percent and 80.45 percent 

availability, respectively. Id. The month with the lowest employee availability in FY 2020 

was April (76.43 percent), while the lowest employee availability in FY 2021 was July 

(75.92 percent). Id.

Figure V-3 displays employee availability in FY 2021 by function: mail processing (Function 

1), delivery services (Function 2), and customer service (Function 4).

 

167 See Response to CHIR No. 6, question 4, Excel file “ChIR.6 Q.4_Data_ChIR.1 Q.13b;” Docket No. ACR2020, February 4 Response to CHIR No. 6, 

question 2, Excel file “Q.2 Employee Availability Data.xlsx.”

70%

72%

74%

76%

78%

80%

82%

84%

Employee Availability

FY 2019 FY 2020 FY 2021
Docket No. ACR2021 - 110 -

Figure V-3

Employee Availability, by Function, by Month, FY 2021

Note: A complete list of the Postal Service’s functions and Labor Distribution Codes appears in Docket No. R2006-1, Library Reference USPS-LRL-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. 9, question 1, Excel file “ChIR.9.Q.1.FY21 – Employee Availability Data,” tab “Month_Quarter_Func.”

Figure V-3 provides insight into the fluctuation of employee availability, at the national 

level, throughout FY 2021. These data indicate that the Postal Service’s national employee 

availability was consistently lower for mail processing than delivery services and customer 

service. National employee availability for mail processing (Function 1) was most 

challenged during May 2021, while delivery services (Function 2) and customer service 

(Function 4) were most challenged during July 2021.

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. 1, question 13.a. 

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. Response to CHIR No. 11, question 16.a.

The Postal Service has previously explained that monthly employee availability of less than 

70 percent can be “empirically [ ] most effective [in] distinguishing particularly-challenged 

65%

70%

75%

80%

85%

Employee Availability

Mail Processing Delivery Services Customer Service
Docket No. ACR2021 - 111 -

Districts.”168 Figure V-4 presents a selection of districts that experienced more than 1 

month of employee availability below 70 percent during FY 2021.

Figure V-4

Districts with Multiple Months of Employee Availability Below 70 Percent, FY 2021

Source: Response to CHIR No. 8, question 4.

Districts across the United States experienced monthly employee availability below 70 

percent during FY 2021. The Western Region District (not shown in Figure V-4) 

experienced the lowest employee availability during FY 2021 with January availability at 

only 61.00 percent. July was a particularly challenging month for the Postal Service with 10 

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. 11, question 16.a. Though employee availability was 

relatively similar in FY 2021 and FY 2O19 (the year prior to the COVID-19 pandemic), ontime service performance results were generally significantly lower in FY 2021.

 

168 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. ACR2021 - 112 -

The Postal Service states that it worked to address employee absenteeism starting in 

FY 2021 Quarter 3 “by partnering with the American Postal Workers Union and the 

National Postal Mail Handler Union to increase the number of career employees through a 

scheduled conversion process.”169 It notes that by the end of FY 2021, its total career 

workforce had increased by over 25,000 employees compared to the end of FY 2020. 

Response to CHIR 1, question 13.c. Pointing to increases in service performance results in 

Quarters 3 and 4 for USPS Marketing Mail, Periodicals, First-Class Mail, and Package 

Services, the Postal Service asserts that this larger workforce resulted in increased service 

performance, which it believes will be sustained in FY 2022. Id. question 13.c.-f. The Postal 

Service states that it plans to continue to monitor employee availability and staffing levels 

through employee availability metrics and employee-on-rolls data, and will adjust staffing 

as needed to ensure adequate employee availability in FY 2022. Id. question 13.e., g.

(2) Transportation Challenges

Transit has been a major area of concern in the Commission’s past evaluations of the Postal 

Service’s service performance results. See, e.g., FY 2020 ACD at 108-16; FY 2019 ACD at 

106-12, 119-21. 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.170 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.171 To move mail to the next facility via the surface network, the Postal 

Service may use contractors or Postal Service career employees as drivers.172

The Postal Service asserts that if a mailpiece misses its scheduled transportation, then 

generally that mailpiece will not be delivered within the expected timeframe absent 

“extraordinary measures at substantial cost, such as extra transportation along with clerk 

and carrier overtime at the delivery point.”173 The Postal Service explains that for Market 

Dominant products, processing and operating plans utilizing ground or air transportation 

 

169 Response to CHIR 1, question 13.c. The Postal Service uses the terms “career” and “regular” interchangeably. The Postal Service categorizes 

its workforce into two types of employees: career and non-career. Career (regular) employees serve in permanent positions on a full-time or 

part-time basis and typically receive full federal benefits. Non-career employees are temporary workers who do not receive the same employee 

benefits as career employees. See United States Postal Service, Office of Inspector General (OIG), Report No. 19POG001SAT000-R20, 

Effectiveness of the Postal Service’s Efforts to Reduce Non-Career Employee Turnover, February 12, 2020, at 4, available at 

https://www.uspsoig.gov/sites/default/files/document-library-files/2020/19POG001SAT000-R20.pdf.

170 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.

171 United States Postal Service, Airmail: A Brief History, March 2018, at 4-5, available at https://about.usps.com/who-we-are/postalhistory/airmail.pdf.

172 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/document-library-files/2020/20-144-R20.pdf (OIG 

Report No. 20-144-R20).

173 Docket No. ACR2018, Responses of the United States Postal Service to Questions 1-9 of Chairman’s Information Request No. 13, February 21, 

2019, question 2 (Docket No. ACR2018 Response to CHIR No. 13).
Docket No. ACR2021 - 113 -

typically do not have an error margin built into planned processing that may accommodate 

even an hour of late mail.174

In response to the Commission’s inquiries regarding quantification of the impacts of the 

COVID-19 pandemic on transit in FY 2021, the Postal Service maintains that the impacts 

were negative and significant but did not provide quantitative support or identify metrics 

used to determine these impacts. See Response to CHIR No. 1, question 15; see also FY 2021 

ACR at 50. The Postal Service asserts that the COVID-19 pandemic impacted both air and 

surface contract transportation. See FY 2021 ACR at 50. Specifically, the Postal Service’s 

commercial carriers reduced their number of flights, changed their schedules, and used 

airplanes with less capacity, which meant that less volume could be assigned by the Postal 

Service to the Commercial Air Network. See id.; Response to CHIR No. 1, question 15.a.

The Postal Service states that, to mitigate these impacts, it “evaluated existing surface and 

air routings” in order to move mail from the air to the surface network. Response to CHIR 

No. 1, question 16.a. It explains that it used “as need” and “rapid response” surface 

transportation contracts to move additional mail volume or volume that needed to be “off 

loaded,” and suggests that it will continue to use these methods going forward. Id. question 

16.a. Nevertheless, the Postal Service explains that these efforts were hampered by high 

demand for transportation services as well as the fact that mail transportation schedules 

are usually planned in advance. See FY 2021 ACR at 50. The Postal Service asserts that it is 

unable to quantify the impact that these mitigation efforts had on service performance 

results. Response to CHIR No. 1, question 16.b. Going forward, it states that it will monitor 

the efficacy of its attempts to mitigate transportation constraints by using its Supplier 

Performance Dashboard, which includes supplier, route, and trip level data and reportedly 

measures “on-time performance (both departure and arrival) and omitted service.” Id.

question 16.e.

The Postal Service tracks surface trips that arrive more than 4 hours late, referred to as 

Critically Late Trips (CLTs).175 “The CLT is identified by [comparing] the actual arrival scan 

[to the] scheduled arrival scan at the destination facility.”176 The Postal Service stated that 

it uses its Surface Visibility diagnostic tool to identify the route, the trip, and the destination

Area and District. See Docket No. ACR2019 Response to CHIR No. 4, question 30.b.; Docket 

No. ACR2017, January 17 Response to CHIR No. 2, question 7.b.iii.

Figure V-5 illustrates the number of CLTs for First-Class Mail on Highway Contract Routes 

(HCRs) on an annual basis for FY 2019, FY 2020, and FY 2021.

 

174 See Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-21 of Commission Information Request No. 1, January 

15, 2021, question 3.a. (Docket No. ACR2020 Response to CIR No. 1).

175 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. (Docket No. ACR2015 Response to CHIR No. 22).

176 Docket No. ACR2017, Responses of the United States Postal Service to Questions 1-19 of Chairman’s Information Request No. 2, January 17, 

2018, question 7.b.iii. (Docket No. ACR2017, January 17 Response to CHIR No. 2); 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. ACR2019 Response to 

CHIR No. 4).
Docket No. ACR2021 - 114 -

Figure V-5

First-Class Mail CLTs for HCRs, by Area and Nation, FY 2019–FY 2021

Source: Library Reference USPS-FY21-29, Excel file “FY21 FCM Q3 CLT.xlsx,” tab “FY21;” Library Reference USPS-FY20-29, Excel file “FY20 FCM 

Q3 CLT Natl Area Dist.xlsx,” tab “4.c.3 CLT;” Docket No. ACR2019, December 27, 2019, Library Reference USPS-FY19-29, Excel file “FY19 ACR 

FCM Q1-2-4-5 EOY.xlsx,” tab “Q4;” see also Response of the United States Postal Service to Question 1 of Chairman’s Information Request No. 

19, February 24, 2022, question 1 (Response to CHIR No. 19).

The number of nationwide First-Class Mail CLTs for HCRs has fluctuated significantly since 

FY 2019. In FY 2020, despite the constraints of the COVID-19 pandemic, the number of 

these CLTs was approximately half of the number observed in FY 2019, which the Postal 

Service attributed to its focus on ensuring that mailpieces were placed on the dock and/or 

platform in a timely manner for loading on to trucks, thus supporting on-time departure. 

See Docket No. ACR2020, February 4 Response to CHIR No. 6, question 5. The Postal 

Service also reported that it had been working with its suppliers to emphasize on-time 

arrival, loading, and departures. See id. However, as demonstrated above, the number of 

nationwide First-Class Mail CLTs for HCRs increased from 8,955 CLTs in FY 2020 to 30,070 

CLTs in FY 2021, which amounts to a more than three-fold increase. The Eastern District 

reported the most of these CLTs with 6,932, which represents approximately 23.1 percent 

of the national total. The Capital Metro area also experienced a substantial number of these 

CLTs with 6,329, which amounts to approximately 21.0 percent of the national total. In 

attempting to explain the significant increase in these CLTs, the Postal Service pointed 

generally to the increases in each CLT cause (i.e., contractor-caused, Postal Service-caused,

and caused by outside factors). Response to CHIR No. 9, question 2.

Capital

Metro Eastern GreatLakes Northeast Pacific Southern Western NationalTotal

FY 2019 Total 2,523 3,169 2,715 2,636 1,012 2,127 2,852 17,034

FY 2020 Total 1,074 1,283 1,770 1,257 699 1,251 1,621 8,955

FY 2021 Total 6,329 6,932 3,235 4,025 1,231 4,949 3,369 30,070

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

CLTs

FY 2019 Total FY 2020 Total FY 2021 Total
Docket No. ACR2021 - 115 -

Figure V-6 shows the number of total CLTs for all products, disaggregated by cause for 

FY 2020 and FY 2021.

177

Figure V-6

Total CLTS, by Responsible Party, FY 2020–FY 2021

Source: Response to CHIR No. 1, question 28, Excel file “ChIR.1.Q.28.Critical late trips.”

Total CLTS increased substantially between FY 2020 and FY 2021 for all causes. 

Contractor-caused CLTs increased from 145,246 in FY 2020 to 331,808 in FY 2021, which 

amounts to an increase of 128.4 percent. CLTs caused by outside factors (e.g., weather 

delays) increased from 38,866 in FY 2020 to 77,210 in FY 2021, which represents an 

increase of 98.7 percent. Finally, CLTs related to Postal Service-caused issues increased 

from 88,206 in FY 2020 to 218,400 in FY 2021, which amounts to an increase of 147.6 

percent.

 

177 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. Response to CHIR No. 1, question 28.a. 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.” See Response to CHIR No. 9, question 2, Excel file “ChIR.9 

Q2_Late Trip Reasons FY21 vs FY20.” CLTs designated as caused by outside forces are those due to “traffic, weather, construction, and 

accidents.” See id. The Postal Service does not define what specific incidents constitute contractor failures. See id.

145,246

38,866

88,206

272,318

331,808

77,210

218,400

627,418

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Contractor Outside USPS Total

CLTs

FY 2020 FY 2021
Docket No. ACR2021 - 116 -

Table V-1 presents the distribution of causes as a percent of total annual CLTs for FY 2020 

and FY 2021.

Table V-1

Total CLTS and Proportional Representation, by Responsible Party, FY 2020–FY 2021

Cause FY 2020 % of FY 2020 Total FY 2021 % of FY 2021 Total

Contractor 145,246 53.3% 331,808 52.9%

Outside 38,866 14.3% 77,210 12.3%

Postal Service 88,206 32.4% 218,400 34.8%

Total 272,318 627,418

Source: Response to CHIR No. 1, question 28, Excel file “ChIR.1.Q.28.Critical late trips.”

These data illustrate that the distribution of CLT causes remained relatively consistent 

between FY 2020 and FY 2021.

In the FY 2020 ACD, the Commission recommended that the Postal Service develop a 

metric to determine whether a late trip was caused by delays specific to moving mail 

between processing facilities rather than one occurring during processing operations. See

FY 2020 ACD at 114. In response, the Postal Service now states that “Surface Visibility 

(SVweb) and Informed Visibility (IV) are both referenced to monitor supplier on-time 

performance, Postal on-time performance, and service performance by lane.” Response to 

CHIR No. 11, question 15. According to the Postal Service, it now tracks and evaluates a 

given CLT by whether it was caused by suppliers, Postal Service processing issues, or 

events outside both parties’ control (such as inclement weather) for the audited period, as 

shown above. See Response to CHIR No. 1, question 28. 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. 11, question 14.

The Postal Service states that it attempted to remediate CLTs caused by its own processing 

failures by, as stated above, hiring more employees, acquiring more space, installing more 

package sorting machines, and creating more surface transfer centers (STCs). See Response 

to CHIR No. 1, question 28.b.

In terms of CLTs caused by contractors, the Postal Service states that it “continues to 

nationally utilize the ‘5 Step’ process to address poor performing contract suppliers.” Id.

For delays caused by contract truck drivers, the Postal Service requires the officer that is 

responsible for administering the contract (Administrative Official) to take progressive 

corrective actions against an underperforming supplier. See Docket No. ACR2017, January 

17 Response to CHIR No. 2, question 7.b.i.; Docket No. ACR2015 Response to CHIR No. 22, 

question 12.b. In the FY 2020 ACD, the Commission encouraged the Postal Service to 

ensure that Administrative Officials adhere to the established process of taking progressive 

corrective actions against an underperforming supplier and document such actions as they 

occur. FY 2020 ACD at 116. The Postal Service states that the Surface Logistics department, 
Docket No. ACR2021 - 117 -

with oversight provided by the Regional/Division Logistics Directors, is responsible for 

ensuring that Administrative Officials follow the appropriate due diligence process.

Response to CHIR No. 1, question 29.a. In January 2022, the Postal Service reissued the 

relevant directives instructing Administrative Officials to follow the current established 

processes, with mandatory certification to be completed by the end of that month. Id.

question 29.b. Additionally, it states that, beginning in January 2021, Administrative 

Officials began using the ServiceNow tool, which is referred to as the Surface 

Transportation Automated Forms (STAF) application,178 to document and track poorly 

performing suppliers. Response to CHIR No. 11, question 15. The Postal Service also states 

that it continues to evaluate the viability of including liquidated damages clauses in its 

contracts with suppliers related to CLTs. Response to CHIR No. 1, question 29.d.

(3) Mail Mix Changes

In addition to the Postal Service’s reduced employee availability and stressed 

transportation network, the Postal Service states that it received an unprecedented level of 

packages during the peak season of FY 2021, which it asserts contributed to decreased 

Market Dominant service performance during the peak season and subsequent months.

FY 2021 ACR at 49-50; Response to CHIR No. 1, question 17.a.-b. The Postal Service 

previously explained that, 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.

179 It asserts that a backlog arose because 

package-shaped volumes were inducted faster than they could be processed given the lack 

of staff and processing capacity, and that gridlock occurred due to a lack of space to stage 

those backlogged volumes. See Response to CHIR No. 1, question 17.a. Further, the Postal 

Service contends that the lack of space led to other disruptions such as crowded staging 

areas and longer wait times for drop shipments. See id. The Postal Service adds that 

“[m]any facilities were unable to maintain First-In-First-Out (FIFO) order, leading to 

increased cycle time and, by extension, diminished service performance.” See id.

Offloads from private companies further strained the limited resources of the Postal 

Service. The Postal Service explains that the surge in package volume also affected private 

delivery companies, many of whom instituted volume capacity controls, which resulted in 

substantial package volume being offloaded to the Postal Service. FY 2021 ACR at 49-50. 

According to the Postal Service, this created additional gridlock and backlogs. Id. However, 

the Postal Service does not have specific information on how many packages were 

offloaded by private companies. Response to CHIR No. 1, question 27.

 

178 See United States Postal Service, Office of Inspector General, Report No. 21-116-R22, Trips Operating More Than Four Hours Late, November 

8, 2021, at 1, available at https://www.uspsoig.gov/sites/default/files/document-library-files/2021/21-116-R22.pdf (OIG Report No. 21-116-

R22).

179 See Docket No. ACR2020 Response to CIR No. 1, question 3.a.; Docket No. ACR2020, Responses of the United States Postal Service to 

Questions 1-26 of Chairman’s Information Request No. 3, January 22, 2021, question 22.a. (Docket No. ACR2020 Response to CHIR No. 3).
Docket No. ACR2021 - 118 -

FigureV-7 shows the delayed inventory by month for FY 2021.

180

Figure V-7

Delayed Inventory, by Month, FY 2021

Source: Response to CHIR No. 1, question 17.b.

The delayed inventory for Market Dominant products varied considerably during FY 2021. 

Quarter 1 experienced the most delayed inventory, with 2.265 billion delayed First-Class 

Letters and Flats, 2.465 billion pieces of delayed USPS Marketing Mail, and 270.68 million 

delayed Periodicals. The month of October was the most challenging for First-Class Letters 

and Flats with approximately 989.54 million delayed pieces, while December was the most 

challenging month for USPS Marketing Mail and Periodicals with 967.41 million and 108.80 

million delayed pieces, respectively.

The Postal Service explains that it took several steps to increase peak season capacity and 

handle its larger package volumes. FY 2021 ACR at 49. Specifically, it asserts that it: (1) 

hired additional employees to improve timely processing and dispatch; (2) acquired longterm and peak season annexes to create additional space and allow for more efficient 

management of mail volumes; and (3) added more package/bundle processing machines, 

 

180 “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.” Response of the United States Postal 

Service to Question 1 of Chairman’s Information Request No. 22, February 28, 2022, question 1.

967.41 989.54 

108.80 

 -

 200

 400

 600

 800

 1,000

 1,200

Delayed Invetory (in Millions)

First-Class Letters & Flats Marketing Mail Periodicals
Docket No. ACR2021 - 119 -

which allowed the Postal Service to process more packages at a time and at a faster rate, 

thus allowing workhours to be reallocated for other purposes. Response to CHIR No. 1, 

question 18.a. According to the Postal Service, these changes occurred in the second half of 

FY 2021, leading to increased service performance over that period. Id. question 18.a.-b.

The Postal Service states that, going forward, it intends to “continue to assess staffing and 

equipment needs,” realign its facilities and processing capacity to reflect the changing mail 

mix, and “reevaluate mail flows and identify opportunities for simplification.” Id. question 

18.c. The Postal Service expects that these efforts will increase service performance, and 

intends to monitor employee availability, equipment needs, and the network redesign in 

order to ensure the efficacy of its plans. Id. question 18.d.-e.

In addition to increased package volumes, after the onset of the COVID-19 pandemic, there 

were surges in volumes for Political Mail and Election Mail,

181 and the Postal Service 

observed “[c]ollectively, these increases in volumes, coupled with decreased employee 

availability, led to competing goals of finalizing mail on time and getting it on a limited 

transportation network” across the nation. See Docket No. ACR2020 Response to CIR No. 1, 

question 20.a., c. Throughout FY 2020 and continuing into FY 2021, the Postal Service 

stated that it strived to prioritize delivery of Political Mail and Election Mail. See Library 

Reference USPS-FY21-17, at 3, 35 (FY 2021 Annual Report). The Commission discussed this 

issue in detail in its FY 2020 ACD. See FY 2020 ACD at 134-39. The post-election reports 

released by the Postal Service and the OIG detail the additional resources devoted—such as 

extra transportation and overtime—and extraordinary measures taken by the Postal 

Service to deliver Political Mail and Election Mail for the 2020 General Election held in FY 

2021 Quarter 1 on November 3, 2020, and the two run-off elections for the United States 

Senate in Georgia held in FY 2021 Quarter 2 on January 5, 2021.182

Table V-2 presents Political Mail and Election Mail volumes by month for FY 2021.

 

181 The Commission uses the term “Election Mail” to refer to any item mailed to or from authorized election officials that enables citizens to 

participate in the voting process, such as balloting materials, voter registration cards, absentee applications, and polling place notifications, and 

uses the term “Political Mail” to refer to any item mailed for campaign purposes by a registered political candidate, campaign committee or 

committee of a political party, political action committee, or organization engaging in issue advocacy or voter mobilization. See United States 

Postal Service, Postal Bulletin No. 22539, February 13, 2020, at 4, available at https://about.usps.com/postalbulletin/2020/pb22539/pb22539.pdf (Postal Bulletin No. 22539).

182 United States Postal Service, 2020 Post-Election Analysis: Delivering the Nation’s Election Mail in an Extraordinary Year, updated January 12, 

2021, at 19, available at https://about.usps.com/newsroom/national-releases/2021/usps_postelectionanalysis_1-12-21_georgia.pdf (Postal 

Service Post-Election Report); United States Postal Service, Office of Inspector General, Report No. 20-318-R21, Service Performance of Election 

and Political Mail During the November 2020 General Election, March 5, 2021, at 1-4, 7, available at 

https://www.uspsoig.gov/sites/default/files/document-library-files/2021/20-318-R21.pdf (OIG Report No. 20-318-R21). The Postal Service uses 

the term “extraordinary measures” to refer to processes it used “beyond [its] normal operations” such as “expedited handling, extra deliveries, 

and special pickups,” to accelerate the delivery of Election Mail, effective October 26, 2020. See Docket No. ACR2020, February 4 Response to 

CHIR No. 6, question 11.b., PDF file “Extraordinary Measures Memorandum.pdf,” at 2 (Extraordinary Measures Mem.).
Docket No. ACR2021 - 120 -

Table V-2

Political Mail and Election Mail, by Month, FY 2021

Month Political Mail % of Total Election Mail % of Total

October 2,131,550,610 77.2% 141,492,831 52.0%

November 78,902,974 2.9% 2,522,801 0.9%

December 178,138,127 6.5% 2,357,429 0.9%

January 30,938,790 1.1% 6,341,150 2.3%

February 19,636,599 0.7% 6,323,678 2.3%

March 32,416,745 1.2% 5,893,626 2.2%

April 40,468,758 1.5% 9,063,548 3.3%

May 51,659,773 1.9% 6,081,588 2.2%

June 61,288,255 2.2% 3,390,548 1.2%

July 32,179,749 1.2% 9,496,980 3.5%

August 45,896,991 1.7% 68,634,587 25.2%

September 56,897,683 2.1% 10,627,072 3.9%

Total 2,759,975,054 272,225,838

Source: Response to CHIR No. 1, question 21.

The vast majority of Political Mail and Election Mail was delivered in October 2020 (the 

first quarter of FY 2021). During October, the Postal Service delivered approximately 2.1 

billion pieces of Political Mail and 141.5 million pieces of Election Mail. These volumes 

represent approximately 77.2 percent and 52.0 percent of the annual totals, respectively.

More information on the measures taken by the Postal Service to deliver Political Mail and 

Election Mail in FY 2021 is available in both the Postal Service’s and the OIG’s post-election 

analyses. See Postal Service Post-Election Report; OIG Report No. 20-318-R21. The 

Commission will publish a separate discussion related to the Postal Service’s preparations

for the November 2022 primary and general elections, which the Postal Service described 

in its FY 2020 Annual Performance Report and FY 2021 Annual Performance Plan. See, e.g.,

FY 2020 Analysis at 23.

c. 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 2021 are 

organized by topic, summarized, and responded to below.

Significance of the COVID-19 pandemic. In its comments, NAPM commends the Postal 

Service for improving service performance in the latter part of FY 2021. NAPM Comments 

at 13. On the other hand, Lexington expresses concern that the Postal Service’s ACR “does 

not address in a full, more forthright manner the historically low mail service standards 

that occurred in December 2020-January 2021” and asserts that the Postal Service 
Docket No. ACR2021 - 121 -

minimizes the impact of the delays on its customers.183 Lexington also contends that the 

Postal Service’s ACR offered a “passing reference to ‘package volume’ as a reason for those 

mail delays,” and that the impact of package volume on service performance during FY 

2021 “merits a full-fledged, exhaustive, and independent investigation.” LI Comments at 4.

The Commission appreciates the improvement in service performance that occurred in the 

second half of FY 2021 but, as discussed in more detail in Section A.2.d., infra, notes that 

seasonal improvement in service performance over the latter half of fiscal years has 

historically been commonplace and does not necessarily mean that such improvement will 

continue into the next year. In terms of Lexington’s remarks, although numerous CHIRs 

were issued to address the lack of detail in the Postal Service’s ACR, the Commission 

reiterates its expectation that the Postal Service file relevant quantitative and/or 

qualitative support for its principal assertions with its ACR filing. Additional Commission 

analysis appears in Section V.A.2.d., infra.

FY 2021 Service Performance Targets. The Public Representative notes that, because the 

Postal Service did not file its FY 2021 service performance targets until the third quarter of 

FY 2021, there was insufficient time for a robust review of the targets by the Commission 

and the public. PR Comments at 34. 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 33. 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. Id. He states that the Postal Service has not 

explained the purpose of the new targets, nor “provided a clear explanation or basis or 

reasons for the specific targets it has chosen,” thus making it difficult to assess the 

significance of achieving or failing to achieve a given target. Id. at 34.

The Postal Service responds that it sought to set realistic targets using actual historical 

data, but that the COVID-19 pandemic created unforeseen challenges. Postal Service Reply 

Comments at 17. It also reiterates that it set the FY 2021 targets with an expectation that 

they would be raised as the 10-Year Strategic Plan was implemented. Id. at 17-18.

NPPC asserts that, by unilaterally setting service performance targets, the Postal Service 

inherently assumes that it will not achieve its service standards 100 percent of the time. 

NPPC Comments at 20. According to NPPC, the Postal Service “deserves no credit for 

achieving ‘targets’ that are less than the actual service standards,” and instead should be 

tasked with meeting the service standard itself. Id. The Postal Service responds that “the 

practicalities of delivering billions of pieces of mail across the country six days a week 

throughout the year necessarily means that not every mailpiece is going to be delivered in 

accordance with the established service standards,” necessitating the use of targets to 

measure compliance under 39 U.S.C. § 3653. Postal Service Reply Comments at 19-20.

 

183 Comments of the Lexington Institute, January 31, 2022 (LI Comments).
Docket No. ACR2021 - 122 -

NAPM commends the Postal Service for establishing higher interim service performance 

targets for certain products for FY 2022. NAPM Comments at 14.

The Commission acknowledges the difficulties in setting targets that the Postal Service 

faced in FY 2021 due to the COVID-19 pandemic. However, the Commission expects the 

Postal Service to 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.

Additionally, the Commission questions the Postal Service’s strategy of setting targets for 

FY 2021 service performance after nearly half of FY 2021 had already elapsed and notes 

that the Commission rules do not contemplate that the Postal Service would set its targets 

mid-year. The Postal Service Reform Act of 2022 requires the Postal Service to provide its 

targets to the Commission no later than 60 days after the start of each fiscal year.184 The 

Commission expects that, going forward, the Postal Service will identify changes to its 

service performance targets 30 days prior to their implementation. See 39 C.F.R. § 3055.5. 

Consistent with precedent, the Commission reserves the opportunity to initiate a 

rulemaking, if appropriate.

185

The Commission points out, in regard to NPPC’s comments, that the argument 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.186

Service Performance Outlook for FY 2022. The Public Representative asserts that, given the 

ongoing presence of the COVID-19 pandemic, the Postal Service will continue to face 

serious challenges resulting from employee absenteeism, transportation constraints, 

elevated parcel volume, and restricted access to postal facilities. PR Comments at 60. He 

states that, “[f]or service to improve, in addition to its ongoing service performance 

improvement efforts, it will be necessary to build on its FY 2020 and FY 2021 efforts to 

meet the challenges of the pandemic.” Id.

The Postal Service acknowledges that it has long-standing service performance challenges 

and points to its 10-Year Strategic Plan as an effort to further service performance not only 

in the context of the COVID-19 pandemic but also “for the long term.” Postal Service Reply 

Comments at 14-15.

The Commission generally concurs with the Public Representative that, given the ongoing 

COVID-19 pandemic and the recent development of new variants, even greater efforts by 

 

184 See Postal Service Reform Act of 2022, H.R. 3076, 117th Cong. § 201 (2022).

185 See 39 C.F.R. § 3055.5; see also Order No. 2512 at 11, n. 20; Order No. 465 at 26.

186 See Am. Postal Workers Union, AFL-CIO, 842 F.3d at 718.
Docket No. ACR2021 - 123 -

the Postal Service will be needed if it is to improve service performance in the current 

national environment. The Commission will closely monitor the Postal Service’s efforts to 

implement its 10-Year Strategic Plan and the consequent impacts that these efforts have on 

service performance going forward.

Access to Postal Service Information and Support. PostCom states that the Postal Service 

should share more unedited information about service performance collected through the 

Postal Service’s IV platform, suggesting that open access to this information would benefit 

all parties. PostCom Comments at 11.

NAPM states that its members often reach out to the Postal Service to resolve discrete 

service issues, with limited success. NAPM Comments at 15. NAPM asserts that:

With all the data, visibility, tools and resources the USPS has in place 

today, it is hard to understand the inability to ‘see’ where mailpieces 

have moved within the postal system and what may be causing 

performance issues – or in some cases where a mailing has ended up 

when the customer is seeing no delivery scan data.

Id. To this end, NAPM recommends that the Postal Service explore improving its customer 

support in the area of service performance. Id. at 16.

The Commission generally encourages open data initiatives as a means of increasing 

transparency and accountability.187 The Commission encourages the Postal Service to 

consider the feasibility of PostCom’s suggestion as a potential path to mitigate service 

issues, but recognizes the challenges faced by the Postal Service in developing a system that 

appropriately safeguards its customer and employee identities and minimizes its 

administrative burden.

The Commission also encourages the Postal Service to explore alternative methods of 

providing customer support for service performance issues.

d. Commission Analysis of Overall FY 2021 Impacts and 

FY 2022 Outlook

The Commission reiterates its appreciation for the tremendous efforts of the frontline 

Postal Service workers to provide continuous mail service to the nation during the COVID19 pandemic. Frontline Postal Service workers continue to perform essential services that 

allow millions of Americans to minimize their exposure to COVID-19 by remaining at home.

As described above, the COVID-19 pandemic in FY 2021 presented serious service 

performance challenges for the Postal Service. The three primary challenges—reduced 

 

187 See, e.g., Docket No. PI2022-2, Notice and Order Providing an Opportunity to Comment on the Service Performance Dashboard, February 10, 

2022, at 3-4 (Order No. 6104).
Docket No. ACR2021 - 124 -

employee availability, contract transportation disruptions, and changes in the mail mix—

are likely to persist into FY 2022.

Each of these challenges, which are discussed separately above, had significant impacts on 

service performance. The Commission observes that the combination of all effects together 

increased the extent and duration of the impact. The interconnectivity of the mail network 

is sensitive to internal and external disruptions. For instance, the Postal Service explains 

that certain “hot spots” in one geographic area can impact downstream operations in other 

facilities. See Response to CHIR No. 11, question 16.a. This appears to be particularly 

applicable to transportation challenges. Due to this interconnectivity, the Postal Service 

must ensure that it thoroughly examines the service performance impact of adapting 

operations to respond to the challenges posed by the COVID-19 pandemic. The Commission 

has taken this into account with respect to formulating its recommendations and 

directives.

Despite these challenges, the Postal Service asserts that, “as the effects of the pandemic on 

transportation and absenteeism waned somewhat in the later part of FY 2021, and as the 

Postal Service worked to stabilize and improve operations and address the substantial 

increase in package volume, overall service performance for Market Dominant products 

improved” in the second half of FY 2021. See FY 2021 ACR at 51-52. The Commission notes 

that this seasonal improvement in service performance is not a phenomenon unique to 

FY 2021. With the exception of the extraordinary circumstances of FY 2020 (when COVID19 appeared in the United States during Quarter 2), and as explained in prior ACDs, service 

performance results during the second half of the fiscal year (Quarters 3 and 4) generally 

exceed results observed for the first half of the fiscal year (Quarters 1 and 2). See, e.g.,

FY 2019 ACD at 105.

However, the Postal Service considers the improvements seen in the second half of FY 2021 

to be representative of “improvements in annual service performance trends,” rather than 

an effect of seasonal variation. Response to CHIR No. 2, question 24.a. In support, the Postal 

Service points to the fact that service performance in Quarter 4 of FY 2021 improved 

relative not only to Quarters 1 and 2 of FY 2021, but to Quarter 4 of FY 2020 as well. Id.

question 24.b. According to the Postal Service, because both FY 2020 and FY 2021 occurred 

during the COVID-19 pandemic, the explanation for this year-over-year growth is most 

likely its service improvement strategies. Id.

The Commission recognizes the service improvement seen in Quarter 4 of FY 2021. 

Nevertheless, it cautions again that increases in service performance results and decreases 

in failures as the fiscal year progresses is consistent with seasonal trends and does not 

necessarily signify that improvement will be maintained into the next fiscal year. This is 

particularly true in FY 2021, where, according to the Postal Service’s own admission, the 

second half of the year coincided with a relative easing of the effects of the COVID-19 

pandemic. See FY 2021 ACR at 51-52.
Docket No. ACR2021 - 125 -

The Postal Service expects on-time service performance for each Market Dominant product 

to meet or exceed its applicable service performance target in FY 2022 but observes that 

achievement may be hampered due to continuing COVID-19 pandemic-related impacts and 

uncertainties such as employee availability and contract transportation constraints. See

Response to CHIR No. 6, question 15.f. As detailed in Section V.A.4., infra, multiple products 

performed below their targets for years prior to the COVID-19 pandemic, and generally 

results have decreased over time. The Commission recommends that the Postal Service 

carefully evaluate which of its long-standing efforts are the most impactful on improving 

service performance results.

The Postal Service is required to include in its ACR filing an explanation of why each service 

performance target is not met and a plan describing the steps that have been or will be 

taken to ensure that the product achieves the target. See 39 C.F.R. § 3055.2(h); see also 39 

U.S.C. § 3652(d), (e). Additionally, the Postal Service must provide a more detailed analysis 

regarding its failures to achieve stated goals for on-time delivery standards if the 

Commission observed and commented upon the same matter in the ACD for the previous 

fiscal year. See 39 C.F.R. § 3050.20(c). Last year, the Commission noted that “the Postal 

Service’s FY 2020 ACR filing lacked quantitative or qualitative support for its generalized 

assertions regarding the impact of the COVID-19 pandemic and the steps taken to restore 

service performance.” FY 2020 ACD at 145. In fact, the Commission noted that “[o]verall, 

more information regarding the nature and extent of service performance issues 

experienced in FY 2020 was obtained via responses to the CIR and the CHIRs than through 

the Postal Service’s FY 2020 ACR filing.” Id. (footnote omitted). The Commission stated its 

expectation that the Postal Service “be attentive to filing relevant quantitative and/or 

qualitative support for its principal assertions with its FY 2021 ACR filing” in order to 

“improve regulatory efficiency and transparency for the general public.” Id. at 146. 

Although the Commission commends the Postal Service for the additional information it 

provided regarding Periodicals, in general, the Commission believes that the Postal Service 

again fell short in providing quantitative and qualitative support for its generalized 

assertions regarding the service performance challenges it faced in FY 2021, the steps it 

took to attempt to combat these challenges, and the plans it will initiate to resolve its 

service performance difficulties in the future. The Commission expects that Postal Service 

will be increasingly attentive to filing relevant quantitative and/or qualitative support for its 

principal assertions with its FY 2022 ACR filing.

In the FY 2020 ACD, the Commission found that the Postal Service had undertaken several 

operational initiatives—particularly one cutting down on “late and extra trips”—that had a 

pronounced impact on service performance. See FY 2020 ACD at 148. The Commission also 

determined that this initiative was implemented without undertaking sufficient advance 

study or analysis. Id. at 149. As a result, the Commission directed the Postal Service to “file 

with the Commission a service performance impact analysis for initiatives that are planned 

for implementation on or before the issuance of the next ACD (March 29, 2022) and are 

reasonably foreseeable to impact service performance results.” Id. at 149-50 (footnote 

omitted). On June 4, 2021, the Postal Service filed its Response, informing the Commission 

that it intended to implement a plan that would authorize the Surface Planner Group—the 
Docket No. ACR2021 - 126 -

entity tasked with deciding which supplier to use when extra trips are requested—to deny 

requests for extra trips when a trip would either not be service standard responsive or 

would transport only a very small mail volume.188 The Postal Service also filed a motion to 

clarify the preliminary injunction regarding late and extra trips issued in the U.S. District 

Court for the District of Columbia, asking the court to confirm that it was not prohibited 

from denying extra trips in these specific circumstances.189 The court confirmed that its 

injunction did not prohibit the Postal Service’s proposed actions. Civ. No. 20-2340 EGS, 

Memorandum Opinion and Order at 13-15. The Postal Service implemented this plan on 

November 1, 2021 (after the conclusion of FY 2021), and as of November 22, 2021, had 

only denied five of a possible 3,518 extra trips requested.190 The Commission commends the 

Postal Service for considering the service performance impact of its plan prior to 

implementation and encourages it to continue analyzing the service performance impact of 

future initiatives prior to implementation.

Beginning in FY 2020 and continuing into FY 2021, the Postal Service reorganized its 

operations into separate functions: “retail and delivery on one hand and processing and 

logistics on the other.” See FY 2020 ACR at 39. The Postal Service believes this 

reorganization positively impacted service performance in FY 2021. Response to CHIR No. 

6, question 12. Although it cannot quantify this impact, the Postal Service explains that the 

reorganization allowed the Retail and Delivery Operations unit to develop a “Rapid 

Response process” that allowed the Postal Service to “quickly respond to service impacts 

such [as] customer service backlogs or delivery issues” that previously could have taken 3 

to 6 days to resolve. Id. question 12.b. The Postal Service also explains that the Logistics 

and Processing Operations unit191 was able to implement a national holiday plan within 

days (rather than weeks) of development. Id. The Commission commends the Postal Service 

for these improvements and encourages the Postal Service to continue to leverage both 

efficient advance planning and its Rapid Response process to address service issues before and 

after they occur.

Beginning in FY 2020 and continuing into FY 2021, the Postal Service also divided its legacy 

reporting Areas into new areas and districts (for Retail and Delivery Operations) and into 

new regions and divisions (for Logistics and Processing Operations).192 The Postal Service 

illustrates the geographic organization of each unit in the Postal Service’s FY 2021 Annual 

 

188 See Docket No. ACR2020, Response of the United States Postal Service to Commission Request for Additional Information in the FY 2020 

Annual Compliance Determination, June 4, 2021, at 2-4.

189 See State of New York, et al. v. Joseph R. Biden, Jr., et al., Civ. No. 20-2340 EGS, Memorandum Opinion and Order, at 1-4 (D.D.C. August 23,

2021) (Civ. No. 20-2340 EGS, Memorandum Opinion and Order).

190 Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-6 of Chairman’s Information Request No. 33, November 

29, 2021, question 5.

191 Within the Logistics and Processing Operations business unit, the Postal Service created a so-called “Headquarters In-Plant Support Letter 

and Flat, Planning and Implementation group,” discussed in more detail in the FY 2020 ACD. See FY 2020 ACD at 141, 146-47, 199-200. The 

Postal Service states that the group met its goal of “creat[ing] site-specific achievable operating plans for letters and flats” and began efforts to 

adjust reporting standards and “strategically stabiliz[e] all letter and flat-shaped products.” Response to CHIR No. 6, question 13.a. The Postal 

Service explains that, because the site-specific operation plans did not go into effect until FY 2022, it does not have quantitative support to 

show the impact of the plans. Id. question 13.b.

192 Library Reference USPS-FY20-17, December 29, 2020, at 16-17 (FY 2020 Annual Report).
Docket No. ACR2021 - 127 -

Report to Congress. FY 2021 Annual Report at 16-17. It asserts that this geographic 

reorganization improved service performance, although it explains that “it is not possible 

to isolate only the portion of the improvement that would be related solely to the 

redivision from the legacy Areas to new regions and divisions.” Response to CHIR No. 6, 

question 14. Although it cannot quantify this impact, the Postal Service explains that the 

geographic reorganization streamlined internal communication processes, which enabled a 

revised holiday operating plan approved by senior leadership to be communicated via 

division directors to Plant Managers for rapid and consistent execution. See id. at 14.b. The 

Commission commends the Postal Service for these improvements and encourages the Postal 

Service to continue to leverage its streamlined communication processes before and during 

implementation of future initiatives to ensure messaging between the executive level, field 

managers, and personnel across the nation is timely, clear, and consistent.

e. Commission Directives

Of the 27 Market Dominant products/categories measured, 21 products/categories (more 

than 77 percent) did not meet their targets in FY 2021, and some were substantially below 

the applicable target. See Figure V-1, supra. Moreover, of the 25 measured Market 

Dominant products that generated comparable annual results for FY 2020 and FY 2021,

193

service performance results for 21 products/categories were lower than in FY 2020. This 

systemic and continued decline in service performance results is troubling. As described 

above, the COVID-19 pandemic was an external factor contributing to the decline in service 

performance to which the Postal Service has made reasonable efforts to respond. The 

Commission will 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.

Moreover, as explained above, though the Commission recognizes the COVID-19 pandemicrelated difficulties faced by the Postal Service in setting on-time service performance 

targets, it expects the Postal Service to identify targets that are both operationally realistic 

and promote continuous improvement. Additionally, greater clarity from the Postal Service 

regarding the purpose and basis behind targets is beneficial for all parties. During FY 2021, 

the Postal Service initiated its 10-Year Strategic Plan,194 which it designed to address both 

the near-term challenges posed by the COVID-19 pandemic and its long-standing service 

performance challenges. See Postal Service Reply Comments at 14-15. In conjunction with 

the implementation of its 10-Year Strategic Plan, the Postal Service stated that over time, it 

aims to raise its service performance targets to 95 percent on-time for all Market Dominant 

products and categories. See id. at 15, 18. Therefore, at the time of filing the FY 2022 ACR, if 

the Postal Service maintains its current goal to “transition over approximately the next two to 

three years” all Market Dominant product service performance targets to 95 percent on-time 

 

193 Note that In FY 2021, internal Service Performance Measurement (SPM) replaced the International Mail Measurement System (IMMS) as the 

official system of measurement and reporting for Outbound Single-Piece International and Inbound Letter Post. As a result, service 

performance results for these two products in FY 2021 are not directly comparable to results from previous fiscal years.

194 United States Postal Service, Delivering for America: Our Vision and Ten-Year Plan to Achieve Financial Sustainability and Service Excellence, 

March 23, 2021, available at https://about.usps.com/what/strategic-plans/delivering-for-america/assets/USPS_Delivering-For-America.pdf.
Docket No. ACR2021 - 128 -

(see Response to CHIR No. 18, question 1.a.i.1.), the Commission directs the Postal Service to 

include as a part of its FY 2022 ACR filing a specific plan for moving service performance 

targets from their current interim levels to 95 percent for each Market Dominant product. 

This plan should include a proposed timeline for setting interim targets and key criteria for 

each product that the Postal Service uses to assess what those interim targets will be. In 

developing this plan, the Postal Service should balance the interests of setting realistically 

achievable interim targets with its stated goal of moving service performance targets up to 95 

percent over “approximately the next two to three years.” If the Postal Service does not 

maintain this goal at the time of filing the FY 2022 ACR, the Commission directs the Postal 

Service to identify its revised goal and the rationale for the change as a part of its FY 2022 

ACR filing.

FY 2021 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-8 identifies the systems used by the Postal Service during 

FY 2021 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.”
Docket No. ACR2021 - 129 -

Figure V-8

Service Performance Measurement Systems, FY 2021

Source: Library Reference USPS-FY21-29, PDF file "FY21-29 Methodologies Report.pdf" (FY 2021 Methodologies Report); Response to CHIR No. 

9, question 5.

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.

195 Accordingly, service 

performance results for these mailpieces are comparable for FY 2019 through FY 2021. 

 

195 See Docket No. PI2015-1, Order Approving Use of Internal Measurements 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 2021 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.
Docket No. ACR2021 - 130 -

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 started 

to be measured by Internal SPM.196

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 2021 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.197 Last Mile measures the time between the 

last processing operation and final delivery. FY 2021 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. See Order No. 4697 at 67. The Postal 

Service reports that the COVID-19 pandemic affected several of the 29 audit measures—

Audit Measures 2, 11, and 15.198 The Postal Service explains that it fell short on Measure 2 

(that carrier sampling weekly compliance rates should exceed 80 percent for most 

districts) because of the significant impacts of the COVID-19 pandemic, including the 

unprecedented parcel volumes. FY 2021 Q1 Audit Response at 3. The Postal Service 

explains that it will improve First Mile compliance rates through training, biweekly 

meetings, and IV monitoring. Id. For Measures 11 and 15 (low rates of Last Mile imputed 

volumes and low margins of error for reporting/processing duration, respectively), the 

Postal Service states that shortfalls were largely caused by the decline in mail volume due 

to the COVID-19 pandemic. See, e.g., id. at 4. The Postal Service acknowledges that these 

Measures will remain difficult to achieve until sufficient volume is sent to each District and 

expects that as volume returns to pre-COVID-19 pandemic levels, fewer Districts will 

require imputed data and suffer from high margins of error. See id.

Formerly, the IMMS was used to measure the domestic leg of transit time for international 

First-Class Mail using test mailpieces.199 However, the Commission granted the Postal 

Service’s request to report service performance for First-Class Mail Outbound Single-Piece 

International and Inbound Letter Post based on data generated from Internal SPM, 

beginning in FY 2021; thus, Internal SPM replaced IMMS in FY 2021. See Order No. 5576 at 

10. The Commission specified that the FY 2021 ACR must explain any significant service 

performance discrepancies between the Internal SPM versus the legacy systems and 

 

196 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).

197 FY 2021 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.

198 See United States Postal Service, Transmittal Letter for FY 2021 Q1 Audit Report, Audit Response, and Measured/Unmeasured Volumes

Report, February 26, 2021, PDF file “FY21 Q1 USPS Audit Resp.pdf,” at 3-4 (FY 2021 Q1 Audit Response); United States Postal Service, 

Transmittal Letter for FY 2021 Q2 Audit Report, Audit Response, and Measured/Unmeasured Volumes Report, June 1, 2021, PDF file “FY21 Q2

USPS Audit Resp.pdf,” at 4 (FY 2021 Q2 Audit Response).

199 See Docket No. ACR2020, Library Reference USPS-FY20-29, PDF file “FY20-29 Methodologies Report.pdf,” at 8 (FY 2020 Methodologies 

Report).
Docket No. ACR2021 - 131 -

propose a method of comparing Internal SPM versus legacy service performance data, 

where appropriate. See id. at 11. In its Response to CHIR No. 2, the Postal Service explained 

that the performance scores produced by the legacy sampling process and the SPM 

measurement system are statistically valid; however, if both systems were used to measure 

the same time period, then the results would not align precisely. See Response to CHIR 

No. 2, question 3.a.

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 2021 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.200 PTR 

uses the scan data to track a package from acceptance (start-the-clock) through delivery 

(stop-the-clock). See Docket No. ACR2016, February 17 Response to CHIR No. 16, question 

3.

c. Intelligent Mail Barcode (IMb)

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 IV electronic scan data that can be used to track 

mailpieces as they pass through automated scan operations.201 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-9 displays the percentage of total mailpieces entered into the mailstream that are 

measured by Full-Service IMb for FY 2019 through FY 2021.

 

200 Docket No. ACR2016, Responses of the United States Postal Service to Questions 2-4 and 7-13 of Chairman’s Information Request No. 16, 

February 17, 2017, question 3 (Docket No. ACR2016, February 17 Response to CHIR No. 16).

201 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. ACR2021 - 132 -

Figure V-9

Nationwide Market Dominant Mail Measured by Full-Service IMb,

by Percentage, by Quarter,

FY 2019–FY 2021

Note: BPM Flats is the only Package Services product measured using IMb; the remaining Package Services products are measured using PTR. FY 

2021 Service Performance Report at 19-20.

Source: Response to CHIR No. 1, question 22; Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-38 of 

Chairman’s Information Request No. 1, January 19, 2021, question 34 (Docket No. ACR2020 Response to CHIR No. 1); Docket No. ACR2019, 

Responses of the United States Postal Service to Questions 1-22 of Chairman’s Information Request No. 3, January 21, 2020, question 21

(Docket No. ACR2019 Response to CHIR No. 3); FY 2019 through FY 2021 United States Postal Service Quarterly Service Performance Reports, 

First-Class Mail, USPS Marketing Mail (formerly known as Standard Mail), Periodicals, and Package Service Scores Reports, available at 

https://www.prc.gov/dockets/quarterly-performance.

The percentage of mailpieces measured by IMb has remained relatively consistent since 

FY 2019. The Commission observes that the percentage of mail measured by Full Service 

IMb decreased for both First-Class Mail and Periodicals. Conversely, there was an increase 

in the percentage of BPM Flats measured by IMb. At each quarterly measurement point, the 

Postal Service achieved a higher percentage in FY 2021 relative to the same point in 

FY 2020. 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 such measurements will be. The Commission continues to monitor mailpieces 

0%

20%

40%

60%

80%

100%

FY 2019

Q1

FY 2019

Q2

FY 2019

Q3

FY 2019

Q4

FY 2020

Q1

FY 2020

Q2

FY 2020

Q3

FY 2020

Q4

FY 2021

Q1

FY 2021

Q2

FY 2021

Q3

FY 2021

Q4

First-Class Mail USPS Marketing Mail Periodicals Package Services
Docket No. ACR2021 - 133 -

excluded from measurement.202 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.203

Table V-3 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 2019.

Table V-3

Mail in Measurement and Excluded from Measurement, by Percentage,

FY 2019–FY 2021

Class/Product(s)

Percent of Mail Entered at FullService IMb Prices and Included 

in Measurement

Percent of Mail Processed as FullService IMb, but Excluded from 

Measurement

FY 

2019

FY

2020

FY 

2021

FY 

2019

FY

2020

FY 

2021

First-Class Mail

Presorted

Letters/Postcards 73.75 71.95 66.10 26.25 28.05 33.90

Flats 70.51 66.50 62.20 29.49 33.50 37.80

USPS Marketing Mail

High Density and 

Saturation Letters 77.99 79.87 79.63 22.01 20.13 20.37

High Density and 

Saturation 

Flats/Parcels

65.64 63.92 53.68 34.36 36.08 46.32

Carrier Route 74.70 75.41 72.62 25.30 24.59 27.38

Letters 80.12 81.83 80.47 19.88 18.17 19.53

Flats 75.52 75.45 71.49 24.48 24.55 28.51

Every Door Direct 

Mail–Retail Not Applicable

Parcels Data Not Available

Total USPS Marketing

Mail 78.63 80.00 78.23 21.37 20.00 21.77

Periodicals

In-County Data Not Available Outside County

Package Services

Bound Printed Matter

Flats 49.37 48.05 26.39 50.63 51.95 73.61

Source: Response to CHIR No. 1, question 23; Docket No. ACR2020 Response to CHIR No. 1, question 35; Docket No. ACR2019 

Response to CHIR No. 3, question 22.

 

202 See, e.g., FY 2015 ACD at 99-102; FY 2016 ACD at 96-99; FY 2017 ACD at 103-06; FY 2018 ACD at 133-36; FY 2019 ACD at 98-101; FY 2020 ACD 

at 155-59.

203 See Docket No. PI2016-1, Order Enhancing Service Performance Reporting Requirements and Closing Docket, August 26, 2016, at 28-35 

(Order No. 3490).
Docket No. ACR2021 - 134 -

The percentage of mail entered at Full-Service IMb and included in measurement conveys a 

concerning pattern. There was a decline between FY 2020 and FY 2021 for all products. 

The two largest declines occurred for High Density and Saturation Flats/Parcels and Bound 

Printed Matter Flats, with declines of 10.24 and 21.66 percentage points, respectively.

Figure V-10 displays the top two reasons that a mailpiece was excluded from measurement 

in FY 2021, 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. ACR2021 - 135 -

Figure V-10

Reasons for Mailpiece Exclusions, by Percentage, by Quarter, FY 2021

Source: 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).

The most common reason for mailpiece exclusion for 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 
Docket No. ACR2021 - 136 -

associated with the container.204 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.

For First-Class Mail, the most common reported reason for exclusion was “No Start-theClock” in FY 2021 Quarter 1 and shifted to “Long Haul” in FY 2021 Quarters 2, 3, and 4.205

This was the same pattern—a shifting reason for exclusion from “No Start-the-Clock” to 

“Long Haul” over the course of the year—that occurred during FY 2020. “Long Haul” 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.

For Periodicals and Package Services, the most common reason for mailpiece exclusion was 

reported to be “No Piece Scan,” which occurs when no automation scan is observed for the 

mailpiece.206 The Postal Service excludes these mailpieces from measurement due to 

incomplete data. See FY 2019 ACD at 101.

 

204 FY 2021 Postal Service Q4 Service Performance Report, Excel file “AttachA_ExclusionReasonBreakdown_FY21_Q4.xlsx,” tab “Exclusions.”

205 FY 2021 Postal Service Q4 Service Performance Report, Excel file “AttachA_ExclusionReasonBreakdown_FY21_Q4.xlsx,” tab “Exclusions.”

206 FY 2021 Postal Service Q4 Service Performance Report, Excel file “AttachA_ExclusionReasonBreakdown_FY21_Q4.xlsx,” tab “Exclusions.”
Docket No. ACR2021 - 137 -

Figure V-11

Non-Compliance as an Exclusion Reason, FY 2020–FY 2021

Source: FY 2021 Postal Service Q4 Service Performance Report, Excel file “AttachA_ExclusionReasonBreakdown_FY21_Q4.xlsx,” tab 

“Exclusions;” United States Postal Service, Quarterly Service Performance Report, Quarter 4, November 9, 2020, Excel file 

“AttachA_ExclusionReasonBreakdown_FY20_Q4.xlsx,” tab “Exclusions” (FY 2020 Postal Service Q4 Service Performance Report).

Figure V-11 shows the trend of “Non-Compliant” as an exclusion reason for FY 2020 and FY 

2021. “Non-Compliant” is defined by the Postal Service as “Mail identified as non-compliant 

due to inaccuracies in mail preparation.”207 The Commission observes 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 in these classes may 

be considered non-compliant when they do not meet the requirements for “Full-Service.” 

Response to CHIR No. 16, question 2.a. The Postal Service states that, after conducting an 

investigation, it concluded that a single major mailer contributed approximately 99 percent 

of the non-compliant volumes between February 2021 and September 2021. Id. question 

2.b. The Postal Service explains that this was caused by the mailer using a new Customer 

Registration Identification (CRID) because, when volumes are mailed using a new CRID, the 

volume associated with that CRID is initially placed on a temporary non-compliant status 

so that the Postal Service can evaluate the new mailer’s compliance with Full-Service 

 

207 FY 2021 Postal Service Q4 Service Performance Report, Excel file “AttachA_ExclusionReasonBreakdown_FY21_Q4.xlsx,” tab “Exclusions.”

0%

5%

10%

15%

20%

25%

30%

FY 2020

Q1

FY 2020

 Q2

FY 2020

Q3

FY 2020

Q4

FY 2021

Q1

FY 2021

Q2

FY 2021

Q3

FY 2021

Q4

First-Class Mail USPS Marketing Mail Periodicals Package Services
Docket No. ACR2021 - 138 -

requirements. Id. question 2 a.-b. As a result, the Commission does not expect this issue to 

reoccur in FY 2022 and will continue to monitor exclusion trends going forward.

In its comments, NAPM suggests that “efforts to move more mail into measurement be 

more aggressively pursued,” asserting that “in looking at the percent of mail not in 

measurement and the main reasons behind it for each mail class, the needle has not moved 

much in years, despite the annual review by the Commission and USPS collection and 

reporting of measurement data exclusions.” NAPM Comments at 15-16. The Postal Service 

responds that it already reports to the Commission quarterly on its mail in measurement, 

and “given the extensive data collection and reporting that the Postal Service already 

performs...pursuing additional reporting is unnecessary and likely counter-productive.” 

Postal Service Reply Comments at 20-21.

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. 

Moreover, all products saw a decline between FY 2020 and FY 2021 for their percentages 

of mail entered at Full-Service IMb and included in measurement. The Commission will 

continue to monitor trends in measurement and the reasons for exclusions. The 

Commission recommends that, as the impacts to the Postal Service caused by the COVID-19 

pandemic begin to abate, the Postal Service renew its focus on analyzing and improving its 

mail in measurement.

FY 2021 Service Performance Results by Class

a. First-Class Mail

(1) FY 2020 Directives

Finding that no First-Class Mail products met their FY 2020 service performance targets, 

the Commission directed the Postal Service to improve service performance. FY 2020 ACD 

at 163, 180. Determining that Single-Piece Letters/Postcards remained out of compliance, 

and Outbound Single-Piece International was not in compliance for FY 2020, 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 180-81.

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 181-82. 

Third, to facilitate the consistent monitoring of First-Class Mail service performance 

(particularly for Single-Piece Letters/Postcards), the Commission directed the Postal 
Docket No. ACR2021 - 139 -

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 182-83. 

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 183-84. 

Fifth, the Commission directed the Postal Service to evaluate the feasibility and status of 

developing point impact data for international mail. See id. at 184. 

Sixth, to monitor the Postal Service’s initiatives to remediate service performance declines 

from FY 2019 to FY 2020, the Commission directed the Postal Service to provide national 

service performance results, disaggregated by month, for Single-Piece Letters/Postcards 

and Outbound Single-Piece International (all service standards and combined). See id. at 

184-85.

(2) FY 2021 Results

Figure V-12 shows the FY 2021 service performance results compared to the annual 

targets for all First-Class Mail products.
Docket No. ACR2021 - 140 -

Figure V-12

First-Class Mail

Service Performance Results, by Percent, FY 2021

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 2021 Service Performance Report at 4.

Table V-4 summarizes service performance results compared to the annual targets for all 

First-Class Mail products for FY 2019, FY 2020, and FY 2021.

-0.45

-4.07

-0.33 -0.68

-3.07 -18.77 -17.47

-22.98 -24.40

-8.62

87.81

68.64

93.99

89.20

84.11

93.99

89.20

84.11 82.43 82.43

0

20

40

60

80

100

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

Outbound

Int

Inbound

Int

On-Time (%)

FY 2021 FY 2021 Target Points from Target
Docket No. ACR2021 - 141 -

Table V-4

First-Class Mail

Service Performance Results, by Percent, FY 2019–FY 2021

Product FY 2019 FY 2019 Target FY 2020 FY 2020 Target FY 2021 FY 2021 Target

Single-Piece Letters/Postcards

2-Day 92.52 96.50 92.03 96.50 87.36 87.81

3-5-Day 81.44 95.25 79.67 95.25 64.57 68.64

Presorted Letters/Postcards

Overnight 95.66 96.80 94.95 96.80 93.66 93.99

2-Day 94.28 96.50 93.03 96.50 88.52 89.20

3-5-Day 92.10 95.25 90.15 95.25 81.04 84.11

Flats

Overnight 81.50 96.80 80.32 96.80 75.22 93.99

2-Day 81.49 96.50 77.52 96.50 71.73 89.20

3-5-Day 76.63 95.25 73.35 95.25 61.13 84.11

Outbound Single-Piece International

Combined 79.73 94.00 71.98 94.00 58.03 82.43

Inbound Letter Post

Combined 64.82 94.00 66.18 94.00 73.81 82.43

Note: Red text indicates service performance was below target. Green text indicates service performance was above target. 

(3) Postal Service Report

The Postal Service describes significant adverse impacts occurring during the first half of 

FY 2021, primarily due to the COVID-19 pandemic, but also due to natural disasters and 

weather events, which negatively impacted service performance for First-Class Mail. 

FY 2021 ACR at 49-51; FY 2021 Service Performance Report at 6. The Postal Service 

emphasizes that significant improvement in on-time service performance occurred during 

the second half of FY 2021, with Single-Piece Letters/Postcards and Presort 

Letters/Postcards exceeding targets for all reported categories by the fourth quarter of the 

fiscal year. FY 2021 ACR at 51-53; FY 2021 Service Performance Report at 6. The Postal 

Service attributes this improvement to a reduction in root cause failures due to the Postal 

Service’s mitigation and improvement initiatives, specifically with regard to transit and 

processing failures. See FY 2021 Service Performance Report at 6-7.

As directed in the FY 2020 ACD, the Postal Service provided evaluations of its nationwide 

initiatives in FY 2021 to improve transit and Last Mile performance and its Division-level 

progress in addressing the top root causes of failure to deliver First-Class Mail on time, 

along with plans to further improve transit and Last Mile performance and address the top 
Docket No. ACR2021 - 142 -

root causes of service failures in FY 2022.208 The Postal Service also, as directed by the 

Commission, submitted data for FY 2021 with respect to 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.209 In addition, the Postal Service filed monthly service 

performance results for First-Class Mail Single-Piece Letters/Postcards and Outbound 

Single-Piece International during FY 2021.210

(4) Comments and Related Commission Analysis

Comments concerning First-Class Mail service performance are organized by topic, 

summarized, and responded to below.

Domestic products: The Public Representative notes that the Postal Service revised the ontime service performance targets for all First-Class Mail products in FY 2021, and that the 

new targets, while they vary by product, are all lower than the previous targets. PR 

Comments at 37-38. He comments that the Postal Service “offered only general and vague 

explanations for the changes[,]” and he further notes that even with the target reductions 

all domestic First-Class Mail products failed to meet their targets in FY 2021. Id. at 38. 

Moreover, he observes that actual on-time performance scores in FY 2021 fell short of the 

levels achieved in FY 2019 and FY 2020. Id. He observes that on-time service performance 

for most First-Class Mail products improved steadily from the second quarter through the 

fourth quarter of FY 2021, which he describes as encouraging, but he cautions that fourthquarter results for FY 2021 still have not recovered to the level of the second quarter of 

FY 2020, when the COVID-19 pandemic began. Id. at 41. He concludes that “[i]n order for 

domestic First-Class Mail service performance to recover during FY 2022, it will be 

necessary for the Postal Service to build upon its FY 2021 efforts to deal with the impacts of 

the pandemic[,]” and “[u]ntil the pandemic is brought under control, the Postal Service will 

have to continue to contend with the unavailability of numbers of employees, constrained 

transportation, and the challenges of increased package volume.” Id. at 43.

NPPC observes that “the Postal Service once again failed to achieve its advertised service 

standards for First-Class Presort Mail[,]” and “[s]ervice for First-Class Flats was worse 

 

208 See Library Reference USPS-FY21-29, PDF file “Preface USPS-FY21-29.pdf” (Library Reference USPS-FY21-29 Preface); Library Reference USPSFY21-29, PDF file “USPS Division Report.pdf” (FY 2021 Division Report); Library Reference USPS-FY21-29, PDF file “USPS Division Report -

Attachment A.pdf” (FY 2021 Division Report Attachment A); Docket No. ACR2020, Third Response of the United States Postal Service to 

Commission Requests for Additional Information in the FY 2020 Annual Compliance Determination, June 28, 2021, at 1-8 (Docket No. ACR2020 

Third Response); PDF file “Division Reports - 6-28-21.pdf.”

209 See Library Reference USPS-FY21-29, December 29, 2021, Excel files “FY21 FCM Q1 Point Impact for Area.xlsx,” “FY21 FCM Q1 Point Impact 

for Nation.xlsx,” “FY21 FCM Q3 CLT.xlsx,” “FY21 FCM Q4 24 hr clock.xlsx;” Library Reference USPS-FY21-NP30, December 29, 2021, Excel files 

“NONPUBLIC FCM Q2 - Air Capacity.xlsx,” “NONPUBLIC FCM Q5 - Facility Failures.xlsx;” Docket No. ACR2020, Third Response Excel files 

“Question 4c3-CLT FY21 Q1Q2.xlsx,” “Questions 4c1 4c4 7b.xlsx;” Docket No. ACR2020, Library Reference USPS-FY20-NP50, June 28, 2021, files

“NONPUBLIC-Question 4c2-Air Cap.xlsx,” “NONPUBLIC-Question 4c5-Facilities.xlsx.”

210 See Docket No. ACR2020, First Response of the United States Postal Service to Commission Requests for Additional Information in the FY 

2020 Annual Compliance Determination (Docket No. ACR2020 First Response), May 10, 2021, Excel file “PER-SPFC-OSPI Oct19-Mar21.xlsx;” 

Docket No. ACR2020, Fifth Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2020 

Annual Compliance Determination, August 9, 2021 (Docket No. ACR2020 Fifth Response), Excel file “PER-SPFC-OSPI Apr21-Jun21;” Docket No. 

ACR2020, Eighth Response of the United States Postal Service to Commission Requests for Additional Information in the FY 2020 Annual 

Compliance Determination, November 9, 2021 (Docket No. ACR2020 Eighth Response), Excel file “PER-SPFC-OSPI Jul21-Sep21xlsx.”
Docket No. ACR2021 - 143 -

still.” NPPC Comments at 18. NPPC asserts that “[t]his poor service quality continues to 

diminish the value of First-Class Mail....” Id. NPPC contends that “adverse weather and other 

factors are normal occurrences, and the postal system should anticipate them and be 

prepared to overcome them.” Id. at 19. Similarly, while “Covid-19 has brought additional 

challenges,...FY 2021 was the second year in which the Postal Service has dealt with them.” 

Id. With respect to increased package volumes, NPPC asserts that “the Postal Service’s 

declared decision to pivot to a packages-focused business is impairing the quality of service 

provided to First-Class Mail.” Id. 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 19.

The Postal Service replies by noting the severity of the adverse impacts the Postal Service 

experienced in FY 2021 and the improvements in service performance that occurred 

during the second half of FY 2021. Postal Service Reply Comments at 14-15. The Postal 

Service disputes the allegation that it is focusing on package growth to the detriment of 

other types of mail, maintaining instead that growth in package volumes is a result of 

pandemic-related changes in consumer demand, and given these changes in demand and 

the reality that packages, flats, and letters are all handled simultaneously, modifications to 

the Postal Service’s processing and delivery networks to accommodate increased package 

volumes are necessary to stabilize service performance for all other postal products, as 

well. Id. at 18-19.

The Commission acknowledges that the COVID-19 pandemic exacerbated pre-existing 

service performance challenges for the Postal Service and has taken that 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 restore service 

performance for its domestic First-Class Mail products, which are detailed below in Section 

V.A.4.a.6., infra.

The Commission finds that NPPC’s suggestion that the Commission should modify service 

performance reporting requirements to include a report on the service quality accorded to 

remittance mail is beyond the scope of the ACD, which determines compliance with 

existing requirements using established methodologies. Proposed changes to the reporting 

requirements appearing in 39 C.F.R. part 3055 are properly the subject of a rulemaking 

proceeding. See 39 U.S.C. § 3652(e)(2)(B). 

International products: The Public Representative observes that even though on-time 

service performance targets were lowered for both international First-Class Mail products 

in FY 2021, both products nevertheless failed to meet the revised targets. PR Comments at 

44. 

The Postal Service states that it is striving for further improvements in service 

performance for international First-Class Mail in FY 2022. Postal Service Reply Comments 

at 21.
Docket No. ACR2021 - 144 -

The Commission shares the Public Representative’s concern regarding the service 

performance results for the Postal Service’s international First-Class Mail products and has 

taken this into account in formulating its directives, which are detailed below in Section 

V.A.4.a.6., infra.

(5) Commission Analysis

(a) Overview

For the seventh consecutive year, no First-Class Mail product category achieved its service 

performance target. See Figure V-12, supra. The best indicator of improvement (or decline) 

in service performance is to compare service performance results from one period to the 

same period in the prior fiscal year. See FY 2019 ACD at 105, 117. FY 2021 results for each 

domestic product category declined compared to results for the prior fiscal year. FY 2021 

results for both international products are not directly comparable to results from previous 

fiscal years due to a change in measurement systems. See, e.g., id. at 94. Below, the 

Commission provides further analysis for the three domestic and two international 

products.

(b) Domestic Products

Figure V-13 displays quarterly results for FY 2021, disaggregated by shape, service 

standard, and whether the mailpiece was presorted or single-piece.
Docket No. ACR2021 - 145 -

Figure V-13

Domestic First-Class Mail

Service Performance Results, by Quarter, FY 2021

Source: Library Reference USPS-FY21-29, Excel file “FY21 ACR First-Class Mail.xlsx.”

Service performance improved for all domestic product categories in the second half of 

FY 2021 relative to the first half of the fiscal year. The Commission notes that no First-Class 

Mail product (or shape or service standard category) achieved its annual target levels in 

the FY 2021 Quarter 1 and Quarter 2 period. It should also be noted, however, that all 

domestic letter products met the annual FY 2021 targets during Quarter 3 and Quarter 4. 

This trend reflects the pattern observed in most previous fiscal years, as 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 ACD at 165.

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 

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 82.0 54.8 91.8 85.0 78.3 71.0 67.2 55.9

Q2 86.7 58.6 93.1 85.1 74.0 71.0 67.8 53.5

Q3 91.6 74.8 95.5 92.4 86.2 79.1 75.6 67.5

Q4 91.4 76.1 94.8 92.5 87.2 82.1 78.1 70.1

87.81 68.64 93.99 89.20 84.11 93.99 89.20 84.11

87.81

68.64

93.99 89.20

84.11

93.99 89.20

84.11

0

10

20

30

40

50

60

70

80

90

100

On-Time (%)

Q1 Q2 Q3 Q4 FY 2021 Target
Docket No. ACR2021 - 146 -

manner, and holds local facilities accountable for gaps between the target and actual 

performance. Id.

Generally, the various narrative reports submitted by the Postal Service indicate that issues 

related to processing, transit, and the Last Mile have the most impact on delivering FirstClass Mail on time.211 The data confirm that failures in transit and the Last Mile are the 

known root causes that had the most impact on service performance results for First-Class 

Mail in FY 2021.212

The Postal Service reports that in order to address transportation and processing capacity 

constraints and prevent the gridlock experienced during the first half of FY 2021 from 

recurring, it acquired long-term Package Support Annexes (PSAs) in over 40 locations 

(with additional annexes for peak season), purchased over 100 additional package sorting 

machines, converted over 64,000 pre-career employees to full-time career status, and 

backfilled the non-career positions with new employees.213 In the spring of FY 2021, the 

Postal Service reports that it commenced the “Third Party Canine (3PK9)” program, 

pursuant to which third party providers are now able to perform the requisite cargo 

screening in order for more packages to be transported on commercial air networks, 

increasing air capacity and permitting the Postal Service to scale back usage of certain 

freight air networks.214 The Postal Service contends that these initiatives should benefit all 

mail products, including First-Class Mail, by increasing the overall capacity and fluidity of 

the processing and delivery network and reducing the number of late trips due to mail not 

being ready for transport as a result of late processing.215

The Postal Service also focused on optimizing its surface transportation network and 

schedules. FY 2021 Division Report at 4; Response to CHIR No. 2, questions 25, 28. In 

particular, the Postal Service reports that its STC redesign, implemented in September 

2020, streamlined the surface transportation network by adding and expanding designated 

centers to process First-Class Mail for downstream sites, and STC operations were further 

expanded in FY 2021 through the acquisition of new, larger facilities. FY 2021 Division 

Report at 4; Response to CHIR No. 2, questions 25, 28. 

Other improvement initiatives in FY 2021 included:

 

211 FY 2021 Service Performance Report at 6; Library Reference USPS-FY21-29 Preface at 4; Library Reference USPS-FY21-29, PDF file “USPS 

Division Report.pdf” (FY 2021 Division Report); Response to CHIR No. 2, questions 26.a., 27.a.

212 Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx.”

213 FY 2021 Service Performance Report at 6; Library Reference USPS-FY21-29 Preface at 4; FY 2021 Division Report at 1-2; Response to CHIR No. 

2, questions 26.a., 27.a.

214 FY 2021 Service Performance Report at 6; FY 2021 Division Report at 2; Response to CHIR No. 2, question 26.a.

215 See FY 2021 Service Performance Report at 6; Library Reference USPS FY21-29 Preface at 4; FY 2021 Division Report at 1-2; Response to CHIR 

No. 2, questions 26.a., 27.a.
Docket No. ACR2021 - 147 -

 The continued monitoring of processing, transit, and Last Mile operations by using 

visualization tools and Grid analysis to identify root causes of failure and develop 

mitigation plans.216

 Expediting air mail to and from Terminal Handling Service (THS) by utilizing 

liaisons to monitor mailflow. FY 2021 Division Report at 4.

 Conducting training sessions with local management on the topic of developing and 

implementing supplier performance improvement plans and removing contracted 

suppliers from surface routes whose performance is unsatisfactory. Library 

Reference USPS-FY21-29 Preface at 4.

 Implementing site-specific operating plans for processing letters and flats (as 

opposed to the former network-wide operating plans), which the Postal Service 

reports led to an increase in operational clearance time compliance across all 

Divisions. FY 2021 Division Report at 2; Response to CHIR No. 6, question 13.

 Implementing a FSS Compression initiative to remove delivery points with little or 

no average daily volumes from the FSS sort program, thereby allowing sites to 

process more FSS volume within the same operating window, which the Postal 

Service asserts should benefit all flat-shaped mail products, including flat-shaped 

First-Class Mail. FY 2021 Service Performance Report at 17; Response to CHIR No. 2, 

questions 25.a., 31.

 Integrating the reporting of NDCs into each NDC’s host Division, which the Postal 

Service asserts should make it easier to react to equipment failures or other adverse 

circumstances at processing facilities by shifting volumes to NDCs for processing. 

FY 2021 Division Report at 2; Response to CHIR No. 11, question 9.

 Introduction of the “Mail Arrival Quality/Plant Arrival Quality (MAQ/PAQ)” 

program, which “give[s] plants and delivery units in all Divisions the opportunity to 

provide feedback to each of their respective Divisions about mail arrival[,]” in order 

to “identify opportunities for improvement and create plans to mitigate 

discrepancies that may lead to last mile failures.”217

 The creation of a “National Joint Service Task Force” to “identify actionable 

opportunities for improvements to key service indicators...,” which, among other 

things, focuses on delivery-related issues.218

 

216 FY 2021 Division Report at 3-5; Library Reference USPS-FY21-29 Preface at 4-5; Response to CHIR No. 2, question 25; Response to CHIR No. 6, 

question 2; Response to CHIR No. 11, questions 8, 10.

217 FY 2021 Division Report at 3; FY 2021 Service Performance Report at 7; Response to CHIR No. 2, questions 25.a., 29.

218 Library Reference USPS-FY21-29 Preface at 4; Response to CHIR No. 6, question 3. The National Joint Service Task Force was created 

pursuant to a Memorandum of Understanding with a labor union. Response to CHIR No. 6, question 3. Specific areas of focus include, inter alia, 

exploring the modification of current case configurations and work methods to identify more efficient techniques; exploring various 

combinations of office and street functions; addressing issues regarding city carrier complements, starting times, employee availability, and 

transportation schedules; determining the most efficient and effective mix of letter routes and parcel routes; and exploring the use of 

technology, data, advanced analytics, and machine learning. Id.
Docket No. ACR2021 - 148 -

 Emphasizing the maintenance of First-In-First-Out (FIFO) order at processing 

facilities, with managers and supervisors conducting on-site walkthroughs stressing 

FIFO adherence. Response to CHIR No. 2, question 25.a.

 Sharing best practices between headquarters and field operations and providing 

training to employees. Library Reference USPS-FY21-29 Preface at 4-5.

In response to information requests, the Postal Service reported that it is unable to 

quantify the impact of any of these initiatives on service performance.219 The Postal Service 

reports that it intends to continue employing the foregoing strategies in FY 2022, in 

addition to implementing the network modifications specified in the Postal Service’s TenYear Strategic Plan.220

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 SPM.221 Generally, the Postal Service indicates that it 

will use key performance indicators (KPIs) to monitor the efficacy of its strategies to 

achieve its service performance targets for Market Dominant products. See Response to 

CHIR No. 6, question 15.f.i. 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 2022 progress are imperative to ensure transparency and 

accountability of the Postal Service’s improvement and recovery initiatives from the 

COVID-19 pandemic. Consequently, the Commission directs the Postal Service to provide 

additional information, as described in Section V.A.4.a.6., infra.

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 Section 1105. Since FY 2015, 

the Commission has determined that this product has been 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. There are two service 

 

219 Response to CHIR No. 2, questions 8.a.-c., 26.b.-d., 27.c.-d., 28.b.-c., 29.b.-d., 31.b.-d.; Response to CHIR No. 6, question 2.b., 3.b.-c., e., 

13.b.; Response to CHIR No. 11, questions 8.c.-e., 9.b.-c., 10.c.-d.

220 FY 2021 Service Performance Report at 6; Response to CHIR No. 2, question 25.b. See United States Postal Service, Delivering For America: 

Our Vision and Ten-Year Plan to Achieve Financial Sustainability and Service Excellence, March 23, 2021, available at 

https://about.usps.com/what/strategic-plans/delivering-for-america/assets/USPS_Delivering-For-America.pdf (Ten-Year Strategic Plan).

221 See, e.g., Response to CHIR No. 2, questions 5.c., 8.a.-c., 10.b.-c., 17.a.-b., 19.a.-b., 20.a.-b., 21.a.-b., 26.b.-d., 27.d., 28.a.-c., 29.b.-d., 30.c., 

31.b.-d.; Response to CHIR No. 5, question 4.b.; Response to CHIR No. 6, questions 2.b., 3.b.-c., e., 11.b., 12.b., 13.b., 14.b.; Response to CHIR 

No. 11, questions 8.c.-e., 9.b.-d., 10.c.-d., 12.c.-d.
Docket No. ACR2021 - 149 -

standards for this product: 2-Day and 3-5-Day.222 The 2-Day service standard only applies 

to Single-Piece Letters/Postcards in the continental U.S.A. if the drive time between the 

origin processing and distribution center/facility (P&DC/F) and destination ADC is 6 hours 

or less.223 Generally, the Commission focuses its discussion on Single-Piece 

Letters/Postcards with the 3-5-Day service standard, which has experienced a more 

pronounced decline than 2-Day Single-Piece Letters/Postcards because 3-5-Day SinglePiece Letters/Postcards require transportation over longer distances and, therefore, 

experience more processing and transportation delays.224 From FY 2020 to FY 2021, 

service performance results for 3-5-Day Single-Piece Letters/Postcards and 2-Day SinglePiece Letters/Postcards declined by 15.1 and 4.7 percentage points, respectively.225

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 2020 and 

FY 2021; however, First Mile failures replaced Last Mile failures in the top five root 

causes.226 Figure V-14 displays the top five root causes for the failure of 3-5-Day SinglePiece Letters/Postcards to be delivered on time in FY 2021, along with the corresponding 

point impact and percent change from FY 2020.

 

222 See 39 C.F.R. § 121.1(b)(2), (c), (d), (e). Effective February 1, 2015 (FY 2015 Quarter 2), the Postal Service generally eliminated the overnight 

service standard for this product; only certain presorted First-Class Mail pieces may now qualify for the overnight service standard. See Revised 

Service Standards for Market-Dominant Mail Products, 77 Fed. Reg. 31,190, 31,194 (May 25, 2012) (codified at 39 C.F.R. pt. 121); see also

Docket No. N2012-1, Advisory Opinion on Mail Processing Network Rationalization Service Changes, September 28, 2012, at 49.

223 See 39 C.F.R. § 121.1(b)(2); see also 77 Fed. Reg. 31,190, 31,194. With respect to the non-continental U.S.A., 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).

224 See, e.g., FY 2020 ACD at 168; FY 2019 ACD at 101; FY 2015 ACD at 132; FY 2016 ACD at 119.

225 Compare FY 2021 Service Performance Report at 4, with Docket No. ACR2020, Library Reference USPS-FY20-29, December 29, 2020, PDF file 

“FY20-29 Service Performance Report.pdf,” at 4 (FY 2020 Service Performance Report).

226 Compare Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx,” tab “SPFC,” with Docket No. ACR2020, 

Response to CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point 

Impact Ranking by Quarter for Nation.xlsx,” tab “SPFC.”
Docket No. ACR2021 - 150 -

Figure V-14

3-5-Day First-Class Mail Single-Piece Letters/Postcards

FY 2021 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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx;” Docket No. 

ACR2020, Response to CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-

Q2-Q3-Q4 SPFC PFCM Root Cause Point Impact Ranking by Quarter for Nation.xlsx.”

Root causes related to transportation and processing provided the top three point impacts 

in FY 2021, and the impact of all three increased substantially over FY 2020. The Postal 

Service asserts that transit failures were “a result of overburdened air networks, driver 

shortages, and delays due to lack of staging space.” See FY 2021 Service Performance 

Report at 6.

Transit Late Destination Primary Scan increased 121.62 percent in point impact, from 6.59 

in FY 2020 to 14.61 in FY 2021. 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.227

Due to the large percentage increase, the Commission performed further analysis on this 

indicator. Figure V-15 compares the point impacts reported for this indicator annually and 

disaggregated by fiscal quarter for FY 2020 and FY 2021.

 

227 Response to CHIR No. 2, question 23.b., Excel file “ChIR.2.Q.23.RootCause.DefintnHier.xlsx.”
Docket No. ACR2021 - 151 -

Figure V-15

3-5-Day First-Class Mail Single-Piece Letters/Postcards

FY 2021 Point Impact for Transit Late Destination Primary Scan

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. Response to CHIR No. 2, question 

23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx;” 

Docket No. ACR2020, Response to CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file 

“ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point Impact Ranking by Quarter for 

Nation.xlsx.”

The year-over-year overall increase was largely driven by significant increases reported for 

Quarters 1 and 2 of FY 2021 compared to the corresponding periods in FY 2020.

The second highest root cause category, Unable to Assign, increased 77.73 percent in point 

impact from 3.24 in FY 2020 to 5.76 in FY 2021. This indicator is applied to mailpieces for 

which there is insufficient information to determine the root cause. FY 2021 Division 

Report at 5.

Figure V-14 also shows that First Mile failures replaced Last Mile failures in the top five 

root causes. This is a result of First Mile failures increasing while Last Mile failures 

decreased in point impact in FY 2021 relative to FY 2020. The Postal Service contends that 
Docket No. ACR2021 - 152 -

Last Mile failures improved due to the introduction of the MAQ/PAQ program in March 

2021 (Quarter 2), which gives plants and delivery units the opportunity to provide 

feedback to their counterparts about mail arrival. See FY 2021 Service Performance Report 

at 7. However, as with its other improvement initiatives, the Postal Service is unable to 

quantify any impact that the MAQ/PAQ program had on service performance. Response to 

CHIR No. 2, questions 29.c.-d.

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 Section 1110. There 

are three service standards for this product: overnight, 2-Day, and 3-5-Day. See 39 C.F.R. 

§ 121.1(a)(2), (b)(2), (c), (d), (e).

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 2020 to FY 2021. Figure V-16 displays the top 

five root causes for Presorted Letters/Postcards in FY 2021 nationwide, along with 

corresponding data for FY 2020.
Docket No. ACR2021 - 153 -

Figure V-16

First-Class Mail Presorted Letters/Postcards

FY 2021 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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, file “FY21 FCM Q1 Point Impact for Nation.xlsx;” Docket No. ACR2020, Response to CHIR No. 

3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point Impact 

Ranking by Quarter for Nation.xlsx.”
Docket No. ACR2021 - 154 -

Figure V-16 illustrates that Presorted Letters/Postcards experienced similar trends to the 

point impact results for Single-Piece Letters/Postcards from FY 2020 to FY 2021. The 

FY 2021 point impacts related to transportation and processing increased from the levels 

observed in FY 2020 for Presorted Letters/Postcards. These data also show that the point 

impact related to Last Mile decreased slightly for the 3-5-Day service standard from 

FY 2020 to FY 2021 but increased for the Overnight and 2-Day service standards. 

Similar to Single-Piece Letters/Postcards, failures during the transit phase had a significant 

impact on all service standard levels of Presorted Letters/Postcards. As noted above, the 

Postal Service asserts that transit failures were “a result of overburdened air networks, 

driver shortages, and delays due to lack of staging space.” See FY 2021 Service Performance 

Report at 6. To address these issues, the Postal Service implemented initiatives such as 

procuring new PSAs to add additional staging space and the “3PK9” program to increase 

transit capacity. Id. In addition, the Postal Service deployed additional STCs, which it states 

freed up space in other facilities to use for package and other mail processing and reduced 

yard congestion and load/unload cycle time within the surface transportation network. Id. 

at 7. As with its other service performance initiatives, the Postal Service was unable to 

quantify any impact on service performance from these initiatives.

The Transit Late Secondary Scan indicator for Presorted Letters/Postcards experienced 

similar trends to the corresponding Transit Late Destination Primary Scan indicator for 

Single-Piece Letters/Postcards—significant percent increases in Quarter 1 and Quarter 2 of 

FY 2021 compared to the same Quarter in FY 2020.228 This root cause is assigned if there 

are no outgoing scans (at the origin facility) or Incoming Primary scans (at the expected 

destination facility), and the First Incoming Secondary scan (at the expected destination 

facility) is late.229 Table V-5 compares the point impacts reported for this indicator 

disaggregated by fiscal quarter for FY 2020 and FY 2021.

 

228 Compare Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx,” tab “PFCM” with Docket No. ACR2020, 

Response to CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point 

Impact Ranking by Quarter for Nation.xlsx,” tab “PFCM.”

229 See Response to CHIR No. 2, question 23.b., Excel file “ChIR.2.Q.23.RootCause.DefintnHier.xlsx.”
Docket No. ACR2021 - 155 -

Table V-5

Presorted Letters/Postcards

FY 2021 Point Impact for Transit Late Secondary Scan

Quarter Service 

Standard

Point Impact for Transit Late Secondary 

Scan

FY 2021 FY 2020 % Change

Q1 

1 3.29 1.31 151.65% 

2 6.63 2.10 216.25% 

3 to 5 8.59 2.76 210.76% 

Q2 

1 2.39 0.92 159.36% 

2 6.47 1.80 259.36% 

3 to 5 10.80 2.28 374.72% 

Q3 

1 1.06 0.94 11.97% 

2 2.39 2.06 16.12% 

3 to 5 4.67 3.04 53.48% 

Q4 

1 1.00 2.36 -57.61% 

2 2.28 3.56 -35.98% 

3 to 5 4.21 5.21 -19.20%

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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx;” Docket No. ACR2020, 

Response to CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM 

Root Cause Point Impact Ranking by Quarter for Nation.xlsx.”

The point impacts of Transit Late Secondary Scan failures increased by more than 150 

percent for all service standards of Presorted Letters/Postcards during Quarter 1 and 

Quarter 2 of FY 2021 compared to the same periods in FY 2020. Specifically, the point 

impact for Transit Late Secondary Scan increased by 151.65 percent for the Overnight 

service standard, 216.25 percent for the 2-Day service standard, and 210.76 percent for the 

3-5-Day service standard.230 Further, comparing Presorted Letters/Postcards during 

Quarter 2 of FY 2021 to the same Quarter in FY 2020, the point impact for “Transit Late 

Secondary Scan” increased by 159.36 percent for the Overnight service standard, 259.36 

percent for the 2-Day service standard, and 374.72 percent for the 3-5-Day service 

standard.231

 

230 Compare Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx,” tab “PFCM,” with Docket No. ACR2020, 

Response to CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point 

Impact Ranking by Quarter for Nation.xlsx,” tab “PFCM.”

231 Compare Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx,” tab “PFCM,” with Docket No. ACR2020, 

Response to CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point 

Impact Ranking by Quarter for Nation.xlsx,” tab “PFCM.”
Docket No. ACR2021 - 156 -

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.

232 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. See Order No. 5086. 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 2021 Service Performance Report at 2; see also MCS 

Section 1115. The Postal Service attributes Flats’ poor on-time service performance scores 

in FY 2021 to the ongoing COVID-19 pandemic and its adverse effects on the Postal 

Service’s operations. Response to CHIR No. 2, questions 4.a.-b. The Postal Service’s current 

initiatives to improve service performance for Flats include the work of the National Joint 

Service Task Force, which is intended to reduce Last Mile failures; the sharing of best 

practices between headquarters and field operations; the use of visualization tools to 

identify processing and delivery issues, and training employees. Response to CHIR No. 2, 

question 4.c. As with its other improvement initiatives, the Postal Service was unable to 

quantify the impact of these initiatives on service performance.

The Postal Service’s data illustrate that point impact results increased 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 2021, along with corresponding data for FY 2020, disaggregated for single-piece 

and presorted mailpieces, respectively.

 

232 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; Chapter VI., infra.
Docket No. ACR2021 - 157 -

Figure V-17

First-Class Mail Single-Piece Flats

FY 2021 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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx”; Docket No. ACR2020, Response to 

CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point 

Impact Ranking by Quarter for Nation.xlsx.”
Docket No. ACR2021 - 158 -

Figure V-18

First-Class Mail Presorted Flats

FY 2021 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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx;” Docket No. ACR2020, Response to 

CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point 

Impact Ranking by Quarter for Nation.xlsx.”
Docket No. ACR2021 - 159 -

The point impacts caused by transportation-related issues increased for all categories of 

Flats from FY 2020 to FY 2021—especially for the first half of the fiscal year (Quarters 1 

and 2).233 These results are consistent with the results for the letter-shaped products and 

likely illustrate the impact of overburdened air networks and driver shortages due to the 

COVID-19 pandemic and delays due to lack of staging space. 

Last Mile failures remain as the top root cause for Single-Piece 2-Day Flats. Last Mile 

failures increased in point impact from 7.58 in FY 2020 to 8.80 in FY 2021, which amounts 

to an increase of 16.09 percent. The second highest root cause failure was First Mile, which 

increased from 4.11 in FY 2020 to 6.55 in FY 2021, an annual increase of 59.43 percent. For 

Single-Piece 3-5-Day Flats, the top root cause was Transit Late Destination Primary Scan, 

which increased from 4.35 in FY 2020 to 8.47 in FY 2021, an increase of 94.65 percent. 

The top root causes in FY 2021 for presorted Flats were Last Mile failures and Transit 

Missing Outgoing Scan. For the Overnight service standard, Last Mile failures were the top 

root cause, with a point impact of 7.18 in FY 2021 compared to a point impact of 6.78 in 

FY 2020. For both the 2-Day and 3-5-Day service standard, the top root cause was Transit 

Missing Outgoing Scan. In FY 2021, Presorted 2-Day Flats had a point impact of 9.47, 

compared to 6.85 in FY 2020, which represents an increase of 38.24 percent. For the 3-5-

Day standard, the point impact in FY 2021 was 10.91, compared to a point impact of 6.86 in 

FY 2020; an increase of 59.16 percent.

Table V-6 shows the point impacts reported for each top transportation-related indicator, 

disaggregated by Quarter for FY 2020 and FY 2021, for 3-5-Day Presorted and Single-Piece 

Flats.

 

233 Compare Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx,” tabs “SPFC” and “PFCM,” with Docket No. 

ACR2020, Response to CHIR No. 3, question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root 

Cause Point Impact Ranking by Quarter for Nation.xlsx,” tabs “SPFC” and “PFCM.”
Docket No. ACR2021 - 160 -

Table V-6

3-5-Day First-Class Mail Flats

Top Transit Root Cause Point Impact, by Quarter, FY 2021

Quarter

Single-Piece 3-5-Day

Transit Late Destination Primary Scan

Presorted 3-5-Day

Transit Missing Outgoing Scan

FY 2021 FY 2020 % Change FY 2021 FY 2020 % Change

Q1 9.00 3.51 156.11% 13.59 5.61 142.05%

Q2 11.18 3.29 239.49% 15.02 5.15 191.60%

Q3 6.67 4.55 46.75% 7.67 7.28 5.42%

Q4 6.46 6.63 -2.58% 6.94 9.64 -27.95%

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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 FCM Q1 Point Impact for Nation.xlsx;” Docket No. ACR2020, Response to CHIR No. 3, 

question 16, folder “ChIR 3 Question 16,” Excel file “ChIR No. 3 Q16 - FY20 Q1-Q2-Q3-Q4 SPFC PFCM Root Cause Point Impact Ranking by 

Quarter for Nation.xlsx.”

The overall point impact for these transportation-related indicators increased year-overyear from FY 2020 to FY 2021. This year-over-year overall increase was largely driven by 

significant increases reported for Quarters 1 and 2 of FY 2021, compared to the 

corresponding periods in FY 2020. As described above in Section V.A.4.a.5.b.i.-ii., supra, 

these data corroborate that the COVID-19 pandemic exacerbated existing transportationrelated challenges for the Postal Service. Further, Table V-6 illustrates that during Quarter 

2 of FY 2021 (January 1, 2021 through March 31, 2021), the point impacts for these top 

transportation-related indicators nearly tripled compared to the same Quarter in FY 2020.

(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 U.S.A. See

MCS Section 1125. Inbound Letter Post includes postcards, aerograms, and letter-shaped 

mailpieces, which originate outside of the U.S.A., contain only documents, and are intended 

for delivery inside of the U.S.A.234

 

234 See MCS Section 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. ACR2021 - 161 -

Annual results for Inbound Letter Post and Outbound Single-Piece International have 

remained below their applicable service performance targets since FY 2009.235

In FY 2021, the on-time service performance score for Outbound Single-Piece International

was 58.0 percent on-time, which was 24.43 percentage points below the applicable target 

of 82.43 percent on-time. FY 2021 Service Performance Report at 4. The on-time service 

performance score for Inbound Letter Post was 73.8 percent on-time, which was 8.62 

percentage points below the same applicable target of 82.43 percent on-time. Id. In 

FY 2021, internal SPM replaced the IMMS as the official system of measurement and 

reporting for Outbound Single-Piece International and Inbound Letter Post. See Order No. 

5576. As a result, service performance results for Outbound Single-Piece International and 

Inbound Letter Post in FY 2021 are not directly comparable to results from previous fiscal 

years. See, e.g., FY 2019 ACD at 94.

Generally, the Postal Service’s handling of both international products is similar to its 

handling of their domestic analogs; however, service performance for both international 

products has continued to underperform compared to their domestic analogs.236 The Postal 

Service attributes the significantly below-target service performance score for Outbound 

Single-Piece International in FY 2021 to the fact that the routing of Outbound Single-Piece 

International mailpieces is different than the routing of domestic First-Class Mail. Response 

to CHIR No. 2, question 3.c. In particular, the vast majority of Outbound Single-Piece 

International volume is routed through a single ISC and thus, tends to require more air 

transportation than domestic First-Class Mail. Id. The Postal Service explains that in 

FY 2021, air transportation continued to be subject to significant disruptions due to the 

ongoing COVID-19 pandemic. Id. 

The Postal Service attributes the below-target service performance score for Inbound 

Letter Post to the fact that the processing of Inbound Letter Post is more complex than 

most domestic First-Class Mail. Id. question 3.e. Unlike domestic First-Class Mail, which is 

largely barcoded and may also be presorted, Inbound Letter Post mailpieces typically need 

 

235 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.

236 See FY 2020 Service Performance Report at 8; Docket No. ACR2019 Third Response at 3; Docket No. PI2019-1, Library Reference USPS-LRPI2019-1/1, May 21, 2019, PDF file “iSPM RevPlan RED-LINE 52119.pdf,” at 30, 50. Therefore, the Postal Service’s domestic transit improvement 

initiatives described above generally apply to its service performance for international mailpieces. Similarly, First Mile and Last Mile 

improvement initiatives apply to outbound and inbound international mailpieces, respectively.
Docket No. ACR2021 - 162 -

to be barcoded and are not presorted, so a large percentage of Inbound Letter Post 

mailpieces cannot be processed in the same operation as most domestic First-Class Mail. Id. 

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 in the FY 2020 ACD to report on its progress at addressing processing 

deficiencies at ISCs and plans for remedying such issues. See FY 2020 ACD at 183-84. As 

directed, the Postal Service filed an evaluation of its FY 2021 improvement initiatives, along 

with an FY 2022 improvement plan.237 The Postal Service also, as directed, filed monthly 

service performance results for Outbound Single-Piece International.238 In addition, the 

Postal Service reports that it implemented root cause reporting for Outbound Single-Piece 

International beginning in Quarter 3 of FY 2021.239

 

237 See Library Reference USPS-FY21-29, PDF file “FY21-29 Supplement - International.pdf,” at 15-25 (FY 2021 International Supplement); Library 

Reference USPS-FY21-NP30, PDF file “NONPUBLIC Preface USPS-FY21-NP30.pdf;” Docket No. ACR2020 Third Response of the United States 

Postal Service to Commission Requests for Additional Information in the FY 2020 Annual Compliance Determination (Questions 1, 5, and 6), July 

2, 2021; Docket No. ACR2020, Library Reference USPS-FY20-NP51, July 6, 2021, PDF file “FY20.NP51.Preface ACD 3rd 

Response.Q1.5,NonPublic.pdf.”

238 See Docket No. ACR2020 First Response, Excel file “PER-SPFC-OSPI Oct19-Mar21.xlsx;” Docket No. ACR2020 Fifth Response, Excel file “PERSPFC-OSPI Apr21-Jun21.xlsx;” Docket No. ACR2020 Eighth Response, Excel file “PER-SPFC-OSPI Jul21-Sep21xlsx.”

239 FY 2021 International Supplement at 24. The Postal Service also, in response to a separate directive in the FY 2020 ACD, reported on the 

status of its initiatives to improve Inbound Letter Post service performance for purposes of the Universal Postal Union (UPU) Quality of Service 

Link to UPU Terminal Dues. See FY 2020 ACD at 63. Under the UPU Quality Link Measurement System (QLMS), terminal dues with respect to 

Inbound Letter Post mailpieces can be adjusted downward 5 percent if the Postal Service does not achieve the UPU-established annual service 

performance target; they can also be adjusted upward 5 percent if the Postal Service does achieve the target. United Postal Union, Regulations 

to the Convention, Final Protocol, Article 30-109, Berne 2017, available at 

https://www.upu.int/UPU/media/upu/files/UPU/aboutUpu/acts/nonPermanentActs/actNonPermanentRegulationsConventionFinalProtocolEn.

pdf. In CY 2019 and January through October of FY 2020, Inbound Letter Post did not achieve the annual QLMS target, and results showed 

deterioration from CY 2019 to CY 2020. FY 2020 ACD at 60. The Postal Service attributed the decline to the initiation of international peak 

volume season in October 2019 and the onset of the COVID-19 pandemic in March 2020, along with issues related to staffing and availability of 

transportation across the Postal Service’s network. Id. at 61. The Commission directed the Postal Service in the FY 2020 ACD to report on the 

status of this issue in FY 2021, including, inter alia, the Postal Service’s initiatives to improve QLMS service performance for Inbound Letter Post. 

See id. at 63.

In CY 2020 and January through October of CY 2021, Inbound Letter Post did not achieve the annual QLMS target. See Library Reference USPSFY21-NP30, PDF files “NONPUBLIC UPU QS Link Performance December 2020 -Redacted.pdf” and “NONPUBLIC UPU QS Link Performance 

October 2021 -Redacted.pdf.” The Postal Service reports (under seal) the amount of revenue forfeited due to not meeting the UPU service 

performance target in FY 2021. See Library Reference USPS-FY21-NP30, PDF file “NONPUBLIC Preface USPS-FY21-NP30.pdf.” 

The Postal Service reports that its initiatives to improve service performance for purposes of QLMS in FY 2021 primarily involved Phase I of 

international mail processing, during which Inbound Letter Post mailpieces enter an ISC and undergo Radio Frequency Identification (RFID) 

Gateway Detection Monitoring. FY 2021 International Supplement at 7. The Postal Service explains that QLMS scores are based on 

measurement conducted through terminal dues gates, which are “RFID antennae and readers installed at the identified and approved handover 

points....” Id. at 4 (internal citations omitted). If an Inbound Letter Post mailpiece does not go through the appropriate RFID gateway upon entry 

into an ISC and the appropriate scan does not occur, then that mailpiece will not be included in the QLMS scoring process. Id. at 8. For every 

mailpiece for which this occurs, the Postal Service states that it is possible that the Postal Service’s QLMS score could be negatively affected. Id. 

The Postal Service reports that it has determined that one of the possible reasons for its low QLMS scores is that a certain percentage of 

Inbound Letter Post volume entering ISCs is not passing through an RFID Gateway and, thus, is not being measured. Id. Another possible reason 

involves missed scans occurring at the induction of Inbound Letter Post mailpieces into ISCs through the RFID gateways. Id. at 12. The Postal 

Service reports that it is in the process of mapping out process flows for each ISC and its surrounding offload sites to ensure that appropriate 

processes are being followed, and the Postal Service is reviewing additional entry points and adding more RFID scanners to ensure that scans 

occur throughout all process flows. Id. at 9. The Postal Service is also inspecting current RFID equipment to ensure that it is in working order. Id. 

The Postal Service is conducting RFID Audit Reviews at each ISC to determine whether Inbound Letter Post volume is passing correctly through 

the appropriate RFID gateway. Id. These reviews are also focused on identifying root cause failures at each ISC, including those related to the 

bypassing of RFID scanners. Id.
Docket No. ACR2021 - 163 -

For Outbound Single-Piece International, the Postal Service identifies relevant processing 

deficiencies as being “somewhat similar to those identified in the domestic network[,]” 

given that Outbound Single-Piece International mailpieces are measured from origin 

acceptance to the final outgoing processing scan at the ISC, which is all considered to be 

part of the domestic network. FY 2021 International Supplement at 18, 20. For Inbound 

Letter Post, the Postal Service identifies relevant processing deficiencies as occurring 

within Phase II of international mail processing—during which Inbound Letter Post 

mailpieces are accepted and cleared through Customs at the ISC and then enter the 

domestic network—and Phase III of international mail processing—during which Inbound 

Letter Post mailpieces travel through the domestic network to their final destination. Id. at 

19-20. 

The Postal Service reports that during FY 2021 it carried out “Operation 848 initiatives,” 

which involved placing a barcode on the back of Inbound Letter Post mailpieces so that 

they could be tracked through the Postal Service’s network to identify improper mailflows 

and processing operations. Id. at 13. Through Operation 848 initiatives, the Postal Service 

reports that it was able to address deficiencies in mailflow at certain ISCs, which led to 

improvement in on-time service performance scores. Id. at 20, 22. 

For both Outbound Single-Piece International and Inbound Letter Post, the Postal Service 

reports that during FY 2021 it focused on achieving measured targets for turnover between 

tours for all operational categories during shift changeover. Response to CHIR No. 2, 

question 5.a. The Postal Service also focused on enhancing machine utilization and monitoring 

machine run plan performance. Id. As with its other improvement initiatives, the Postal 

Service reports that it is unable to quantify the impact that any of these measures had on 

service performance, but the Postal Service asserts that they “likely improved service

performance...in FY 2021.” Response to CHIR No. 2, question 5.b.-c. As noted in the analysis 

pertaining to domestic First-Class Mail in Section V.A.4.a.5.b., supra, the Commission finds 

the Postal Service’s inability to quantify the impact of any of its service performance 

initiatives to be problematic because for an improvement initiative to be successful, it must 

be possible to determine whether or not the initiative had the desired effect on service 

performance results. Generally, the Postal Service indicates that it will use KPIs to monitor 

the efficacy of its strategies to achieve its service performance targets for Market Dominant 

products. See Response to CHIR No. 6, question 15.f.i. The Commission, therefore, finds that 

additional reporting regarding the KPIs established for specific improvement initiatives is 

necessary, as described in Section V.A.4.a.6., infra. 

The Postal Service reports that in FY 2022 it plans to continue Operation 848 monitoring 

with respect to Phase II of international mail processing for Inbound Letter Post.240 With 

 

240 See FY 2021 International Supplement at 22. Additional detail was provided by the Postal Service under seal. See Library Reference USPSFY21-NP30, PDF file “NONPUBLIC Preface USPS-FY21-NP30.pdf,” at 3-6.
Docket No. ACR2021 - 164 -

respect to Phase III, the Postal Service reports that it plans to review international 

mailflows to their final destinations within the domestic network.241

Because the point impact data the Postal Service submitted for international mail products 

in FY 2021 only covers Quarters 3 and 4, the data are not representative of service 

performance throughout the entirety of FY 2021. Therefore, the Commission is unable to 

meaningfully analyze the top root causes and point impacts for international mail products 

in FY 2021. The Commission will continue to monitor the point impact data and seek to 

identify relevant trends in future fiscal years.

(6) Commission Directives

The Commission finds that the Postal Service did not meet its service performance targets for 

First-Class Mail in FY 2021 and directs the Postal Service to improve service performance 

results to achieve the applicable on-time percent target level for its First-Class Mail products 

in FY 2022. The Commission recognizes that the COVID-19 pandemic has continued to 

exacerbate the Postal Service’s difficulty in achieving its service performance targets and 

takes that into account in formulating its directives.

The Commission is concerned that FY 2021 is the seventh consecutive year that no First-Class 

Mail product category achieved its service performance target and over that time, service 

performance results for First-Class Mail have continued to decline, particularly for the 3-5-

Day product categories. The Commission has found Single-Piece Letters/Postcards out of 

compliance since FY 2015,242 and Single-Piece Outbound International out of compliance 

since FY 2020. See FY 2020 ACD at 180. However, Presorted Letters/Postcards has also been 

below target since FY 2015 for all categories.243 Flats have been below-target since FY 2010 

for all categories.244 Inbound Letter Post, like Single-Piece Outbound International, has been 

below-target since FY 2009.245 In FY 2021, the Postal Service revised service performance 

targets substantially downward for every First-Class Mail product category, yet every product 

category still failed to achieve its applicable service performance target, in some cases (as 

with Flats and Single-Piece Outbound International) by a significant margin. Given the longstanding problems the Postal Service has had achieving its service performance targets, and 

given 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 determines 

that all First-Class Mail products were out of compliance in FY 2021. 

 

241 See FY 2021 International Supplement at 22. Additional detail was provided by the Postal Service under seal. See Library Reference USPSFY21-NP30, PDF file “NONPUBLIC Preface USPS-FY21-NP30.pdf,” at 3-6.

242 See FY 2015 ACD at 136.

243 See FY 2020 ACD at 161 Table V-16; FY 2019 ACD at 116 Table V-10; FY 2018 ACD at 164 Table V-19 (collecting prior service performance 

results).

244 See FY 2020 ACD at 161 Table V-16; FY 2019 ACD 116 Table V-10; FY 2018 ACD at 164 Table V-19 (collecting prior service performance 

results); FY 2012 ACD at 52 Table VI-2; FY 2011 ACD at 69-70; FY 2010 ACD at 60 Table VI-2.

245 See FY 2020 ACD at 161 Table V-16; FY 2019 ACD 116 Table V-10; FY 2018 ACD at 164 Table V-19 (collecting prior service performance 

results); FY 2012 ACD at 52 Table VI-2; FY 2011 ACD at 69-70; FY 2010 ACD at 60 Table VI-2.
Docket No. ACR2021 - 165 -

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. ACR2021, if necessary. Where 

appropriate, the Postal Service shall explain the reasons for any differences in the calculation 

of data in FY 2022 versus FY 2021 and shall propose a method for comparing the FY 2022 

data to the FY 2021 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 2022 

nationwide initiatives to improve transit and Last Mile and to provide specific detailed plans 

to improve service performance results for First-Class Mail, as described in items 1 and 2.

1. The transit evaluation shall explain how the progress made in FY 2022 (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 2022. 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 2022 (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 2022. 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 2022 Quarter 1 to FY 2021 Quarter 1) and provide a narrative explaining the 

practices employed to remediate the underlying problem(s) in FY 2022. Because every 

First-Class Mail product remains below its applicable target and 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,

246 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 

 

246 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. ACR2018 Response to CHIR No. 1).
Docket No. ACR2021 - 166 -

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, 

2022). An updated evaluation and plan shall be filed at the time of the FY 2022 ACR (by 

December 29, 2022).

(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.

1. For each Division, the Postal Service shall evaluate the efficacy of its FY 2022 

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 2022. This evaluation shall 

include quantitative comparisons of the same period last year (e.g., compare 

FY 2022 Quarter 1 to FY 2021 Quarter 1) and provide a narrative explaining 

the practices employed to remediate the underlying problem(s) in FY 2022.

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 every First-Class Mail product remains below its applicable target and 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.247 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 

 

247 See generally FY 2021 Division Report; FY 2021 Division Report - Attachment A.
Docket No. ACR2021 - 167 -

issuance of this ACD (by June 27, 2022). An updated report from each Division shall be filed at 

the time of the FY 2022 ACR (by December 29, 2022).

(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 

through 5. Data shall be provided for FY 2022 Quarter 1, Quarter 2, and “mid-year”248 within 

90 days of the issuance of this ACD (by June 27, 2022). Data shall be provided for FY 2022 

Quarter 3, Quarter 4, “second-half”249 and annualized for the fiscal year, in the FY 2022 ACR 

(by December 29, 2022). The Commission continues to direct the Postal Service to provide 

Area- and District-level data to allow comparability to prior fiscal years.

1. The top five root cause point impacts for First-Class Mail, disaggregated by 

shape/product and service standard, presented for the nation and each Area.250

Present results for Flats at the product level and disaggregated by the singlepiece and presorted categories.251

2. The air carrier capacity requested, air carrier capacity received, and air 

capacity gap calculated, using daily cubic feet volume.252

3. The number of CLTs (any HCR that is late by more than 4 hours), presented for 

the nation, each Area, and each District.253

4. The performance for each national operating plan target (also referred to as 

the 24-Hour Clock national clearance goals), presented for the nation, each 

Area, and each District.254

5. The 10 facilities with the most failures in meeting each of the 24-Hour Clock 

national clearance goals during FY 2022. For each facility identified, please 

state the number of times that the facility failed to meet that national 

clearance goal during FY 2022, and the corresponding number of times that 

the facility failed to meet that national clearance goal during FY 2021.255

(d) FY 2022 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 

 

248 Mid-year refers to the aggregation of the data for Quarters 1 and 2 of FY 2022.

249 Second-half refers to the aggregation of the data for Quarters 3 and 4 of FY 2022. Annualized refers to the aggregation of the data for all four 

quarters of FY 2022.

250 See, e.g., Library Reference USPS-FY21-29, Excel files “FY21 FCM Q1 Point Impact for Area.xlsx;” “FY21 FCM Q1 Point Impact for Nation.xlsx;” 

Library Reference USPS-FY21-NP30, Excel file “NONPUBLIC FY21 Q3-Q4 SPFC International.xlsx.”

251 See, e.g., Library Reference USPS-FY21-29, Excel files “FY21 FCM Q1 Point Impact for Area.xlsx;” “FY21 FCM Q1 Point Impact for Nation.xlsx.”

252 See, e.g., Library Reference USPS-FY21-NP30, Excel file “NONPUBLIC FCM Q2 - Air Capacity.xlsx.”

253 See, e.g., Library Reference USPS-FY21-29, Excel file “FY21 FCM Q3 CLT.xlsx.”

254 See, e.g., Library Reference USPS-FY21-29, Excel file “FY21 FCM Q4 24 hr clock.xlsx.”

255 Library Reference USPS-FY21-NP30, Excel file “NONPUBLIC FCM Q5 - Facility Failures.xlsx.”
Docket No. ACR2021 - 168 -

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 2022 

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 2022.

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 2021. The report for each facility 

shall be filed within 90 days of the issuance of this ACD (by June 27, 2022). An 

updated report from each facility shall be filed at the time of the FY 2022 ACR 

(by December 29, 2022).

With respect to Inbound Letter Post specifically, the Postal Service shall further provide 

information on the following matters, described in items 3 and 4.

3. In its FY 2022 ACR, the Postal Service shall provide both SPM and QLMS CY 2021 

and CY 2022 reports, aggregations of weekly failure reports, and an analysis of the 

failures and steps being taken to improve QLMS service performance. The Postal 

Service shall state in its FY 2022 ACR whether it forfeited revenue in CY 2021 and 

CY 2022 based on its QLMS results for the Inbound Letter Post product. If the

Postal Service forfeited revenue in CY 2021 and CY 2022, the Commission directs 

the Postal Service to provide the forfeited amounts for CY 2021 and for CY 2022 

based on all results available to date and explain how this amount is calculated 

based on service performance results. 

4. The Postal Service shall file a report within 90 days of issuance of this ACD (by 

June 27, 2022) that includes the following: QLMS service performance reports for 

CY 2021 and all available reports for CY 2022; a status update on projects and 

initiatives to improve QLMS service performance in FY 2021, and their 
Docket No. ACR2021 - 169 -

effectiveness in improving service performance based on available KPI(s); root 

cause failures identified through coordination with the UPU and International Post 

Corporation (IPC) and steps that have been taken to address them; and the 

amount of Inbound Letter Post forfeited revenue due to not meeting UPU service 

performance targets in CY 2021 and CY 2022. The Postal Service shall provide an 

update to this report at the time of the FY 2022 ACR (by December 29, 2022).

(e) National Monthly Service Performance Results

To monitor the Postal Service’s initiatives to remediate the decline from FY 2020 to FY 2021, 

the Commission directs the Postal Service to provide national service performance results, 

disaggregated by month, for each First-Class Mail product (all service standards and 

combined).

256 These monthly results shall be due on the following schedule: May 10, 2022 

(monthly results for October 2021 through March 2022),257 August 9, 2022 (monthly results 

for April 2022 through June 2022), November 9, 2022 (monthly results for July 2022 through 

September 2022), February 9, 2023 (monthly results for October 2022 through December 

2022), and May 10, 2023 (monthly results for January 2023 through March 2023).258

b. USPS Marketing Mail

(1) FY 2020 Directives

Finding that five USPS Marketing Mail products did not meet their FY 2020 service 

performance targets (High Density and Saturation Flats/Parcels, Letters, Carrier Route, 

Flats, and Every Door Direct Mail—Retail), the Commission directed the Postal Service to 

apply its data leveraging techniques to improve service performance. FY 2020 ACD at 193. 

The Commission further directed the Postal Service, for any USPS Marketing Mail product 

failing to achieve its service performance targets in FY 2021, to provide specific data with 

respect to the top five root cause point impacts for the product, and report on the Postal 

Service’s progress and plans for remedying issues with the product’s service performance. 

Id.

(2) FY 2021 Results

Figure V-19 shows the service performance results compared to the FY 2021 targets for 

USPS Marketing Mail products for FY 2021.

 

256 This directive is separate from the requirements that the Postal Service report service performance results on an annual and periodic basis 

pursuant to 39 C.F.R. part 3055. This directive complements, rather than replaces, the requirements of 39 C.F.R. part 3055.

257 The Commission acknowledges that for Single-Piece Letters/Postcards and Outbound Single-Piece International, monthly results have 

already been provided for October 2021 through December 2021; thus, only monthly results for January 2022 through March 2022 are due for 

these two products on May 10, 2022, pursuant to an existing directive. See FY 2020 ACD at 185; Docket No. ACR2020, Responses of the United 

States Postal Service to Items 1 & 2 of the Ninth Response to the Commission Requests for Additional Information in the FY 2020 Annual 

Compliance Determination, February 10, 2022 (monthly results for October 2021 through December 2021 for Single-Piece Letters/Postcards 

and Outbound Single-Piece International). For the remaining First-Class Mail products, monthly results for October 2021 through March 2022

are due May 10, 2022.

258 By the issuance of the next ACD in March 2023, the Commission will evaluate whether or not monthly results will continue to be necessary 

beyond this schedule.
Docket No. ACR2021 - 170 -

Figure V-19

USPS Marketing Mail

Service Performance Results, by Percent, FY 2021

Source: FY 2021 Service Performance Report at 10; FY 2020 Service Performance Report at 14.

Table V-7 summarizes service performance results compared to the annual targets for 

Marketing Mail products for FY 2019, FY 2020, and FY 2021.

6.07

-1.29 -1.52 2.91

-14.17

-33.89

-10.95

86.62 86.62 86.62 86.62 86.62 86.62 86.62

0

20

40

60

80

100

High Density

and Saturation

Letters (HDSL)

High Density

and Saturation

Flats (HDSF)

Carrier Route Letters Flats Parcels Every Door

Direct Mail

(EDDM)

On -Time (%)

FY 2021 FY 2021 Target Points from Target
Docket No. ACR2021 - 171 -

Table V-7

Marketing Mail

Service Performance Results, by Percent, FY 2019–FY 2021

Product FY 

2019

FY 2019 

Target

FY 

2020

FY 2020 

Target

FY 

2021

FY 2021 

Target

High Density and Saturation 

Letters (HDSL) 93.08 91.80 93.22 91.80 92.69 86.62

High Density and Saturation Flats 

(HDSF) 89.36 91.80 87.53 91.80 85.33 86.62

Carrier Route 89.96 91.80 87.78 91.80 85.10 86.62

Letters 89.25 91.80 89.78 91.80 89.53 86.62

Flats 77.58 91.80 75.65 91.80 72.45 86.62

Parcels 97.94 91.80 96.70 91.80 52.73 86.62

Every Door Direct Mail (EDDM) 75.66 91.80 76.99 91.80 75.67 86.62

Note: Red text indicates service performance was below target. Green text indicates service performance was above target.

(3) Postal Service Report

The Postal Service describes significant adverse impacts occurring during the first half of 

FY 2021, primarily due to the COVID-19 pandemic, but also natural disasters and weather 

events, which negatively affected service performance for USPS Marketing Mail. FY 2021 

ACR at 49-50; FY 2021 Service Performance Report at 12. The Postal Service emphasizes 

that on-time service performance for all USPS Marketing Mail products improved over the 

course of FY 2021. FY 2021 ACR at 51; FY 2021 Service Performance Report at 12.

As directed in the FY 2020 ACD, for USPS Marketing Mail products that failed to achieve 

their on-time service performance targets in FY 2021, the Postal Service provided 

evaluations of its progress at improving service performance in FY 2021 and plans for 

further remedying issues with respect to those products’ service performance in FY 2022. 

See FY 2021 Service Performance Report at 12-13. The Postal Service also provided data 

with respect to the top five root cause point impacts for those products.259

The Postal Service reports that, as with First-Class Mail, mitigation and improvement 

initiatives for USPS Marketing Mail in FY 2021 included increasing network capacity by 

procuring additional PSAs and package processing machines and hiring additional 

employees. FY 2021 Service Performance Report at 12-13. The Postal Service states that 

this freed up space to permit plants to better manage FIFO order for all mail, including 

USPS Marketing Mail. Id. Other improvement initiatives in FY 2021 included:

 

259 See Library Reference USPS-FY21-29, Excel file “FY21 Marketing Mail Root Cause.xlsx.”
Docket No. ACR2021 - 172 -

 Employing visualization tools to identify root causes and developing mitigation 

plans. FY 2021 Service Performance Report at 13; Response to CHIR No. 2, question 

25.a.

 Deploying personnel to opportunity sites to assist in evaluating and correcting 

processes. FY 2021 Service Performance Report at 13.

 Conducting on-site walkthroughs stressing FIFO adherence. Response to CHIR No. 2, 

question 25.a.

 Focusing on cycle time improvements. Id.

 Increasing bundle capacity through bin expansion and by adding additional bundle 

processing machines. Id.

 The FSS Compression initiative, which applies to all flat-shaped products, including 

USPS Marketing Mail. Response to CHIR No. 2, question 25.a; see supra at Section 

V.A.4.a.5.b.

 Encouraging processing plants to advance USPS Marketing Mail volumes by 

processing them earlier than planned when possible, thereby reducing the risk of 

USPS Marketing Mail volumes being delayed. Response to CHIR No. 2, question 25.a.; 

Response to CHIR No. 11, question 11.a.

In response to information requests, the Postal Service reported that it is unable to 

quantify the impact of any of these initiatives on service performance for USPS Marketing 

Mail. See Response to CHIR No. 2, questions 8.a.-c., 10.b., 26.b.-d., 31.b.-d.; Response to CHIR 

No. 11, questions 11.b.-c. As part of its plans to improve service performance for USPS 

Marketing Mail in FY 2022, the Postal Service states that it will continue using the foregoing 

strategies. FY 2021 Service Performance Report at 13; Response to CHIR No. 2, question 

25.b. 

(4) Comments and Related Commission Analysis

The Public Representative observes that the Postal Service lowered on-time service 

performance targets for all USPS Marketing Mail products in FY 2021, but despite this 

reduction, only three USPS Marketing Mail products achieved their targets. PR Comments 

at 49. He notes that for USPS Marketing Mail Parcels in particular, the on-time service 

performance score fell from 96.7 percent on-time in FY 2020 to 52.7 percent on-time in 

FY 2021. Id. He notes that the Postal Service succeeded at improving on-time service 

performance for all USPS Marketing Mail products over the course of FY 2021, such that by 

Quarter 4 of FY 2021 many USPS Marketing Mail products were exceeding their revised 

annual on-time service performance targets. Id. at 52. He asserts that the significance of 

this fact “depends upon the reasonableness of those targets.” Id. Nevertheless, he states 

that he is encouraged by the fact that by Quarter 4 of FY 2021 four USPS Marketing Mail 

products had achieved on-time service performance that would have met even the annual 

targets in place prior to FY 2021. Id. at 51-52.
Docket No. ACR2021 - 173 -

MPA observes that on-time service performance for USPS Marketing Mail Flats fell to 72.5 

percent on-time, “its lowest level in the last five years[.]” MPA Comments at 2. The Postal 

Service replies that MPA overlooks the severity of the adverse impacts the Postal Service 

faced in FY 2021 and the improvements in service performance that occurred during the 

second half of FY 2021. Postal Service Reply Comments at 18.

The Commission acknowledges that the COVID-19 pandemic exacerbated pre-existing 

service performance challenges for the Postal Service and has taken that 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 restore service 

performance for its USPS Marketing Mail products, which are detailed below in Section 

V.A.4.b.6., infra.

(5) Commission Analysis

USPS Marketing Mail is designed for bulk mailings of items that are not required to be 

mailed as First-Class Mail or authorized for mailing as Periodicals. See MCS Section 1200.1; 

see also DMM §§ 243.1.1, 243.2.1. FY 2021 service performance results for two USPS 

Marketing Mail products (Letters and High Density and Saturation Letters) exceeded the 

applicable targets set by the Postal Service. High Density and Saturation Letters scored 6.08 

percentage points above the applicable target. FY 2021 Service Performance Report at 10. 

Letters scored 2.88 percentage points above the applicable FY 2021 target of 86.62 

percent, and its performance declined slightly from FY 2020.260 The Commission urges the 

Postal Service to seek continuous improvement for this product, particularly given that the 

Postal Service has indicated it plans to raise this product’s target to 91.84 percent for FY 

2022. See Response to CHIR No. 6, question 15.d.

Table V-8 presents the quarterly service performance results for Marketing Mail products 

for FY 2020 and FY 2021. 

 

260 Compare id. with FY 2020 Service Performance Report at 14.
Docket No. ACR2021 - 174 -

Table V-8

Marketing Mail

Service Performance Results, by Quarter, by Percent, FY 2020–FY 2021

Product

Quarter 1 Quarter 2 Quarter 3 Quarter 4

FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021

High Density and 

Saturation Letters (HDSL) 93.7 88.2 95.0 91.6 94.8 95.6 89.5 96.2

High Density and 

Saturation Flats (HDSF) 88.0 84.1 89.3 83.4 87.0 86.0 86.2 88.4

Carrier Route 89.9 81.9 93.5 82.0 84.3 89.6 85.7 92.4

Letters 89.5 85.9 92.0 86.9 91.3 92.2 86.7 94.2

Flats 78.4 69.1 81.9 66.9 71.7 76.9 72.1 82.7

Parcels 98.4 51.7 98.5 48.3 95.7 54.1 92.0 58.5

Every Door Direct Mail 

(EDDM) 75.3 73.6 78.0 75.3 77.6 76.4 74.9 77.3

Note: Red text indicates service performance in the quarter FY 2021 was below service performance of the corresponding quarter in FY 2020. 

Green text indicates service performance in the quarter in FY 2021 was above service performance of the corresponding quarter in FY 2020.

Source: Library Reference USPS-FY21-29, Excel file “FY21 ACR Marketing Mail.xlsx;” Docket No. ACR2020, Library Reference USPS-FY20-29, 

Excel file “FY20 ACR Marketing Mail.xlsx.”

Five of the seven USPS Marketing Mail products (High Density and Saturation Flats/Parcels, 

Carrier Route, Flats, Parcels, and Every Door Direct Mail—Retail) did not achieve their 

service performance targets. On-time results for every USPS Marketing Mail product 

declined compared to FY 2020.261 All USPS Marketing Mail results were worse during the 

first half of FY 2021 (Quarters 1 and 2) when compared to the corresponding periods of 

FY 2020, whereas results for most products improved during the second half of FY 2021 

(Quarters 3 and 4) compared to the corresponding periods of FY 2020.262 Specifically, in 

FY 2021 Quarter 1 and Quarter 2, all seven products posted results lower than the same 

Quarter in FY 2020.

263 However, that trend reversed in Quarters 3 and 4. In FY 2021 

Quarter 3, four products posted results better than the same Quarter in FY 2020; in FY 

2021 Quarter 4, six of the seven products posted results better than the same Quarter in 

FY 2020.

264

Parcels performed particularly poorly in FY 2021 when compared to FY 2020. In FY 2020, 

the on-time service performance results for parcels was 96.7 percent, which exceeded the 

applicable FY 2020 target of 91.8 percent. FY 2020 Service Performance Report at 14. In FY 

 

261 Compare FY 2021 Service Performance Report at 10, with FY 2020 Service Performance Report at 14.

262 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Marketing Mail.xlsx,” tabs “Aggregation” and “HDSF Aggregation,” with

Docket No. ACR2020, Library Reference USPS-FY20-29, Excel file “FY20 ACR Marketing Mail.xlsx,” tabs “Aggregation” and “HDSF Aggregation.”

263 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Marketing Mail.xlsx,” tabs “Aggregation” and “HDSF Aggregation,” with

Docket No. ACR2020, Library Reference USPS-FY20-29, Excel file “FY20 ACR Marketing Mail.xlsx,” tabs “Aggregation” and “HDSF Aggregation.”

264 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Marketing Mail.xlsx,” tabs “Aggregation” and “HDSF Aggregation,” with

Docket No. ACR2020, Library Reference USPS-FY20-29, Excel file “FY20 ACR Marketing Mail.xlsx,” tabs “Aggregation” and “HDSF Aggregation.”
Docket No. ACR2021 - 175 -

2021, on-time service performance results decreased to 52.7 percent, which is 

substantially below the applicable FY 2021 target of 86.62. FY 2021 Service Performance 

Report at 10. The Postal Service states that this significant decrease was due to “changes 

made in the source system in October 2020 [that] caused a flaw in the logic used to 

generate the service scores for USPS Marketing Mail Parcels[,]” which “caused the 

measurement system to revert to inaccurate start-the-clock event for destination entered 

USPS Marketing Mail Parcels.” Response to CHIR No. 2, question 6.a. The Postal Service 

states that it expects to correct this source system error in FY 2022. Id. question 6.b.

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.

265 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-FY21-29 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. 

Figures V-20 and V-21 show the FY 2021 top root causes and corresponding point impacts 

for letter- and flat-shaped USPS Marketing Mail entered at origin.

 

265 Library Reference USPS-FY21-29, Excel file “FY21 Marketing Mail Root Cause.xlsx.”
Docket No. ACR2021 - 176 -

Figure V-20

USPS Marketing Mail Origin-Entered Letter/Cards 

FY 2021 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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 Marketing Mail Root Cause.xlsx;” Docket No. ACR2020, Library Reference 

USPS-FY20-29, Excel file “FY20 Marketing Mail Root Cause.xlsx.”
Docket No. ACR2021 - 177 -

Figure V-21

USPS Marketing Mail Origin-Entered Flats 

FY 2021 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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 Marketing Mail Root Cause.xlsx;” Docket No. ACR2020, Library Reference 

USPS-FY20-29, Excel file “FY20 Marketing Mail Root Cause.xlsx.”

The top root causes of failure in FY 2020 continued to persist in FY 2021. Similar to FirstClass Mail, the majority of the top five root causes for origin-entered USPS Marketing Mail 
Docket No. ACR2021 - 178 -

are related to transportation and Last Mile. Many transportation-related indicators 

assigned to origin-entered USPS Marketing Mail appear to be indicative of the same types 

of difficulties experienced by First-Class Mail flows. Generally, for both letter- and flatshaped USPS Marketing Mail mailpieces, Last Mile failures were reported to be less 

problematic than their First-Class analogs. In FY 2021, Destinating Missent entered the top 

five root causes of failure for origin-entered USPS Marketing Mail flats. This indicator is 

assigned when the last incoming primary scan at the expected destination facility is on time 

and the piece receives a scan at an unplanned facility.266 The point impact for the 

Destinating Missent indicator for 6-10-Day USPS Marketing Mail flats rose from 0.15 in FY 

2020 to 0.93 in FY 2021, which amounts to an increase of 506.72 percent. The point impact 

for the same indicator for 11+ Day flats rose from 0.06 in FY 2020 to 0.36 in FY 2021, which 

represents an increase of 470.35 percent. While these percentage increases are large in 

magnitude, the overall point impacts represented by the Destinating Missent indicator are 

very small when compared to the other top five root causes of failure. 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.

As noted in the analysis pertaining to other classes, the Commission finds the Postal 

Service’s inability to quantify the impact of any of its improvement initiatives for USPS 

Marketing Mail to be problematic because for an improvement initiative to be successful, it 

must be possible to determine whether or not the initiative had the desired effect on 

service performance results. Generally, the Postal Service indicates that it will use KPIs to 

monitor efficacy of its strategies to achieve its service performance targets for Market 

Dominant products. See Response to CHIR No. 6, question 15.f.i. The Commission therefore 

finds that additional reporting regarding the KPIs established for specific improvement 

initiatives is necessary, as described in Section V.A.4.b.6., infra.

(6) Commission Directives

The Commission finds that the Postal Service did not meet its service performance targets in 

FY 2021 for High Density and Saturation Flats/Parcels, Carrier Route, Flats, Every Door 

Direct Mail—Retail, or Parcels. 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 2022. The Commission recognizes that the COVID-19 pandemic has continued to 

exacerbate the Postal Service’s challenges in achieving its service performance targets and 

takes that into account in formulating its directives.

The Commission is concerned that service performance problems with respect to many of 

these products have been long-standing and that generally results for many of these products 

have continued to decline over time. High Density and Saturation Flats/Parcels has been 

 

266 Response to CHIR No. 2, question 23.b., Excel file “ChIR.2.Q.23.RootCause.DefintnHier.xlsx.”
Docket No. ACR2021 - 179 -

below-target since FY 2013.267 Except for FY 2017, Carrier Route has been below-target since 

FY 2012.268 Flats have been below-target since FY 2012.269 Every Door Direct Mail—Retail has 

been below target since FY 2015.270 For the first time, the Postal Service reports that Parcels 

results failed to meet the applicable target in FY 2021, and the Parcels results reported in 

FY 2021 decreased rapidly from the corresponding results reported in FY 2020. In FY 2021, 

the Postal Service revised service performance targets substantially downwards for all USPS 

Marketing Mail products, yet five out of seven products still failed to achieve the applicable 

service performance target, in some cases (as with Flats, Every Door Direct Mail—Retail, and 

Parcels) by a significant margin. In light of this, the Commission finds that High Density and 

Saturation Flats/Parcels, Carrier Route, Flats, Every Door Direct Mail—Retail, and Parcels 

were each out of compliance in FY 2021. 

To monitor the Postal Service’s initiatives to remediate service performance issues with 

respect to these noncompliant products, which have been exacerbated by the COVID-19 

pandemic, the Commission directs the Postal Service to provide information concerning the 

following four matters for High Density and Saturation Flats/Parcels, Carrier Route, Flats, 

Every Door Direct Mail—Retail, and Parcels (as well as any other USPS Marketing Mail 

product that fails to meet its applicable service performance target in FY 2022).

(a) Consistent Data

First, the Commission directs the Postal Service to provide the top five root cause point 

impacts for USPS Marketing Mail for each quarter and annually for FY 2022, disaggregated 

by shape/product and entry level/service standard.271 Data shall be provided for FY 2022 

Quarter 1, Quarter 2, and “mid-year” within 90 days of the issuance of this ACD (by June 27, 

2022). Data shall be provided for FY 2022 Quarter 3, Quarter 4, “second-half” and annualized 

for the fiscal year, in the FY 2022 ACR (by December 29, 2022). 

(b) FY 2021 Improvement Initiatives

Second, 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, Carrier Route, Flats, Every Door Direct Mail—Retail, and Parcels (as well as 

any other USPS Marketing Mail product that fails to meet its applicable service performance 

target in FY 2022), and to provide specific detailed plans to improve these products’ service 

performance, as described in items 1 and 2.

 

267 See FY 2020 ACD at 186 Table V-25; FY 2019 ACD at 122 Table V-11; FY 2018 ACD at 178 Table V-21 (collecting prior service performance 

results). 

268 See FY 2020 ACD at 186 Table V-25; FY 2019 ACD 122 Table V-11; FY 2018 ACD 178 Table V-21 (collecting prior service performance results); 

FY 2012 ACD at 54 Table VI-6.

269 See FY 2020 ACD at 186 Table V-25; FY 2019 ACD at 122 Table V-11; FY 2018 ACD 178 Table (collecting prior service performance results); 

FY 2012 ACD 54 Table VI-6.

270 See FY 2020 ACD at 186 Table V-25; FY 2019 ACD at 122 Table V-11; FY 2018 ACD 178 Table V-21 (collecting prior service performance 

results).

271 See, e.g., Library Reference USPS-FY21-29, Excel file “FY21 Marketing Mail Root Cause.xlsx.”
Docket No. ACR2021 - 180 -

1. The Postal Service shall evaluate the efficacy of its FY 2022 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. 

ACR2019, ACR2020, and ACR2021) and explaining how the Postal Service’s 

progress (or lack thereof) affected on-time results for these products in 

FY 2022. The evaluations shall include quantitative comparisons of the same 

period last year (e.g., compare FY 2022 Quarter 1 to FY 2021 Quarter 1) and 

provide a narrative explaining the practices observed to remediate the 

underlying problem(s) in FY 2022.

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, 2022). An updated report shall be filed at the time of the 

FY 2022 ACR (by December 29, 2022).

(c) National Monthly Service Performance Results

Third, to monitor the Postal Service’s initiatives to remediate the decline from FY 2020 to 

FY 2021, the Commission directs the Postal Service to provide national on-time percent 

results, disaggregated by month (all service standards and combined), for High Density and 

Saturation Flats/Parcels, Carrier Route, Flats, Every Door Direct Mail—Retail, and Parcels.272

These monthly results shall be due on the following schedule: May 10, 2022 (monthly results 

for October 2021 through March 2022), August 9, 2022 (monthly results for April 2022 

through June 2022), November 9, 2022 (monthly results for July 2022 through September 

2022), February 9, 2023 (monthly results for October 2022 through December 2022), and 

May 10, 2023 (monthly results for January 2023 through March 2023).273

(d) Status Report on Parcels

Fourth, the Postal Service shall provide a report on the status of its initiative to correct the 

source system error with respect to Parcels identified in Response to CHIR No. 2, question 6. 

The report shall be filed within 90 days of the issuance of this ACD (by June 27, 2022). An 

updated report shall be filed at the time of the FY 2022 ACR (by December 29, 2022).

 

272 This directive is separate from the requirements that the Postal Service report service performance results on an annual and periodic basis 

pursuant to 39 C.F.R. part 3055. This directive complements rather than replaces the requirements of 39 C.F.R. part 3055.

273 By the issuance of next ACD in March 2023, the Commission will evaluate whether or not monthly results will continue to be necessary 

beyond this schedule.
Docket No. ACR2021 - 181 -

c. Periodicals

(1) FY 2020 Directives

Finding that the two Periodicals products had not met their service performance targets 

since FY 2009 and had declined substantially from FY 2019 to FY 2020, the Commission 

found both In-County Periodicals and Outside County Periodicals to be out of compliance in 

FY 2020. FY 2020 ACD at 197. The Commission directed the Postal Service to evaluate the 

efficacy of its FY 2021 initiatives to improve service performance and provide a detailed 

plan to improve performance. See id. The Commission also directed the Postal Service to 

file national service performance results, disaggregated by month, for Periodicals in 

FY 2021, and report on the feasibility and status of developing point impact data for 

Periodicals. Id. at 198.

(2) FY 2021 Results

Figure V-22 shows the service performance results compared to the annual targets for both 

Periodicals products for FY 2021.

Figure V-22

Periodicals 

Service Performance Results, by Percent, FY 2021

Source: FY 2021 Service Performance Report at 14; FY 2020 Service Performance Report at 17.

-11.03 -7.63

86.62 86.62

0

20

40

60

80

100

In County Outside County

On-Time (%)

FY 2021 FY 2021 Target Points from Target
Docket No. ACR2021 - 182 -

Table V-9 summarizes service performance results compared to the annual targets for both 

Periodicals products for FY 2019, FY 2020, and FY 2021.

Table V-9

Periodicals

Service Performance Results, by Percent, FY 2019–FY 2021

Product FY 2019 FY 2019 Target FY 2020 FY 2020 Target FY 2021 FY 2021 Target

In-County 85.72 91.80 80.93 91.80 75.59 86.62

Outside County 85.44 91.80 80.69 91.80 75.04 86.62

Note: Red text indicates service performance was below target. Green text indicates service performance was above target.

(3) Postal Service Report

The Postal Service describes significant adverse impacts that occurred during the first half 

of FY 2021, primarily due to the COVID-19 pandemic, but also natural disasters and 

weather events, which negatively affected service performance for Periodicals. FY 2021 

ACR at 49-50; FY 2021 Service Performance Report at 12. The Postal Service emphasizes 

that on-time service performance for both Periodicals products improved over the course 

of FY 2021. FY 2021 ACR at 51; FY 2021 Service Performance Report at 16. The Postal 

Service reports that the COVID-19 pandemic-related reduction in employee availability 

particularly affected Periodicals because employees had to be diverted from manual 

operations (which include a significant proportion of Periodicals) to automated and 

mechanized operations. FY 2021 Service Performance Report at 17. In response to an 

information request, the Postal Service stated that it is unable to quantify the number of 

employees diverted from manual to automated operations. Response to CHIR No. 2, 

question 9.

As directed in the FY 2020 ACD, the Postal Service provided evaluations of the efficacy of its 

FY 2021 initiatives to improve service performance for both Periodicals products, as well 

as its plans to further remedy service performance for those products in FY 2022.274 The 

Postal Service also, as directed, provided monthly service performance results for 

Periodicals.275 Moreover, the Postal Service provided root cause point impact data for 

Periodicals in FY 2021.276

The Postal Service reports that, as with First-Class Mail and USPS Marketing Mail, 

mitigation and improvement initiatives for Periodicals in FY 2021 included increasing 

network capacity by procuring additional PSAs and package processing machines and 

hiring additional employees. FY 2021 Service Performance Report at 16. The Postal Service 

 

274 See FY 2021 Service Performance Report at 15-18; Docket No. ACR2020 Third Response at 14-15; PDF file “Question 7a - Periodicals 

Plans.pdf.”

275 See Docket No. ACR2020 First Response, Excel file “PER-SPFC-OSPI Oct19-Mar21;” Docket No.ACR2020 Fifth Response, Excel file “PER-SPFCOSPI Apr21-Jun21;” Docket No. ACR2020 Eighth Response, Excel file “PER-SPFC-OSPI Jul21-Sep21xlsx.”

276 Library Reference USPS-FY21-29, Excel file “FY21 Periodicals Root Cause.xlsx.”
Docket No. ACR2021 - 183 -

contends that these initiatives freed up space to permit plants to better manage FIFO order 

for all mail products, including Periodicals. Id. Other improvement initiatives in FY 2021 

included:

 Removing excess FSS machines to increase the efficiency of the remaining FSS 

machines. FY 2021 Service Performance Report at 17.

 Implementing the FSS Compression initiative. Id.; see supra at section V.A.4.a.5.b.

 Placing increased emphasis on “four wall” processing (i.e., processing that begins 

and ends in one location). FY 2021 Service Performance Report at 18.

 Focusing on cycle time improvements. Id.

 Deploying personnel to opportunity sites to assist in evaluating and correcting 

processes. Id.

 Employing visualization and analytical tools to identify root causes and develop 

mitigation plans. Id. at 18-19; Response to CHIR No. 2, question 25.a. 

 Increasing bundle capacity through bin expansion and by adding additional bundle 

processing machines. Response to CHIR No. 2, question 25.a.

In response to information requests, the Postal Service reported that it is unable to 

quantify the impact that any of these initiatives had on service performance for Periodicals, 

though the Postal Service states that the initiatives “appear to be working” based on 

improved on-time service performance scores for Periodicals during the second half of 

FY 2021. Response to CHIR No. 2, question 10.b.; Response to CHIR No. 2, question 31. The 

Postal Service reports that it plans to continue employing the foregoing strategies in 

FY 2022. FY 2021 Service Performance Report at 17-19; Response to CHIR No. 2, question 

10.d.

(4) Comments and Related Commission Analysis

The Public Representative notes that in FY 2021, the Postal Service lowered on-time 

service performance targets for both Periodicals products, but despite this reduction, 

neither product achieved its target. PR Comments at 54. Furthermore, on-time service 

performance for both Periodicals products fell significantly compared to their respective 

FY 2020 levels. Id. At the same time, the Public Representative observes that on-time 

service performance for both Periodicals products improved approximately 20 percent 

over the course of FY 2021, with scores in the fourth quarter of FY 2021 rising to over 82 

percent on-time. Id. at 55. While this still fell below either the former or revised targets, the 

Public Representative nevertheless describes the improvement as encouraging. Id.

MPA observes that on-time service performance for Outside County Periodicals fell to 75.0 

percent on-time, “its lowest level in the last five years[.]” MPA Comments at 2. MPA states 

that “[w]hile Periodicals service performance has bounced back slightly...it remains 

unacceptably low by any standard and not remotely close to the promised 95 percent ontime performance standard found in the [Postal Service’s] [Ten-Year Strategic Plan].” Id.
Docket No. ACR2021 - 184 -

The Postal Service replies that MPA overlooks the severity of the adverse impacts the 

Postal Service faced in FY 2021 and the improvements in service performance that 

occurred during the second half of FY 2021. Postal Service Reply Comments at 18.

The Commission acknowledges that the COVID-19 pandemic exacerbated pre-existing 

service performance challenges for the Postal Service and has taken that 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 restore service 

performance for Periodicals, which are detailed below in Section V.A.4.c.6., infra.

(5) Commission Analysis

Periodicals includes newspapers or other publications that meet applicable criteria for 

regular issuance, editorial and advertising content, circulation levels, and 

sortation/preparation requirements. See MCS Section 1300.1. Neither Periodicals product 

met its applicable 86.62 percent on-time target in FY 2021. FY 2021 results are 11.03 

percentage points and 11.58 percentage points below target for In-County Periodicals and 

Outside County Periodicals, respectively. Overall, on-time performance for Periodicals 

decreased from FY 2020 to FY 2021. Specifically, FY 2021 results decreased 6.6 percent 

and 7.0 percent from FY 2020 results for In-County Periodicals and Outside County 

Periodicals, respectively. Periodicals have remained below their applicable targets since 

FY 2009.277

Table V-10 presents the quarterly service performance results for both Periodicals 

products for FY 2020 and FY 2021. 

 

277 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. ACR2021 - 185 -

Table V-10

Periodicals

Service Performance Results, by Quarter, by Percent, FY 2020–FY 2021

Product

Quarter 1 Quarter 2 Quarter 3 Quarter 4

FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021

In-County 84.8 69.8 87.0 71.5 76.9 79.0 74.3 82.7

Outside County 84.5 69.5 86.7 70.9 76.6 78.2 74.1 82.2

Note: Red text indicates service performance in the quarter FY 2021 was below service performance of the corresponding quarter in FY 2020. 

Green text indicates service performance in the quarter in FY 2021 was above service performance of the corresponding quarter in FY 2020.

Source: Library Reference USPS-FY21-29, Excel file “FY21 ACR Periodicals.xlsx;” Docket No. ACR2020, Library Reference USPS-FY20-29, Excel 

file “FY20 ACR Periodicals.xlsx.”

Both Periodicals products experienced similar trends from FY 2020 to FY 2021. For both 

products, in the first half of FY 2021 (Quarters 1 and 2) results decreased compared to the 

results for the same period in FY 2020; however, that trend reversed in the second half of 

FY 2021 (Quarters 3 and 4), as results mostly increased compared to the results for the 

same period in FY 2020.278

The improvement in service performance observed in the second half of FY 2021 (Quarters 

3 and 4) was not sufficient to offset the double-digit decreases observed in the first half of 

FY 2021 (Quarters 1 and 2) relative to the corresponding periods in FY 2020.279 Comparing 

FY 2021 Quarter 2 to the same quarter in FY 2020, In-County Periodicals results decreased 

by 17.8 percent, and Outside County Periodicals results decreased by 18.3 percent.280 In 

FY 2021, however, In-County Periodicals results improved by 11.3 percent compared to the 

same quarter in FY 2020, while Outside County Periodicals improved by 10.9 percent.

281

Figure V-23 presents top five root causes for the failure of In-County and Outside County 

periodicals to be delivered on time in FY 2021, along with the corresponding change from 

FY 2020.

 

278 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Periodicals.xlsx,” tab “Aggregation,” with Docket No. ACR2020, Library 

Reference USPS-FY20-29, Excel file “FY20 ACR Periodicals.xlsx,” tab “Aggregation.”

279 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Periodicals.xlsx,” tab “Aggregation,” with Docket No. ACR2020, Library

Reference USPS-FY20-29, Excel file “FY20 ACR Periodicals.xlsx,” tab “Aggregation.”

280 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Periodicals.xlsx,” tab “Aggregation,” with Docket No. ACR2020, Library 

Reference USPS-FY20-29, Excel file “FY20 ACR Periodicals.xlsx,” tab “Aggregation.”

281 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Periodicals.xlsx,” tab “Aggregation,” with Docket No. ACR2020, Library 

Reference USPS-FY20-29, Excel file “FY20 ACR Periodicals.xlsx,” tab “Aggregation.”
Docket No. ACR2021 - 186 -

Figure V-23

In-County and Outside County Periodicals

FY 2021 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. Response to CHIR No. 2, question 23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 Periodicals Root Cause.xlsx.”

Point impacts in FY 2021 related to Last Mile failures increased from the levels observed in 

FY 2020. Relative to FY 2020, all top five root cause categories increased in point impact in 

FY 2021. Last Mile failures increased from 4.87 in FY 2020 to 5.80 in FY 2021, which 

represents an increase of 19.18 percent. The second highest root cause category, Transit 

Missing Outgoing Scan, increased in point impact from 4.03 in FY 2020 to 5.67 in FY 2021, 

which amounts to an increase of 40.59 percent.

With respect to transportation and processing-related challenges, the point impact for the 

top root cause reported for Periodicals in both fiscal years is Transit Missing Outgoing 

Scan. This root cause is assigned if there is no outgoing scan of any type at an origin facility 

and the first incoming primary scan at the expected destination facility is late.

282 Figure V24 compares the point impacts reported for this indicator annually and disaggregated by 

fiscal quarter for FY 2020 and FY 2021.

 

282 See Response to CHIR No. 2, question 23.b., Excel file “ChIR.2.Q.23.RootCause.DefintnHier.xlsx.”
Docket No. ACR2021 - 187 -

Figure V-24

Periodicals 

FY 2021 Point Impact for Transit Missing Outgoing Scan

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. Response to CHIR No. 2, question 

23.a.

Source: Library Reference USPS-FY21-29, Excel file “FY21 Periodicals Root Cause.xlsx.”

The point impact for the Transit Missing Outgoing Scan indicator increased year-over-year 

from FY 2020 to FY 2021. This year-over-year overall increase was largely driven by 

significant increases reported for Quarters 1 and 2 of FY 2021 compared to the 

corresponding periods in FY 2020. Transit Missing Outgoing Scan failures increased from 

3.03 in Quarter 1 of FY 2020 to 7.20 in Quarter 1 of FY 2021, which represents an increase 

of 137.22 percent. The same failure indicator increased from 2.54 in Quarter 2 of FY 2020 

to 6.65 in Quarter 2 of FY 2021, which amounts to an increase of 161.80 percent. 

In addition to renewing its pre-pandemic strategies, the Postal Service must refine its 

initiatives to address any ongoing adverse impacts of the COVID-19 pandemic. Because 

both Periodicals products performed below their targets for many years prior to the 

pandemic, the Commission suggests that the Postal Service carefully evaluate which of its 

long-standing initiatives are the most impactful on service performance results. 

Point Impact

FY 2021: 5.80

FY 2020: 4.87

% Change 

19.18%

Point Impact

 FY 2021: 7.20

 FY 2020: 3.03

% Change 

137.22%

Point Impact

 FY 2021: 6.65

 FY 2020: 2.54

% Change 

161.80%

Point Impact

 FY 2021: 4.61

 FY 2020: 2.82

% Change 

63.16%

Point Impact

 FY 2021: 3.77

 FY 2020: 5.20

% Change 

-27.42%

Quarter 1 Quarter 2

Quarter 3 Quarter 4

Annual
Docket No. ACR2021 - 188 -

As noted in the analysis pertaining to other classes, the Commission finds the Postal 

Service’s inability to quantify the impact of any of its improvement initiatives for 

Periodicals to be problematic because for an improvement initiative to be successful, it 

must be possible to determine whether or not the initiative had the desired effect on 

service performance results. Generally, the Postal Service indicates that it will use KPIs to 

monitor efficacy of its strategies to achieve its service performance targets for Market 

Dominant products. See Response to CHIR No. 6, question 15.f.i. The Commission therefore 

finds that additional reporting regarding the KPIs established for specific improvement 

initiatives is necessary, as described in Section V.A.4.c.6., infra.

(6) Commission Directives

The Commission finds that the Postal Service did not meet its service performance targets for 

either Periodicals product in FY 2021 and directs the Postal Service to improve service 

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

in FY 2022. The Commission is concerned that for these products, for which on-time service 

performance scores have remained below target since FY 2009, the Postal Service in FY 2021 

revised service performance targets substantially downwards, yet both products nevertheless 

scored substantially below the applicable targets and declined from the levels observed in FY 

2020. Therefore, the Commission determines that In-County and Outside County Periodicals

remained out of compliance for FY 2021. The Commission recognizes that the COVID-19 

pandemic has continued to exacerbate the Postal Service’s challenges in achieving its service 

performance targets and takes that into account in formulating its directives.

To monitor the Postal Service’s initiatives to remediate service performance issues with 

respect to these noncompliant products, the Commission directs the Postal Service to provide 

information concerning the following three matters.

(a) Consistent Data

First, the Commission directs the Postal Service to provide the top five root cause point 

impacts for Periodicals for each quarter and annually for FY 2022.283 Data shall be provided 

for FY 2022 Quarter 1, Quarter 2, and “mid-year” within 90 days of the issuance of this ACD 

(by June 27, 2022). Data shall be provided for FY 2022 Quarter 3, Quarter 4, “second-half” and 

annualized for the fiscal year, in the FY 2022 ACR (by December 29, 2022). 

(b) FY 2021 Improvement Initiatives

Second, the Commission directs the Postal Service to evaluate the efficacy of its FY 2022 

nationwide initiatives to improve In-County and Outside County Periodicals service 

performance and to provide specific detailed plans to improve Periodicals service 

performance, as described in items 1 and 2.

1. The Postal Service shall evaluate the efficacy of its FY 2022 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. ACR2019, ACR2020, and 

 

283 See, e.g., Library Reference USPS-FY21-29, Excel file “FY21 Periodicals Root Cause.xlsx.”
Docket No. ACR2021 - 189 -

ACR2021) and explaining how the Postal Service’s progress (or lack thereof) 

affected on-time results for Periodicals in FY 2022. The evaluations shall include 

quantitative comparisons of the same period last year (e.g., compare FY 2022 

Quarter 1 to FY 2021 Quarter 1) and provide a narrative explaining the practices 

employed to remediate the underlying problem(s) in FY 2022.

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 within 90 days of the 

issuance of this ACD (by June 27, 2022). An updated report shall be filed at the time of the 

FY 2022 ACR (by December 29, 2022).

(c) National Monthly Service Performance Results

Third, to monitor the Postal Service’s initiatives to remediate the decline from FY 2020 to FY 

2021, the Commission directs the Postal Service to provide national on-time percent results, 

disaggregated by month, for In-County and Outside County Periodicals.284 These monthly 

results shall be due on the following schedule: May 10, 2022 (monthly results for January 

2022 through March 2022)285, August 9, 2022 (monthly results for April 2022 through June 

2022), November 9, 2022 (monthly results for July 2022 through September 2022), February 

9, 2023 (monthly results for October 2022 through December 2022), and May 10, 2023 

(monthly results for January 2023 through March 2023).286

d. Package Services

(1) FY 2020 Directives

The Commission found that FY 2020 was the ninth consecutive year that the service 

performance result for BPM Flats was below its target. FY 2020 ACD at 200. The 

Commission also found that service performance results for Media Mail/Library Mail fell 

below target for the third year in a row. Id. For these two products, the Commission 

directed the Postal Service to apply its data leveraging techniques to improve service 

performance, evaluate the efficacy of its FY 2021 initiatives to improve service 

performance, and provide a detailed plan to improve performance in FY 2022. Id. at 203.

 

284 This directive is separate from the requirements that the Postal Service report service performance results on an annual and periodic basis 

pursuant to 39 C.F.R. part 3055. This directive complements rather than replaces the requirements of 39 C.F.R. part 3055.

285 This is consistent with the existing directive. See FY 2020 ACD at 198.

286 By the issuance of next ACD in March 2023, the Commission will evaluate whether or not monthly results will continue to be necessary 

beyond this schedule.
Docket No. ACR2021 - 190 -

(2) FY 2021 Results

Figure V-25 shows the FY 2021 service performance results compared to the annual target 

of 90.0 percent on-time for Package Services products.

Figure V-25

Package Services

Service Performance Results, by Percent, FY 2021

Note: 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 2021 Service Performance Report at 21; FY 2020 Service Performance Report at 20.

Table V-11 summarizes service performance results compared to the annual targets for 

Package Services products for FY 2019, FY 2020, and FY 2021.

-28.34

7.54

-10.79

90.00

90.00

90.00

0

20

40

60

80

100

Bound Printed Matter Flats

(BPMF)

Bound Printed Matter Parcels

(BPMP)

Media Mail/Library Mail

On-Time (%)

FY 2021 FY 2021 Target Points from Target
Docket No. ACR2021 - 191 -

Table V-11

Package Services

Service Performance Results, by Percent, FY 2019–FY 2021

Product FY 

2019

FY 2019 

Target

FY 

2020

FY 2020 

Target

FY 

2021

FY 2021 

Target

Bound Printed Matter Flats 

(BPMF) 55.23 90.00 55.73 90.00 61.66 90.00

Bound Printed Matter Parcels 

(BPMP) 98.52 90.00 98.46 90.00 97.54 90.00

Media Mail/Library Mail 87.02 90.00 80.89 90.00 79.21 90.00

Note: Red text indicates service performance was below target. Green text indicates service performance was above target.

(3) Postal Service Report

The Postal Service reports that while neither BPM Flats nor Media Mail/Library Mail met 

their service performance targets for FY 2021, BPM Flats scored slightly better than in 

FY 2020. FY 2021 Service Performance Report at 22. Mitigation and improvement 

initiatives for these products in FY 2021 included installing additional package sorting 

machines to increase processing capacity. See id. at 23. For BPM Flats, the Postal Service 

employed the Cycle Time Diagnostics Tool to attempt to reduce cycle time. Response to 

CHIR No. 2, question 16. The Postal Service also relied on the work of an industry work 

team which focused on projects involving flats processing. Response to CHIR No. 2, 

question 15.a. 

Improvement plans for BPM Flats in FY 2022 include continuing to use the Cycle Time 

Diagnostics Tool. FY 2021 Service Performance Report at 23; Response to CHIR No. 2, 

question 16.d. The Postal Service also plans to rely on its general strategies for improving 

service performance for flat-shaped products and parcels. See Chapter VI., infra. The Postal 

Service states that the industry work team will continue to meet. Response to CHIR No. 2, 

question 15.b.-c. For Media Mail/Library Mail, the Postal Service reports that it is 

considering shifting processing to P&DCs instead of NDCs, which the Postal Service asserts 

could increase service performance. FY 2021 Service Performance Report at 23; Response 

to CHIR No. 2, question 14. In response to information requests, the Postal Service reported 

that it is unable to quantify the impact that any of these initiatives had on service 

performance for Package Services, though the Postal Service states that decreases in cycle 

time may be correlated with increases in on-time service performance. Response to CHIR

No. 2, questions 16.a.-b., 27.

(4) Comments and Related Commission Analysis

The Public Representative notes that, unlike the First-Class Mail, USPS Marketing Mail, and 

Periodicals mail classes, on-time service performance targets for Package Services 

remained unchanged from FY 2020. PR Comments at 56. Only one product—BPM Parcels—

met its target. Id. The Public Representative observes that BPM Flats’ on-time service 

performance score improved over FY 2020, but still fell short of its target by a wide margin. 
Docket No. ACR2021 - 192 -

Id. Media Mail/Library Mail, by contrast, declined only slightly from its FY 2020 level. Id. 

The Public Representative states that BPM Flats and Media Mail/Library Mail showed 

improvement over the course of FY 2021. Id. at 58.

The Commission acknowledges that the COVID-19 pandemic exacerbated pre-existing 

service performance challenges for the Postal Service and has taken that 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 restore service 

performance for BPM Flats and Media Mail/Library Mail, which are detailed below in 

Section V.A.4.d.6., infra.

(5) Commission Analysis

Package Services are advertised as a cost-effective option, which may receive deferred 

service, for items that are not required to be mailed as First-Class Mail or Periodicals. See 

MCS Section 1400.1. Service performance results for BPM Parcels exceeded the applicable 

service performance target in FY 2021. BPM Flats and Media Mail/Library Mail did not 

meet their service performance targets for FY 2021.

The two products that did not achieve their FY 2021 service performance targets, BPM 

Flats and Media Mail/Library Mail, experienced service performance challenges prior to 

the pandemic. FY 2021 is the tenth consecutive year that BPM Flats has been below target, 

and the fourth consecutive year that Media Mail/Library Mail has been below target.

Table V-12 presents the quarterly service performance results for Package Services 

products for FY 2020 and FY 2021. 

Table V-12

Package Services

Service Performance Results, by Quarter, by Percent, FY 2020–FY 2021

Product

Quarter 1 Quarter 2 Quarter 3 Quarter 4

FY 

2020

FY 

2021

FY 

2020

FY 

2021

FY 

2020

FY 

2021

FY 

2020

FY 

2021

Bound Printed Matter Flats 

(BPMF) 52.2 57.2 61.7 59.8 57.3 63.9 57.5 69.7

Bound Printed Matter Parcels 

(BPMP) 98.9 97.3 98.9 96.6 98 97.7 97.9 98.5

Media Mail/Library Mail 87.8 74.7 89.3 73.8 75 84.2 75.3 86.7

Note: Red text indicates service performance in the quarter FY 2021 was below service performance of the corresponding quarter in FY 2020. 

Green text indicates service performance in the quarter in FY 2021 was above service performance of the corresponding quarter in FY 2020.

Source: Library Reference USPS-FY21-29, Excel file “FY21 ACR Package Services.xlsx;” Docket No. ACR2020, Library Reference USPS-FY20-29, 

Excel file “FY20 ACR Package Services.xlsx.”

Media Mail/Library Mail experienced a similar trend as the majority of other Market 

Dominant products. In the first half of FY 2021 (Quarters 1 and 2) results decreased 
Docket No. ACR2021 - 193 -

compared to the results for the same period in FY 2020; however, that trend reversed in 

the second half of FY 2021 (Quarters 3 and 4), as results mostly increased compared to the 

results for the same period in FY 2020. Overall, FY 2021 on-time results for Media 

Mail/Library Mail declined compared to FY 2020 and remain 10.79 percentage points 

below target.287

Unlike the majority of other Market Dominant products, BPM Flats showed improved 

results in Quarter 1 when compared to the same period of FY 2020, worse results in 

Quarter 2, and improved results in Quarter 3 and Quarter 4 when compared to the same 

period of FY 2020. Overall, FY 2021 on-time results for BPM Flats improved compared to 

FY 2020 but remain 28.34 percentage points below target.

288 Given the history of this 

product and the extent of the gap between the results and the target, in addition to 

renewing its pre-pandemic strategies, the Postal Service must refine its initiatives to 

stabilize this product and address any ongoing adverse impacts of the pandemic.

In response to an information request, the Postal Service produced root cause point impact 

data for BPM Flats in FY 2020 and FY 2021. Response to CHIR No. 11, question 13. Figure 

V-26 presents top five root causes for the BPM Flats product to be delivered on time in 

FY 2021, with the corresponding change from FY 2020.

Figure V-26

Bound Printed Matter Flats 

FY 2021 National Top 5 Root Causes and Point Impacts

Source: Response to CHIR No. 11, question 13.

 

287 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Package Services.xlsx,” tab “Aggregation,” with Docket No. ACR2020, Library 

Reference USPS-FY20-29, Excel file “FY20 ACR Package Services.xlsx,” tab “Aggregation.”

288 Compare Library Reference USPS-FY21-29, Excel file “FY21 ACR Package Services.xlsx,” tab “Aggregation,” with Docket No. ACR2020, Library 

Reference USPS-FY20-29, Excel file “FY20 ACR Package Services.xlsx,” tab “Aggregation.”
Docket No. ACR2021 - 194 -

It is difficult to draw conclusions from the root cause data for BPM Flats between FY 2020 

and FY 2021. The Transit Late Secondary Scan indicator experienced a decrease of 60.28 

percent, but the Unable to Assign indicator more than doubled from 8.22 in FY 2020 to 

17.53 in FY 2021. The “Unable to Assign” indicator is applied to mailpieces for which there 

is insufficient information to determine the root cause. FY 2021 Division Report at 5. As a 

result, it is impossible to determine at what point in processing such failures are occurring.

Last Mile failures increased by 25.98 percent between FY 2020 and FY 2021, while the 

remaining root cause failures—First Mile and Transit Outgoing Scan—decreased by 39.67 

percent and 42.08 percent, respectively. 

The Commission acknowledges the unique characteristics of BPM Flats, which are offered 

as a cost-effective option for business mailers,289 and are advertised as potentially 

receiving deferred service. See DMM § 263.3.1. The Postal Service explains that “Bound 

Printed Matter Flats is a commercial product that is used by businesses to send large 

catalogs and similar flat-shaped flexible items that are too heavy to be sent using Marketing 

Mail[,]” but less rigid and thick than BPM Parcels. FY 2021 Service Performance Report at 

20 (emphasis omitted).

The Commission has also recognized that the Postal Service faces difficulties in monitoring 

its service performance improvement initiatives for both BPM Flats that are machinecompatible and those that are not machine-compatible (referred to as “nonmachinable”), 

and thereby require manual processing. See FY 2020 ACD at 201.

With respect to machine-compatible mailpieces in FY 2021, the Postal Service reports that 

it used the Cycle Time Diagnostics Tool to monitor cycle time. Response to CHIR No. 2, 

question 16.a. The Postal Service states that “[c]ycle time is a leading indicator that can 

signal potential processing bottlenecks that may lead to service failures[,]” and thus “[a]n 

increase in cycle time may be correlated with a decrease [in] on-time percent....” Id. Cycle 

time generally decreased during the second half of FY 2021, which, as the Postal Service 

demonstrates, coincided with an increase in on-time service performance for BPM Flats. Id. 

question 16.b. The Commission encourages the Postal Service to continue to monitor cycle 

time for BPM Flats and to identify the best practices to decrease cycle time compared to the 

same period in the last fiscal year. In FY 2021, the Postal Service advanced processing to 

day zero290 for 32.64 percent of measured BPM Flats, a significant increase over the 13.48 

percent reported as advanced in FY 2020.291

 

289 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 Section 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.

290 Day zero refers to the start-the-clock date. See Docket No. ACR2018 Response to CHIR No. 1, question 44. If the first automation scan occurs 

on the same day as the start-the-clock date, then those mailpieces are counted as being processed on day zero. Id.

291 Compare Response to CHIR No. 2, question 13, with Docket No. ACR2020 Response to CHIR No. 1, question 28.
Docket No. ACR2021 - 195 -

With respect to nonmachinable mailpieces, the Postal Service does not track the volume or 

percentage of BPM Flats that are processed manually. Response to CHIR No. 2, question 11; 

Docket No. ACR2020 Response to CHIR No. 1, question 27. As the Postal Service has 

previously explained, BPM Flats undergo manual handling due to incompatibility with flat 

or package sorting equipment and comingling of non-automated and automated BPM 

Flats.292 The Postal Service explains that this results in a lack of visibility into manuallyprocessed BPM Flats and that “[headquarters] continues to work with the Area 

coordinators to develop processes that will enable increased visibility for BPM [Flats] when 

it is manually sorted.”293 The Commission acknowledges the difficulty in tracking 

mailpieces that require manual processing. The Commission encourages the Postal Service 

to focus its tracking on data that would demonstrate which (if any) of the Postal Service’s 

multi-year initiatives to improve this product’s performance have been successful.

In the absence of adequate data to conduct a quantitative analysis, the Commission 

continues to encourage the Postal Service to focus its Headquarters In-Plant Support Letter 

and Flat, Planning and Implementation group on a meaningful qualitative analysis of its 

multi-year initiatives and identification of best practices. Given that this product serves a 

limited subset of commercial users, the operational challenges are recurring (albeit 

exacerbated by the COVID-19 pandemic), and the Postal Service’s proposed remediation 

strategy has remained substantially similar year-to-year, the Commission continues to 

encourage the Postal Service to engage in a dialogue with the product’s users regarding 

expectations and actual performance concerning this unique offering.

With respect to Media Mail/Library Mail, on-time performance results have remained 

below target and declined year-over-year since FY 2018. The Postal Service has stated that 

“[t]hough Media Mail/Library Mail is not a separate category in IV reports, it follows the 

same mail flow as USPS Marketing Mail Flats and can therefore be improved by utilizing 

similar IV reports....” FY 2020 Service Performance Report at 23. Similarly, the Postal 

Service has asserted that its initiatives to optimize flat-shaped mail would include Media 

Mail/Library Mail. See id. at 22.

The Postal Service reports that it is considering shifting processing of Media Mail/Library 

Mail from the NDC network to P&DCs as part of a broader modification of the Postal 

Service’s logistics and processing network. FY 2021 Service Performance Report at 23; 

Response to CHIR No. 2, question 14.a. The Postal Service speculates that this shift in 

processing could yield improvements to on-time service performance results. FY 2021 

Service Performance Report at 23. The Postal Service does not provide specifics or a 

timeframe for implementation of any such changes but asserts that it will develop an 

implementation plan “once the design of the new network is finalized and approved.” 

Response to CHIR No. 2, question 14.b.

 

292 See Docket No. ACR2018, Library Reference USPS-FY18-29, PDF file “FY18-29 Service Performance Report.pdf,” at 20.

293 United States Postal Service, Response to Independent Validation of USPS Service Performance Measurement Audit Design, FY2020 Quarter 

4, November 30, 2020, at 6.
Docket No. ACR2021 - 196 -

As noted in the analysis pertaining to other classes, the Commission finds the Postal 

Service’s inability to quantify the impact of any of its improvement initiatives for Package 

Services to be problematic because for an improvement initiative to be successful, it must 

be possible to determine whether or not the initiative had the desired effect on service 

performance results. Generally, the Postal Service indicates that it will use KPIs to monitor 

efficacy of its strategies to achieve its service performance targets for Market Dominant 

products. See Response to CHIR No. 6, question 15.f.i. The Commission therefore finds that 

additional reporting regarding the KPIs established for specific improvement initiatives is 

necessary, as described in Section V.A.4.d.6., infra.

(6) Commission Directives

The Commission finds that the Postal Service did not meet its service performance targets for 

BPM Flats and Media Mail/Library Mail in FY 2021 and directs the Postal Service to improve 

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

products in FY 2022. The Commission recognizes that the COVID-19 pandemic has 

exacerbated the Postal Service’s challenges in achieving its service performance targets and 

takes that into account in formulating its directives.

While the on-time performance result for BPM Flats increased from FY 2020 to FY 2021 by 6.0 

percentage points, the Commission remains concerned that this product is substantially below 

its target. Moreover, FY 2021 marks the tenth consecutive year that BPM Flats has remained 

below its target. The Commission is also concerned that the FY 2021 on-time performance 

result for Media Mail/Library Mail remains below target and declined again for the fourth 

consecutive year. 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. 

Nevertheless, given the history of service performance problems for these products, the 

Commission finds that both BPM Flats and Media Mail/Library Mail were out of compliance in 

FY 2021.

To monitor the Postal Service’s initiatives to remediate these ongoing issues related to these 

noncompliant products, which have been exacerbated by the COVID-19 pandemic, the 

Commission directs the Postal Service to provide the information in the FY 2022 ACR for BPM 

Flats and Media Mail/Library Mail concerning the following three matters.

(a) Consistent Data

First, for BPM Flats, the Commission directs the Postal Service to provide the top five root 

cause point impacts for each quarter and annually for FY 2022. See, e.g., Response to CHIR 

No. 11, question 13. Data shall be provided for FY 2022 Quarter 1, Quarter 2, and “mid-year” 

within 90 days of the issuance of this ACD (by June 27, 2022). Data shall be provided for FY 

2022 Quarter 3, Quarter 4, “second-half” and annualized for the fiscal year, in the FY 2022 

ACR (by December 29, 2022).
Docket No. ACR2021 - 197 -

(b) FY 2022 Improvement Initiatives

Second, the Postal Service shall evaluate the efficacy of the Postal Service’s FY 2022 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. ACR2019, ACR2020, and 

ACR2021) 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, 2022). An updated report shall 

be filed at the time of the FY 2022 ACR (by December 29, 2022).

(c) National Monthly Service Performance Results

Third, to monitor the Postal Service’s initiatives to remediate the decline from FY 2020 to 

FY 2021, the Commission directs the Postal Service to provide national on-time percent 

results, disaggregated by month, for BPM Flats and Media Mail/Library Mail.294 These 

monthly results shall be due on the following schedule: May 10, 2022 (monthly results for 

October 2021 through March 2022), August 9, 2022 (monthly results for April 2022 through 

June 2022), November 9, 2022 (monthly results for July 2022 through September 2022), 

February 9, 2023 (monthly results for October 2022 through December 2022), and May 10, 

2023 (monthly results for January 2023 through March 2023).295

e. Special Services

(1) FY 2020 Directives

Finding that three Special Services products (Post Office Box Service, Stamp Fulfillment 

Services, and Ancillary Services) failed to meet their service performance targets for 

FY 2020, the Commission directed the Postal Service to apply its data leveraging 

techniques to improve service performance for these products in FY 2021. FY 2020 ACD at 

208. The Commission further directed the Postal Service, should Post Office Box Service, 

Stamp Fulfillment Services, or Ancillary Services fail to meet their applicable service 

performance targets in FY 2021, to evaluate the efficacy of the Postal Service’s FY 2021 

improvement initiatives and provide a detailed plan to improve service performance in 

FY 2022. Id.

(2) FY 2021 Results

Table V-13 shows the service performance results compared to the annual target of 90.0 

percent on-time for Special Services products for FY 2019, FY 2020, and FY 2021.

 

294 This directive is separate from the requirements that the Postal Service report service performance results on an annual and periodic basis 

pursuant to 39 C.F.R. part 3055. This directive complements rather than replaces the requirements of 39 C.F.R. part 3055.

295 By the issuance of next ACD in March 2023, the Commission will evaluate whether or not monthly results will continue to be necessary 

beyond this schedule.
Docket No. ACR2021 - 198 -

Table V-13

Special Services

Service Performance Results, by Percent, FY 2019–FY 2021

Special Services

Annual

% On-Time

Target

FY 2019 FY 2020 FY 2021

Ancillary Services 90.93 89.6 82.9 90

International Ancillary Services 99.77 99.8 99.9 90

Money Orders 99.43 93.1 98.9 90

Post OfficeTM Box Service 88.28 88.2 87.0 90

Stamp Fulfillment Services 99.66 79.1 91.7 90

Note: Red text indicates service performance was below target. Green text indicates service performance was above 

target.

Note: 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 30, 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 2021 Service Performance Report at 25; FY 2020 Service Performance Report at 25.

(3) Postal Service Report

With respect to Post Office Box Service, the Postal Service reports that in FY 2021 it 

continued to suffer significant impacts from the COVID-19 pandemic-related employee 

unavailability, which hindered the Postal Service’s ability to complete distribution to Post 

Office Boxes in a timely manner. FY 2021 Service Performance Report at 27; Response to 

CHIR No. 2, question 18. With respect to Ancillary Services, the Postal Service reports that 

service performance in FY 2021 was impacted by increased mail volume and employee 

unavailability due to the COVID-19 pandemic. FY 2021 Service Performance Report at 28.

As directed in the FY 2020 ACD, the Postal Service provided evaluations of the efficacy of its 

FY 2021 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. FY 2021 Service Performance Report at 27-28.

(4) Comments and Related Commission Analysis

The Public Representative notes that on-time service performance targets for Special 

Services products in FY 2021 remained unchanged from their FY 2020 levels. PR 
Docket No. ACR2021 - 199 -

Comments at 60. He observes that three Special Services products met their FY 2021 

targets—International Ancillary Services, Money Orders, and Stamp Fulfillment Services. 

Id. 

The Commission acknowledges that the COVID-19 pandemic exacerbated pre-existing 

service performance challenges for the Postal Service and has taken that 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 restore service 

performance for Post Office Box Service and Ancillary Services, which are detailed below in 

Section V.A.4.e.6., infra.

(5) Commission Analysis

Special Services are offerings related to the delivery of mailpieces, including acceptance, 

collection, sorting, transportation, or other functions. See MCS Section 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 2021. Two products did not 

achieve their respective FY 2021 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 2021, service performance results for Post Office Box Service 

were 3.0 percentage points below target and decreased 1.2 percentage points from the 

level reported in FY 2020. The Postal Service reports that mitigation and improvement 

initiatives for this product in FY 2021 included relying on technological and visualization 

tools to monitor performance, performing reviews at opportunity sites, and adjusting the 

Postal Service’s work complement. FY 2021 Service Performance Report at 27-28; 

Response to CHIR No. 2, question 17. In response to information requests, the Postal 

Service reported that it is unable to quantify the impact of any of these initiatives on 

service performance for Post Office Box Service in FY 2021. See Response to CHIR No. 2, 

questions 17, 19, 20. Improvement plans for Post Office Box Service in FY 2022 include 

further use of computer-based tools and programs, refreshing operating plans, performing 

reviews at opportunity sites, and training employees. FY 2021 Service Performance Report 

at 28. 

Service performance results for Ancillary Services first fell below target in FY 2020, then 

dropped more significantly in FY 2021. For FY 2021, service performance results for 

Ancillary Services were 7.1 percentage points below target and decreased 6.7 percentage 

points from the level reported in FY 2020. The Postal Service reports that the biggest 

opportunity for improvement for Ancillary Services in FY 2021 was with respect to the 

Return Receipt Service Green Card option. FY 2021 Service Performance Report at 28. In 
Docket No. ACR2021 - 200 -

response to an information request, the Postal Service explained that service performance 

for the Green Card option is measured through internal SPM based on barcode scans by 

employees. Response to CHIR No. 2, question 22.c. The Postal Service plans to improve 

service performance for Ancillary Services, including the Green Card option, in FY 2022 by 

training employees with respect to scanning and monitoring service performance metrics 

to develop improvement plans and share best practices. FY 2021 Service Performance 

Report at 28; Response to CHIR No. 2, question 22.d. In response to an information request, 

the Postal Service reported that it is unable to quantify the expected impact of these 

measures on service performance for Ancillary Services in FY 2022. Response to CHIR No. 

2, question 21.

The Postal Service must refine its initiatives to address any ongoing adverse impacts of the 

COVID-19 pandemic. 

(6) Commission Directives

The Commission finds that the Postal Service did not meet its service performance targets for 

Post Office Box Service or Ancillary Services in FY 2021 and directs the Postal Service to 

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

these products in FY 2022. The Commission recognizes that the COVID-19 pandemic has 

exacerbated the Postal Service’s challenges in achieving its service performance targets and 

takes that into account in formulating its directives.

Post Office Box Service results have been below-target since FY 2015. Ancillary Services 

results have been below-target since FY 2020 but have decreased rapidly. Given the ongoing 

nature of service performance problems with respect to Special Services, the Commission finds 

that both Post Office Box Service and Ancillary Services were out of compliance in FY 2021. To 

monitor the Postal Service’s initiatives to remediate these ongoing issues with respect to these 

noncompliant products, which have been exacerbated by the COVID-19 pandemic, the 

Commission directs the Postal Service to provide the following information in the FY 2022 

ACR for Post Office Box Service and Ancillary Services: (1) an evaluation of the efficacy of the 

Postal Service’s FY 2022 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. 

ACR2019, ACR2020, and ACR2021) to improve on-time service performance for each product; 

and (2) a detailed plan explaining how each product’s results will be improved.

The Commission further directs the Postal Service to provide national on-time percent results, 

disaggregated by month, for Post Office Box Service and Ancillary Services.296 These monthly 

results shall be due on the following schedule: May 10, 2022 (monthly results for October 

2021 through March 2022), August 9, 2022 (monthly results for April 2022 through June 

2022), November 9, 2022 (monthly results for July 2022 through September 2022), February 

 

296 This directive is separate from the requirements that the Postal Service report service performance results on an annual and periodic basis 

pursuant to 39 C.F.R. part 3055. This directive complements rather than replaces the requirements of 39 C.F.R. part 3055.
Docket No. ACR2021 - 201 -

9, 2023 (monthly results for October 2022 through December 2022), and May 10, 2023 

(monthly results for January 2023 through March 2023).297

FY 2021 Offshore Special Study

Every 2 years, pursuant to 39 C.F.R. § 3055.7, the Postal Service files a special study 

conducted by a third party contractor concerning final delivery service performance to the 

remote locations of the Alaska, Caribbean, and Honolulu districts.298 These districts serve 

remote locations that are less populated than the average continental district, and large 

portions of these districts are located far from mail processing facilities.299 Each of these 

districts also serves a more populated area, referred to as a Gateway city, which is 

Anchorage for the Alaska District, Honolulu for the Honolulu District, and San Juan for the 

Caribbean District. 2021 Study at 1. The purpose of this special study is to “allow 

evaluation of the unique aspects of providing service to the less populous/more remote 

areas of these districts, and compare how this service differs from the districts as a whole.” 

Order No. 465 at 39.

The 2021 Study reports service performance results for remote locations, compares those 

results to service performance for the district’s Gateway city, and presents statistically 

significant differences between these service performance results. 2021 Study at 2, 6-7, 25-

27. Specifically, the 2021 Study measures performance for 106 remote 3-Digit ZIP Codes 

and mail class groupings. 2021 Study at 25. Of these 106 groupings, the Gateway city had 

better service performance results than the remote 3-Digit ZIP Codes in 40 instances (38 

percent). Id. There were 27 instances where the remote 3-Digit ZIP Codes had better 

service performance results than the Gateway city (25 percent), and 39 instances where 

there was no statistically significant difference between the Gateway city and the remote 3-

Digit ZIP Code (37 percent). See id. Accordingly, the 2021 Study asserts that the remote 3-

Digit ZIP Codes performed better or the same as the Gateway city 62 percent of the time, 

from a statistical perspective. Id.

The 2021 Study data, which are presented in Library Reference PRC-LR-ACR2021-11, are a 

subset of the data already subject to the external auditing performed on the internal SPM 

systems. Docket No. AR2019 Response to CHIR No. 4, question 26. Unlike past Offshore 

Special Studies, the 2021 Study relies on a margin of error approach using internal SPM 

data to identify statistically significant differences. 2021 Study at 7.

 

297 By the issuance of next ACD in March 2023, the Commission will evaluate whether or not monthly results will continue to be necessary 

beyond this schedule.

298 Library Reference USPS-FY21-29, PDF file “FY21-29 Offshore Special Study.pdf,” at 1 (2021 Study). In response to an information request, the 

Postal Service submitted revisions to the 2021 Study. See Response to CHIR No. 11, question 6. All citations to the 2021 Study in this Report are 

to the 2021 Study as revised, which can be found in Library Reference PRC-LR-ACR2021-11.

299 2021 Study at 2. When referring to non-Gateway ZIP Codes, the 2021 Study uses the terms “remote” and “rural” interchangeably.
Docket No. ACR2021 - 202 -

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.”300 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 2021 ACR and 

Library Reference USPS-FY21-33301 contain customer access information responsive to the 

requirements of Title 39 and the Commission’s regulations. The Postal Service provided 

additional information in responses to CHIRs.302

The Postal Service also reported the number of retail facilities and delivery points in its 

Annual Report to Congress (Annual Report).

303 In the FY 2020 ACD, the Commission 

reiterated the importance of reporting consistent information among the Annual Report to 

Congress, ACR, and CHIR responses. FY 2020 ACD at 209. For the 2021 filings, it directed 

the Postal Service to obtain data from the same system to ensure that information provided 

for both retail facilities and delivery points is consistent among the FY 2021 Annual Report, 

FY 2021 ACR, and CHIR responses. Id. The Commission stated, “[i]f there are any 

discrepancies, the Postal Service must identify and reconcile them in the FY 2021 ACR 

instead of in CHIR responses.” Id.

The number of delivery points is consistent between the FY 2021 Annual Report and the FY 

2021 ACR.304 However, the number of retail facilities listed in the FY 2021 Annual Report

differ from the FY 2021 ACR, Library Reference USPS-FY21-33, and CHIR responses.305 The 

Postal Service did not comply with the Commission’s directive to identify and reconcile 

discrepancies in the FY 2021 ACR. In a CHIR response, the Postal Service explains that it 

uses different databases to obtain the number of contractor-operated retail facilities, which 

consist of contract postal units (CPUs), community Post Offices (CPOs), and Village Post 

Offices (VPOs). Response to CHIR No. 1, question 6. The numbers in the FY 2021 Annual 

Report were obtained using the Postal Service’s Address Management System, which relies 

 

300 39 U.S.C. § 3652(a)(2)(B)(ii); 39 C.F.R. § 3055.90.

301 FY 2021 ACR at 78-81; Library Reference USPS-FY21-33, December 29, 2021.

302 See Response to CHIR No. 1, questions 1-8; Response to CHIR No. 2, questions 32-33; Response to CHIR No. 5, questions 1-3; Response to 

CHIR No. 9, questions 6-8; Response to CHIR No. 11, questions 1-4; Responses of the United States Postal Service to Questions 1-3 of 

Chairman’s Information Request No. 12, February 14, 2022 (Response to CHIR No. 12); Response to CHIR No. 13, questions 1-8; Response of the 

United States Postal Service to Question 1 of Chairman’s Information Request No. 23, March 3, 2022 (Response to CHIR No. 23).

303 FY 2021 Annual Report at 27. 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.

304 Compare FY 2021 Annual Report at 27, with Library Reference USPS-FY21-33, Excel file “DeliveryPointsFY2021.xlsx,” tabs “Beginning FY,” and 

“End FY.”

305 Compare FY 2021 Annual Report at 27 with FY 2021 ACR at 78; Library Reference USPS-FY21-33, Excel file “PostOfficesFY2021.xlsx,” tab “Post 

Offices FY21”; and Response to CHIR No. 1, questions 3-6.
Docket No. ACR2021 - 203 -

on field staff to identify, classify, and close contractor-operated retail facilities where 

appropriate. Id. By contrast, the numbers in the FY 2021 ACR were obtained using the 

Contract Post Unit Technology (CPUT) system, which records all contracts for these retail 

facilities and reflects their opening and closing. Id. The Postal Service also notes a small 

discrepancy between the number of post offices reported in the FY 2021 Annual Report

(26,362) and the FY 2021 ACR (26,361) due to a spreadsheet line entry error. Id.

In Docket No. ACR2020, the Postal Service stated that numbers obtained from the CPUT 

system are more reliable, and it will use CPUT data in future ACRs. Docket No. ACR2020 

Response to CHIR No. 1. In FY 2021, the Postal Service used CPUT data to report the 

number of contractor-operated retail facilities in the FY 2021 ACR, but not in the FY 2021 

Annual Report, which was based on data from a different system. Using different systems 

caused large discrepancies in the number of reported contractor-operated retail facilities. 

For example, the FY 2021 Annual Report lists the number of CPUs at the end of FY 2021 as 

2,009, which is 189 more than the number in reported the FY 2021 ACR (1,820). FY 2021 

Annual Report at 27; FY 2021 ACR at 78.

Tracking contractor-operated retail facility data in one system would promote not only 

consistency among reports, but efficiency and accuracy as well. When contractor-operated 

retail facilities open or close, the Postal Service would only need to update one system 

instead of two, which could save time. It could also focus its efforts on ensuring the data in 

the system are accurate.

The Commission reiterates the importance of providing consistent information among the 

Annual Report, ACR, and CHIR responses. In the FY 2022 Annual Report and the FY 2022 ACR, 

the Postal Service must 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 2022 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 

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.306 A 

classified station is located within the corporate limits or city carrier delivery area of the 

 

306 “Main Post Office,” Postal Service Glossary of Postal Terms.
Docket No. ACR2021 - 204 -

city or town where a post office is located.307 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.308 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.309

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 2021 in the 

FY 2021 Annual Report, FY 2021 ACR, Library Reference USPS-FY21-33, and CHIR 

responses.310 This information is included in Table V-14.

 

307 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).

308 “Post Office branch,” Postal Service Glossary of Postal Terms; “Classified Branch,” Handbook PO-101, Appendix A at 53.

309 “Carrier annex,” Postal Service Glossary of Postal Terms.

310 FY 2021 Annual Report at 27; FY 2021 ACR at 78; Library Reference USPS-FY21-33, Excel file “PostOfficesFY2021.xlsx,” tab “Post Offices;” 

Response to CHIR No. 1, questions 3-6.
Docket No. ACR2021 - 205 -

Table V-14

Number of Retail Facilities, FY 2019–FY 2021

Facility Type FY 2019 FY 2020 FY 2021

FY 2021 

Change from 

FY 2020

FY 2021 

Change from 

FY 2019

 Post Offices 26,362 26,361a 26,361 0 -1

 Classified Stations & Branches and 

Carrier Annexes 4,960 4,968 4,885 -83 -75

Total Postal-Managed 31,322 31,329 31,246 -83 -76

 Contract Postal Units 2,022 1,914 1,820 -94 -202

 Village Post Officesb 542 441 411 -30 -131

 Community Post Offices 456 441 419 -22 -37

Total Non-Postal-Managed 3,020 2,796 2,650 -146 -370

Total Retail Facilities 34,342 34,125 33,896 -229 -446

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.

b These numbers were obtained from Response to CHIR No. 13, question 5.

Source: Response to CHIR No. 1, question 6. As previously discussed, the number of retail facilities differs among the Postal Service’s data 

systems. The numbers in this Table reflect the best available data.

The total number of retail facilities in FY 2021 was 33,896, which was 229 less than 

FY 2020. Between FY 2020 and FY 2021, the number of contractor-operated retail facilities 

declined for each facility type (CPU, VPO, and CPO). The largest decrease between FY 2020 

and FY 2021 was in the number of CPUs, which decreased by 94.

The Public Representative expresses concern about the decline in the number of 

contractor-operated retail facilities. PR Comments at 63. He comments that the continued 

decline will likely have a disproportionate effect on rural or remote areas, which are more 

difficult to serve because residents in these areas have to spend more time traveling to 

access retail facilities during the COVID-19 pandemic. Id. at 65. He maintains that access to 

contractor-operated retail facilities provides an important service to customers, especially 

in rural areas. Id. He observes that the Postal Service has not provided a plan to increase 

the number of contractor-operated retail facilities and instead points to the availability of 

alternative access channels. Id. He recommends that the Commission ask the Postal Service 

to explain current policies and plans for maintaining contractor-operated retail facilities for 

underserved communities. Id.

In its reply comments, the Postal Service responds that closures of contractor-operated 

retail facilities do not “conform to tidy geographical patterns.” Postal Service Reply 

Comments at 22. It asserts that the Public Representative does not provide any evidence 

supporting the assumption that declines in contractor-operated retail facilities 

disproportionately affected rural customers. Id. In a CHIR response, the Postal Service 

explains that to maintain access to postal services in rural and/or remote areas during the 

pandemic, it tracks affected sites daily to monitor temporary closures and re-openings of 

retail facilities. Response to CHIR No. 13, question 1.a. It provided suppliers of contractor-
Docket No. ACR2021 - 206 -

operated retail facilities with a letter clarifying their status as essential federal government 

suppliers to ensure they remained open during the COVID-19 pandemic. Id. The Postal 

Service states it evaluates service needs of each community by reviewing factors such as 

volume data, PO Box availability, workhours, retail transactions, delivery growth, customer 

satisfaction ratings, and verbatim comments to Point of Sale surveys. Id. It then compares 

this data to the same period last year to determine customer facing needs. Id. question 1.b.

In FY 2021, the Postal Service did not close any post offices. Although the number of retail 

facilities decreased by 229, the Postal Service continues to provide customer access to 

postal products and services through alternative access channels in addition to providing 

products and services over-the-counter at retail facilities. See Section V.B.7., infra. The 

decline in retail facilities is mitigated by the availability of products and services through 

alternative access channels, which have become increasingly important during the COVID19 pandemic with fewer people conducting transactions in person. The Commission will 

continue to monitor the number of retail facilities in the FY 2022 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 offices311 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 2021. 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.312

a. Post Office Suspension Activity during FY 2021

The Postal Service filed data on the number of suspended post offices in Library Reference 

USPS-FY21-33,313 which the Postal Service updated in a CHIR response.314 This library 

reference also includes data on post offices reopened and closed during FY 2021. Table V15 shows post office suspension activity during FY 2021 by facility type. It lists the number 

of suspended post offices at the beginning and end of FY 2021, as well as the number of 

post offices suspended, reopened, and closed during FY 2021. The number of suspended 

post offices at the end of FY 2021 is calculated by adding the number of post offices 

suspended during the fiscal year to the number of suspended post offices at the beginning 

 

311 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.

312 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).

313 Library Reference USPS-FY21-33, Excel file “PostOfficesFY2021.xlsx,” tab “Suspension Summary.”

314 Response to CHIR No. 11, question 2.f., folder “Docket No. ACR2021,” folder “ChIR 11 Response Attachments,” Excel file “ChIR No. 11 Q 

2.f.xlsx.”
Docket No. ACR2021 - 207 -

of the fiscal year, and then subtracting the number of post offices reopened and closed 

during the fiscal year. Table V-15 shows that the total number of suspended post offices 

increased by 6 in FY 2021. At the end of FY 2021, there were a total of 425 suspended post 

offices.

Table V-15

Post Office Suspension Activity during FY 2021

Under 

Suspension 

at the Start 

of FY 2021

Suspended 

During FY 

2021

Offices 

Suspended Prior 

FYs and Reopened 

During FY 2021

Offices Suspended 

During FY 2021 and 

Reopened During FY 

2021

Closed 

During 

FY 

2021

Under 

Suspension at 

the End of FY 

2021

Post Offices 330 93 40 50 0 333

Stations/Branches 88 17 10 4 0 91

Carrier Annexes 1 0 0 0 0 1

Total 419 110 50 54 0 425

Source: Response to CHIR No. 11, question 2.f., folder “Docket No. ACR2021,” folder “ChIR 11 Response Attachments,” Excel file “ChIR No. 11 Q 

2.f.xlsx” tab “Suspension Summary.”

Note: The post office suspension numbers in this Table and section do not match Library Reference 33 and past CHIR responses 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 Requests for Additional Information in the FY 2020 Annual Compliance Determination, February 9, 2022 (Docket No. 

ACR2020 Ninth Response). The numbers in this Table reflect the most up-to-date numbers reported by the Postal Service.

b. Status of Post Offices Suspended at the end of FY 2016

(1) Background

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 2020 ACD at 

212-22. 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 

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 2020 are described in detail in the FY 2020 

ACD and Order No. 6101.315 FY 2020 presented unique challenges, including the COVID-19 

pandemic and Postal Service organizational restructuring, which further impeded the 

Postal Service’s progress in resolving suspended post offices.316 On August 24, 2020, the 

Postal Service made a business decision to pause all customer-facing activities for the 

remaining suspended post offices. FY 2021 ACR at 80. Consequently, the Postal Service 

 

315 See FY 2020 ACD at 213-22; Order No. 6101 at 21-26. The post office suspension numbers in this section do not match the FY 2020 ACD and 

Order No. 6101 because the Postal Service continually updates these numbers in subsequent filings. See Docket No. ACR2020 Ninth Response. 

The numbers in this section reflect the most up-to-date numbers reported by the Postal Service.

316 FY 2020 ACD at 221. The FY 2020 ACD describes these challenges in detail, as well as their impact on the Postal Service.
Docket No. ACR2021 - 208 -

stated it was unable to take further action to resolve suspended post offices until 

management approves resuming customer-facing activities. Docket No. ACR2020 Response 

to CHIR No. 3, question 9.a.

In the FY 2020 ACD, the Commission acknowledged the unique challenges that affected the 

Postal Service’s progress in resolving the remaining suspended post offices. FY 2020 ACD 

at 221. However, the Commission reiterated its concern about the backlog of suspended 

post offices and the Postal Service’s lack of progress in resolving them despite enhanced 

reporting requirements. Id. It directed the Postal Service to continue filing detailed 

quarterly reports on the status of the suspended post offices remaining from FY 2016. Id.

at 222.

Based on the Postal Service’s apparent lack of commitment to addressing and resolving 

suspended post offices in recent years, the Commission announced its intent to initiate a 

public inquiry docket “to identify and address issues impeding the Postal Service’s progress 

in resolving suspended post offices.” Id. at 221. In Docket No. PI2022-1, the Commission 

established a proceeding 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 sought public input regarding suggested procedures or courses of action for 

how the Postal Service may expeditiously resolve suspended post offices. Id.

(2) FY 2021 Post Office Suspension Activity

In FY 2021, the Postal Service maintained its pause on customer-facing activities given its 

ongoing deliberations concerning retail operations following the issuance of its 10-Year 

Strategic Plan. FY 2021 ACR at 80. It continued to file quarterly reports on the status of the 

remaining post offices suspended at the end of FY 2016.317 Five CHIRs were issued to 

clarify these reports, and the Postal Service filed responses to each one.318 The Postal 

Service filed the FY 2022, Quarter 1 report on February 9, 2022. See Docket No. ACR2020 

Ninth Response.

The Postal Service reports that it reopened two suspended post offices during FY 2021, 

resulting in 207 suspended post offices remaining from FY 2016. See id. In the FY 2021 

ACR, it explains that “[t]he COVID-19 pandemic, along with self-adopted policies placing a 

pause on facility changes, disrupted the processes that had been implemented to achieve 

final resolution of the remaining suspended Post Offices.” FY 2021 ACR at 80. It notes that 

the organizational restructuring and pause on customer-facing activities contributed to the 

disruption in the process for resolving the remaining suspended post offices. Id. It states 

that after issuing its 10-Year Strategic Plan, it began to address all aspects of its retail 

 

317 Docket No. ACR2020 First Response, question 3; Docket No. ACR2020 Fifth Response, question 3; Docket No. ACR2020 Eighth Response, 

question 3.

318 See Docket No. ACR2020, Response of the United States Postal Service to Questions 1 of Chairman’s Information Request No. 28, June 11, 

2021; Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-6 of Chairman’s Information Request No. 30, August 

31, 2021; Docket No. ACR2020, Responses of the United States Postal Service to Question 1-4 of Chairman’s Information Request No. 31, 

September 22, 2021; Docket No. ACR2020, Response of the United States Postal Service to Question 5 of Chairman’s Information Request No. 

31, October 21, 2021; Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-7 of Chairman’s Information Request 

No. 32, November 9, 2021 (Docket No. ACR2020 Response to CHIR No. 32).
Docket No. ACR2021 - 209 -

operations, including the process for resolving suspended post offices. Id. It explains that 

this assessment is ongoing, along with the continuing pause on customer-facing activities, 

which precluded further steps toward resolving the remaining suspended post offices, 

aside from the two reopened in FY 2021. Id.

As an intermediary measure, the Postal Service states it closely examined the remaining 

suspended post offices to “[identify] those suspensions that can be resolved outside the PO101 discontinuance process and independently of the customer-facing activities on which 

that process relies.” Id. at 81. Three CHIRs were issued to clarify post office suspension 

numbers reported in the FY 2021 ACR and Library Reference 33.319

(3) Comments

The Public Representative observes that the Postal Service’s efforts to resolve suspended 

post offices have been limited to suspensions remaining from FY 2016. PR Comments at 67-

68. He states that he is pleased the Postal Service paused the suspension resolution process 

until 2021 and held post office closings in abeyance in areas affected by the COVID-19 

pandemic. Id. at 68. However, he expresses concern that pausing the suspension resolution 

process was not accompanied by reopening post offices during the COVID-19 pandemic. Id.

He maintains that the COVID-19 pandemic has likely increased the need for more extensive 

and rapid access to customer-facing post offices and recommends that the Postal Service 

quickly develop new criteria to evaluate the COVID-19 pandemic’s impact on customer 

access. Id. He suggests that once these criteria are developed, the Postal Service should 

then restart the suspension resolution process using these new criteria as soon as possible. 

Id.

The Public Representative notes that restarting the process of resolving suspended post 

offices is within the Postal Service’s control because the Postal Service may decide when to 

resume customer-facing activities. Id. at 69. He recommends that the Commission require 

the Postal Service to report how the COVID-19 pandemic impacted the need for retail 

access to post offices in areas served by suspended post offices. Id. at 70. He states that this 

report should examine several issues, including the criteria the Postal Service previously 

used to determine whether to open, close, or retain suspension status for currently 

suspended post offices, as well as the new criteria the Postal Service will apply to 

suspended post offices while the COVID-19 pandemic continues to affect areas served by 

these post offices. Id. He also suggests that the Postal Service explain how it determined the 

new criteria and that the Commission ask the Postal Service to discuss other issues 

associated with the universal service obligation. Id.

In its reply comments, the Postal Service reiterates the explanation provided in the 

FY 2021 ACR for the disruption in the process for resolving the remaining suspended post 

offices. Postal Service Reply Comments at 22-23. It notes that main factors contributing to 

the delay were the organizational restructuring, pause on customer-facing activities, and 

 

319 CHIR No. 2, question 33; CHIR No. 5, question 3; CHIR No. 11, questions 1-4.
Docket No. ACR2021 - 210 -

the Postal Service’s assessment of its retail operations in light of the 10-Year Strategic Plan. 

Id.

(4) Commission Analysis

Of the post offices suspended at the end of FY 2016, the Postal Service reports that 207 

remained suspended at the end of FY 2021. See Docket No. ACR2020 Ninth Response. The 

number of suspended post offices at the end of FY 2021, as reported by the Postal Service, 

is shown in Figure V-27:

Figure V-27

Remaining Suspended Post Offices

At the End of FY 2021

a Docket No. ACR2020 Ninth Response.

b See Response to CHIR No. 11, question 1. This number was calculated as the number of suspensions the Postal Service reported at the end of 

FY 2021 (425) minus the 207 suspensions remaining from FY 2016. The net number of post offices suspended between FY 2017 and FY 2021 is 

218. It does not include post offices that were suspended and subsequently reopened or closed during this time period.

c Response to CHIR No. 11, question 1.

Note: The numbers in Figure V-27 reflect the most up-to-date numbers provided by the Postal Service.

In FY 2021, aside from reopening two post offices, the Postal Service did not take further 

action to resolve the remaining suspended post offices. The Public Representative raises 

valid concerns about how the COVID-19 pandemic is impacting areas served by suspended 

post offices, as well as the criteria the Postal Service should apply to current suspensions 

when determining whether to reopen, close, or retain suspension status. Docket No. 

PI2022-1 provides interested persons the opportunity to explore these concerns and 

similar issues, as well as suggest procedures or courses of action for how the Postal Service 

may expeditiously resolve suspended post offices. Interested persons are encouraged to 

participate in that docket.

The Commission is concerned about the accuracy of post office suspension information 

reported by the Postal Service. There are discrepancies in the number of suspensions 

reported in the FY 2021 ACR, Library Reference 33, and CHIR responses. For example, the 

FY 2021 ACR states that there were 662 suspensions at the end of FY 2016 and 206 
Docket No. ACR2021 - 211 -

suspensions at the end of FY 2021. FY 2021 ACR at 79-80. However, the Postal Service 

revised these numbers in the Docket No. ACR2020 Ninth Response to 663 and 207, 

respectively. Docket No. ACR2020 Ninth Response at 2-3, 4.

Also, there were numerous errors in the Docket No. ACR2020 Fifth Response regarding the 

steps completed and next steps reported for each suspended post office. See Docket No. 

ACR2020 Response to CHIR No. 32; Docket No. ACR2020 Fifth Response. The Postal Service 

explained that after the FY 2021 Quarter 3 report was filed, a new team was assigned to 

monitor the status of the remaining suspended post offices. Docket No. ACR2020 Response 

to CHIR No. 32, question 2. It stated that the team reinvestigated the background of each 

suspended post office to review information already submitted and correct errors when 

necessary. Id. It noted “[i]n order to ensure accuracy of reporting, the Postal Service 

consistently updates the database encompassing the originally identified set of Post 

Offices.” Docket No. ACR2020 Ninth Response at 2. The Postal Service stated the Docket No. 

ACR2020 Ninth Response corrected discrepancies identified in past quarterly reports and 

“represent[s] the most accurate data currently available.” Id.

Reporting accurate information is essential for the Commission’s review of suspensions in 

the ACD and other proceedings. Docket No. PI2022-1 in particular is closely examining the 

remaining suspensions from FY 2016, as well as suspensions between FY 2017 and FY 

2021. The Commission and the public require accurate information to properly evaluate 

the suspensions and provide related data analyses. Future quarterly reports must contain 

the most accurate available information. If there are discrepancies or changes from a 

previous quarterly report or related CHIR response, the Postal Service must identify and 

reconcile them in the quarterly report.

The Commission directs the Postal Service to continue filing quarterly reports on the status of 

the suspensions remaining from FY 2016. The Postal Service must file this information within 

40 days after the end of each quarter in FY 2022 and in FY 2023 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. ACR2020 on 

November 9, 2021.320

Each quarterly report must provide 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.321 Also, the FY 2022 ACR must include a detailed plan and timeline for 

resolving all remaining suspended post offices, including post offices suspended from FY 2017 

through FY 2022.

 

320 See Docket No. ACR2020 Response CHIR No. 32, Excel file “list of offices for chir no. 32.xlsx.”

321 For example, the spreadsheet could highlight cells that differ from the prior report or describe any corrections in the Excel spreadsheet.
Docket No. ACR2021 - 212 -

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 2021 in Library Reference USPS-FY21-

33 and in the FY 2021 Annual Report.

322 The total number of delivery points in FY 2021 was 

163,139,167, an increase of 1,765,015 from FY 2020. FY 2021 Annual Report at 27. Figure 

V-28 shows the volume per delivery point between FY 2017 and FY 2021.

Figure V-28

Volume per Delivery Point, FY 2017–FY 2021

a Density is the Market Dominant and Competitive volumes divided by the number of delivery points.

Source: FY 2020 ACD at 223; Commission Calculation Based on FY 2021 Annual Report at 25, 27.

The Commission has been tracking delivery point data since the enactment of the PAEA, 

when volume per delivery point was at its highest level of 1,458 mailpieces per delivery 

point in FY 2006. Volume per delivery point was 790 in FY 2021, a 46 percent decrease 

since FY 2006.

Collection Boxes

A collection box is a metal container dedicated to collecting mail deposited by customers. 

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 

 

322 Library Reference USPS-FY21-33, Excel file “Delivery Points FY2021.xlsx;” FY 2021 Annual Report at 27.

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Density 951 923 892 800 790

 Delivery Points (Millions) 157 159 160 161 163

 Mail Volume (Billions) 150 146 143 129 129

700

750

800

850

900

950

1,000

Volume Per Delivery Point

a
Docket No. ACR2021 - 213 -

collection boxes added and removed during the fiscal year. 39 C.F.R. § 3055.91(c). The 

Postal Service filed this data for FY 2021 in Library Reference USPS-FY21-33.323 Nationally, 

there were 140,062 collection boxes at the end of FY 2021, 783 fewer than in FY 2020. Id.

cells C9 and G12. Figure V-29 shows historical data on the number of collection boxes 

between FY 2017 and FY 2021.

Figure V-29

Number of Collection Boxes

FY 2017–FY 2021

Source: Library Reference USPS-FY21-33, Excel file “CollectionBoxesFY2021.xlsx.”

In a CHIR response, the Postal Service confirms that in FY 2021 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. 5, question 1. The POM states that mail from collection boxes located in primarily 

residential areas is generally collected when mail is delivered.324 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.; Response to CHIR No. 5, question 1.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 

 

323 Library Reference USPS-FY21-33, Excel file “CollectionBoxesFY2021.xlsx.”

324 United States Postal Service, Postal Operations Manual § 311.a., July 2002 (updated with revisions through July 31, 2020) (POM). The Postal 

Service filed an PDF of the most recent version of the POM with a CHIR response. Response to CHIR No. 5, question 2, folder “onedrive_2022-

02-11,” folder “Docket No. ACR2021,” folder “Zip Attachment ChIR 5 Responses,” folder “ChIR 5 Attachments.zip,” folder “ChIR 5 Attachments,” 

folder “Question 2,” folder “pomtc.pdf.”

146,252

143,977

142,300

140,845

140,062

130

132

134

136

138

140

142

144

146

148

150

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Collection Boxes (Thousands)
Docket No. ACR2021 - 214 -

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.325

The Public Representative observes that the number of collection boxes reduced by only 

0.56 percent in FY 2021. PR Comments at 73. He supports the Commission’s continued 

monitoring of collection boxes in ACR dockets to mitigate potential concerns about the 

declining number of collection boxes. In its reply comments, the Postal Service reiterates 

that when managing collection boxes, it has continued to observe the procedures specified 

by Chapter 3 of the POM. Postal Service Reply Comments at 23-24.

The Commission will continue to monitor the number of collection boxes in Docket No. 

ACR2022. In FY 2022, 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 

2022 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 2021 in Library Reference USPS-FY21-33.

326 The national average wait 

time in line increased from 2 minutes 26 seconds in FY 2020 to 2 minutes 48 seconds in 

FY 2021. FY 2021 ACR at 78. Table V-16 shows the national average customer wait time in 

line by quarter for FY 2017 through FY 2021.

 

325 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.

326 Library Reference USPS-FY21-33, Excel file “WaitTimeInLine FY2021.xlsx.” The Postal Service explains how it calculated wait time in line in a 

CHIR response. Response to CHIR No. 2, question 32.
Docket No. ACR2021 - 215 -

Table V-16

National Average Wait Time in Line (in Minutes)

by Quarter, FY 2017–FY 2021

Quarter FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Quarter 1 2:30 2:18 2:25 1:57 3:14

Quarter 2 2:39 2:28 2:34 2:06 3:15

Quarter 3 2:34 2:04 1:54 2:59 2:38

Quarter 4 2:28 1:53 1:39 3:05 2:05

Source: Library Reference USPS-FY21-33, Excel file “WaitTimeInLine FY2021.xlsx,” tab “Nat’l Avg Wait 

Time by Qtr FY21;” FY 2020 ACD at 225.

Table V-16 shows that in FY 2021, the national average wait time in line was more than 3 

minutes during Quarters 1 and 2, but improved during Quarters 3 and 4 to approximately 2 

minutes at the end of Quarter 4. This table also shows that in FY 2021, wait time in line for 

Quarters 1 and 2 were longer compared to past years. Wait time in line increased despite 

the Postal Service’s efforts to mitigate wait time in line during the pandemic, which include:

 Daily reporting to ensure that all post offices are using the IV Employee Scheduler 

and Volume Arrival Profile systems to ensure that no gaps arise in scheduling

 Distribution of Mobile Point of Sale devices at select post offices, together with the 

realignment of Self-Service Kiosks (SSKs) to support peak operations

 Employment of lobby assistants who greet retail customers and help guide them to 

appropriate products and services

 Scheduled visits by Postmasters and/or managers of post office operations to retail 

facilities identified as “vital” based on KPIs

 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 targets327

In a CHIR response, the Postal Service describes several factors contributing to increased 

wait time in line in FY 2021, including a 1.95 percent increase in post office walk-in 

revenue, a 3 percent increase in non-revenue packages and drop offs, a significant increase 

in passport services, and continued limited employee availability caused by the COVID-19 

pandemic. Response to CHIR No. 1, question 7. The Postal Service states that accepted 

passport applications increased by approximately 42 percent in FY 2021, which increased 

wait time in line because passport applications have an average transaction time of almost 

13 minutes. Id.

 

327 FY 2021 ACR at 78-89.
Docket No. ACR2021 - 216 -

The Postal Services notes that as of February 2022, wait time in line improved 2.74 percent 

compared to the same period last year. Response to CHIR No. 13, question 6. To improve 

wait time in line in FY 2022, the Postal Service describes strategies designed to address 

factors contributing to wait time in line that include improving clerk scheduling, 

supporting additional technology deployment, engaging lobby assistance, and 

disseminating Learn and Grow webinars focusing on wait time in line. Id. It states it 

conducted a deep dive analysis of wait time in line failures, as well as on-site reviews of 

retail facilities identified as “vital” based on KPIs. Id. Other strategies include maintaining 

standard work instructions in a central location accessible to Postal Service employees and 

fostering peer networking and development for retail support specialists to help them 

improve their knowledge base. Id.

The Public Representative comments that national average wait time in line increased by 

15 percent between FY 2020 and FY 2021. PR Comments at 74. He states that although this 

increase is small in absolute terms, wait time in line “is clearly moving in the wrong 

direction.” Id. He observes that the average wait time in line was more than 3 minutes in 

the Southern and Western Pacific areas. Id. at 75. He asserts that wait times longer than 3 

minutes “represent a significant increase above wait times estimated in previous years” 

considering that national wait time in line had not exceeded 3 minutes since the first two 

quarters of FY 2016. Id.

The Public Representative states that wait time in line is a key driver of retail customer 

satisfaction. Id. at 76. He asserts that longer wait times in line could cause retail customers 

to seek alternatives such as “approaching Postal Service competitors or avoiding hard copy 

altogether and using the internet.” Id. He recommends that the Commission require the 

Postal Service to develop and file with the Commission a plan describing how the Postal 

Service intends to mitigate increased wait time in line during the expected time of the 

COVID-19 pandemic and beyond. Id. He states this plan should describe the steps and 

resources necessary to steadily reduce wait time in line. He concludes that “[i]f the Postal 

Service continues to avoid the Commission’s recommendation, specific rules and 

regulations requiring this information may be necessary.” Id.

In its reply comments, the Postal Service reiterates several factors contributing to wait time 

in line, including increases in walk-in revenue, non-revenue packages, and drop offs, as well 

as a higher number of accepted passport applications. Postal Service Reply Comments 

at 24. It states the COVID-19 pandemic continued to impact employee availability, which 

was a crucial factor contributing to increased wait time in line. Id.

Wait time in line was more than 3 minutes in FY 2021, Quarters 1 and 2 were likely due to 

peak season combined with staffing shortages resulting from the COVID-19 pandemic. 

However, wait time in line improved to 2 minutes 38 seconds in FY 2021, Quarter 3 and 2 

minutes 5 seconds in Quarter 4. Also, as of February 2022, the Postal Service reports an 

improvement of 2.74 percent in wait time in line compared to the same period last year. 

These trends indicate that wait time in line is moving in the right direction toward pre-
Docket No. ACR2021 - 217 -

COVID-19 pandemic levels. The Commission will monitor wait time in line in Docket No. 

ACR2022 to ensure continued improvement.

The Commission encourages the Postal Service to continue implementing strategies designed 

to improve wait time in line in FY 2022. In the FY 2022 ACR, the Postal Service must describe 

actions taken during FY 2022 to improve wait time in line. If wait time in line worsens during 

FY 2022, the FY 2022 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 2023 that include specific 

actions, strategies, and initiatives designed to address factors contributing to 

increased wait time in line, including 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

 CPUs – contractor-operated retail facilities consisting of 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 Go328

The Commission previously recommended that the Postal Service expand alternative 

access channels to ensure customers have ready access to essential postal services.329 The 

Postal Service provided a table containing information on retail revenue from post offices 

and alternative access channels for FY 2020 and FY 2021 in a CHIR response.330 It also 

included information on the number of transactions, as well as a more detailed breakdown 

 

328 Response to CHIR No. 13, question 2.b.i., b.iv.

329 Docket No. N2012-2, Advisory Opinion on Post Office Structure Plan, August 23, 2012, at 37.

330 Response to CHIR No. 13, question 4.a. 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.). Id. question 4.b.
Docket No. ACR2021 - 218 -

of revenue, for some alternative access channels. Response to CHIR No. 23. Figure V-30

compares retail revenue by channel from FY 2018 through FY 2021 in three groups:

 Post Offices (walk-in revenue from post offices and CPUs)

 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 2021

Source: Response to CHIR No. 13, question 4.a.; Docket No. ACR2020 Response to CHIR No. 1, question 2; Docket No. ACR2019, Responses of 

the United States Postal Service to Questions 1-7 of Chairman’s Information Request No. 1, January 16, 2020, question 2; Docket No. ACR2018, 

Responses of the United States Postal Service to Questions 1-15, 17-50 of Chairman’s Information Request No. No. 1, January 11, 2019, 

question 7.

Figure V-30 shows that in FY 2021, approximately 19 percent of retail revenue came from 

channels other than walk-in revenue from post offices and CPUs. Total revenue from the 

SSK, Stamps by Mail/Phone, and Click-N-Ship channels increased by approximately $19.4 

million, or 2.03 percent, in FY 2021. This represents a much slower revenue growth rate 

than was experienced between FY 2019 and FY 2020, when revenue from these lowcustomer-contact channels grew by approximately 19 percent. By comparison, total retail 

revenue from other channels increased by 2.20 percent.

$10,266 $10,303 $10,413 $10,639

$1,987 $1,918 $1,940 $1,980

$469 $451 $529 $545

$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

Revenue (in Millions)

Post Offices (walk-in revenue) Other Internet Access
Docket No. ACR2021 - 219 -

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 to the COVID-19 

pandemic by remaining at home, and thus minimize visiting brick and mortar post offices 

and conducting transactions in person. Continuing to disaggregate alternative access data 

and track the number of transactions and revenue by class or product will provide further 

transparency into alternative access channels.

The Commission recommends that the Postal Service continue to expand alternative access 

channels to ensure customers have ready access to essential postal services during the COVID19 pandemic and beyond. To promote transparency, the Commission suggests that the Postal 

Service continue to disaggregate alternative access data and track the number of 

transactions and revenue by class or product.

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 customer experience (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 2021 ACR and Library Reference USPS-FY21-38.331

In FY 2021, 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.332 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 USPSFY21-38, 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 2021 targets and results, and CX metrics—will be analyzed in 

 

331 FY 2021 ACR 56-78; Library Reference USPS-FY21-38, December 29, 2021, folders “USPS-FY21-38,” file “CX_Surveys_FY21.docx” (CX Surveys).

332 Library Reference USPS-FY21-38, folder “USPS-FY21-38,” PDF file “USPS-FY21-38 Preface.pdf,” at 1 (Preface).
Docket No. ACR2021 - 220 -

detail in the Commission’s forthcoming Analysis of the FY 2021 Annual Performance Report 

and FY 2022 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 2021 ACR at 72. The Delivery 

survey measures residential and small/medium business customer satisfaction with 

receiving mail and packages. Library Reference USPS-FY21-38, Preface at 3. In FY 2021, 

residential and small/medium business customers were randomly selected, contacted by 

mail, and given the option to complete the Delivery survey by phone or online.333

The Large Business Panel survey measures customer satisfaction of large businesses with 

500 or more employees. Library Reference USPS-FY21-38, Preface at 5. A third-party 

vendor manages customers who sign up to participate in the survey. Id. The Large Business 

Panel survey is conducted monthly to account for seasonal variation for Market Dominant 

products. FY 2021 ACR at 73. 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.334 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, 63-65. The customer 

satisfaction result for each mailing service is expressed as the percentage of customers who 

selected Very Satisfied or Mostly Satisfied. See FY 2021 ACR at 74; FY 2020 ACR at 55-57.

In the FY 2020 ACD, the Commission directed the Postal Service to “describe actions taken 

in FY 2021 to improve customer satisfaction with Market Dominant mailing services for 

each customer type and explain how these actions impacted FY 2021 results.” FY 2020 ACD 

at 235. The Postal Service states that in FY 2021, it continued to support both residential 

and business customers by educating them about postal products, product requirements, 

mailing standards, and operational processes. FY 2021 ACR at 75. It comments that it 

focused on the 10-Year Strategic Plan that contains key tenets directly relating to Market 

Dominant product offerings.335 The Postal Service describes enhancements to its Market 

Dominant products and services that benefit all customers. Id. For example, Informed 

 

333 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 2021 ACR at 72.

334 CX Surveys at 35-36, 63-65. 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 and USPS Retail Ground, 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.

335 Id. These tenets include 95 percent on-time reliability; a modern, transformed network of post offices; a fully optimized surface and air 

transportation network; and a rational pricing approach that involves implementing new and existing pricing authority that provides

transparency in postage prices. Id.
Docket No. ACR2021 - 221 -

Delivery allows customers to preview their mail and manage their packages scheduled to 

arrive soon to help them plan and stay abreast of bills, correspondence, and other 

important transactions.336

Other enhancements to Market Dominant products and services reported by the Postal 

Service include the continuation of the Plus One market test337 and increasing the size of 

First-Class Mail commercial postcards.338 The Postal Service states the Plus One market test 

provides businesses another tool to engage with their customers by allowing mailers to 

include a Plus One card with a host USPS Marketing Mail letter to reduce the cost of 

mailing. FY 2021 ACR at 76. It notes that residential customers also benefitted “by receiving 

offers and information that helped them save money or obtain access to services....” Id. The 

Postal Service comments that it also increased the size of First-Class Mail commercial 

postcards, which are effective in informing and engaging with customers by “‘cut[ting] 

through the digital clutter.’” Id. It states that these enhancements help customers who 

continue to “rely on mail to communicate, engage, and stay informed,” especially during the 

COVID-19 pandemic. Id.

In the FY 2020 ACD, the Commission also directed the Postal Service to explain in the 

FY 2021 ACR the reasons for any decline in customer satisfaction with Market Dominant 

mailing services between FY 2020 and FY 2021. FY 2020 ACD at 235. The Postal Service 

states that customer satisfaction declined in FY 2021 for residential and small/medium 

business customers, but increased for large business customers. FY 2021 ACR at 76. It 

explains that “[r]esidential customers relied on package delivery during the COVID-19 

pandemic, and volume of traditional letter and flat services declined.” Id. at 77. It states the 

COVID-19 pandemic continues to impact both the Postal Service and customers, making it 

difficult to compare scores for customer satisfaction with Market Dominant products 

between years. Id.

Comments

Comments on customer satisfaction with Market Dominant products discuss declines in 

residential and small/medium business customer satisfaction, as well as the Commission’s 

recommendations that the Customer Satisfaction surveys ask follow-up questions and 

questions about service performance for each Market Dominant product.339

 

336 Id. at 75-76; See United States Postal Service, Informed Delivery by USPS, available at 

https://informeddelivery.usps.com/box/pages/intro/start.action.

337 In FY 2022, the Postal Service requested, and the Commission approved, the conversion of 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).

338 FY 2021 ACR at 76. The Commission reviewed and approved the Postal Service’s proposed update to the size limitation in FY 2021. 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).

339 Other issues related to CX—including comparability issues and targets and results for the CX Composite Index and customer surveys—will be 

discussed in the Commission’s forthcoming Analysis of the FY 2021 Annual Performance Report and FY 2022 Annual Performance Plan.
Docket No. ACR2021 - 222 -

a. Customer Satisfaction Declines

The Public Representative observes significant declines in customer satisfaction across 

Market Dominant products for residential and small/medium business customers, 

especially for domestic and international First-Class Mail. PR Comments at 99. He 

comments that large business customer satisfaction increased across all Market Dominant 

products and for Periodicals and Media Mail in particular. Id. He states that the decline in 

residential and small/medium business customer satisfaction is aligned with the general 

pattern of decreased Delivery survey scores in FY 2021. Id. at 99-100. He commends the 

Postal Service “for making its large business customers feel valued in the midst of the 

COVID-19 pandemic.” Id. at 100.

The Public Representative asserts that the Postal Service did not adequately respond to the 

Commission’s directive to explain why customer satisfaction with Market Dominant 

mailing services declined for residential and small/medium business customers. Id. He 

acknowledges that the challenges resulting from the COVID-19 pandemic impacted the 

Postal Service’s ability to meet customer needs, but asserts they are “not an [excuse] for the 

large deterioration in customer sentiment[.]” Id. at 77. He points out that customer 

satisfaction with Market Dominant products did not deteriorate during the beginning of the 

COVID-19 pandemic in FY 2020. Id. Also, he states the Postal Service does not explain why 

customer satisfaction with Market Dominant products “was dramatically worse for small 

businesses and residential customers.” Id. at 100. He recommends the Commission ask the 

Postal Service to clarify how the COVID-19 pandemic, increased demand for packages, and 

decreased demand for flats and letters would lead to customer satisfaction declines for 

these customer types. Id.

The Public Representative acknowledges that the FY 2021 ACR describes general actions 

the Postal Service took to improve customer satisfaction with Market Dominant products, 

which appear to suggest that these actions improved customer satisfaction for all customer 

types. Id. at 101. However, he asserts these general actions would not produce vastly 

different customer satisfaction results for residential and small/medium business 

customers considering the disparity in their customer satisfaction compared to large 

business customers. Id. He recommends the Postal Service provide detailed information 

about “the different strategies [it] employed to improve customer satisfaction [with Market 

Dominant mailing services] by each customer type and the results of those actions.” Id. at 

102.

In its reply comments, the Postal Service maintains that it provided ample information in 

the FY 2021 ACR to satisfy the Commission’s directive to describe actions taken to improve 

customer satisfaction with Market Dominant products for each customer type. Postal 

Service Reply Comments at 27. The Postal Service adds that it worked closely with 

small/medium business customers at Postal Customer Council events and through 

workshops and meetings educating these customers “about how to mail and ship 

effectively and provide information about new and enhanced product offerings.” Id. at 28. It 

states that it helped simplify the process for local businesses to mail items to local 
Docket No. ACR2021 - 223 -

customers by making the Every Door Direct Mail—Retail (EDDM-R) website more user 

friendly. Id. The Postal Service notes that it also introduced a new offering, USPS Connect 

Local340 to help small/medium business customers ship local packages easier and faster, 

which would allow them to compete in an increasingly demanding marketplace. Postal 

Service Reply Comments at 28-29.

For residential customers, the Postal Service asserts that it improved their customer 

satisfaction with Market Dominant products by enhancing Informed Delivery to increase 

the utility of this free service for individuals receiving mail. Id. at 29. It contends that some 

efforts to increase small/medium business customer satisfaction with Market Dominant 

products “had a positive spill-over effect for residential customers by making mail more 

targeted and valuable for individuals.” Id.

b. Service Performance and Follow-up Questions

In the FY 2020 ACD, the Commission recommended that the Postal Service consider asking 

in the Customer Satisfaction surveys about service performance for each mailing service, as

well as follow-up questions for residential and small/medium business customers. FY 2020 

ACD at 234. The Public Representative comments that the Postal Service did not explain 

whether it considered adding questions to the Customer Satisfaction surveys regarding 

service performance for Market Dominant products. PR Comments at 96. He recommends 

that the Postal Service explain whether it considered this suggestion and why it chose not 

to ask these questions. Id. at 96-97.

The Public Representative also observes the Postal Service did not explain whether it 

considered asking follow-up questions for residential and small/medium business 

customers. Id. at 97. He urges the Commission to direct the Postal Service to consider 

acquiring more detailed information for these customer types, especially considering the 

substantial decline in their customer satisfaction in FY 2021. Id.

In its reply comments, the Postal Service responds that it considered the Commission’s 

recommendation to add specific questions for each Market Dominant product relating to 

service performance. Postal Service Reply Comments at 27. It explains it did not adopt this 

recommendation because of possible negative consequences.341 For example, a longer 

survey “could increase the abandonment rate, which would lead to fewer responses and 

decrease the statistical significance of the results.” Postal Service Reply Comments at 27.

 

340 This comment appears to refer to the Postal Service’s FY 2022 proposal, which the Commission approved, to add “USPS Connect Local,”

which provides same-day or next-day local package delivery, as a new price category under the existing Parcel Select product. See Docket No. 

CP2022-22, Order Approving Changes in Rates of General Applicability for Domestic Competitive Products, December 21, 2021, at 9-10 (Order 

No. 6071). Additionally, the Postal Service requested, and the Commission authorized the Postal Service to proceed with a market test for USPS 

Connect Local Mail, which pertains to local document delivery. See Order No. 6081.

341 Id.; see Response to CHIR No. 13, question 8.
Docket No. ACR2021 - 224 -

Commission Analysis

For each customer type, Table V-17 compares customer satisfaction results for select 

Market Dominant mailing services between FY 2020 and FY 2021. Results are expressed as 

the percentage of customers who were Very Satisfied or Mostly Satisfied with a Market 

Dominant mail class or category.

Table V-17

Customer Satisfaction with

Market Dominant Mailing Services, by Percentage

FY 2020–FY 2021

Market Dominant Products 

(Mailing Services) Residential Customers Small/Medium Business Customers

Large Business 

Customers

FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021

First-Class Mail 91.44% 79.14% 90.07% 78.26% 83.09% 85.57%

First-Class Mail International 85.30% 76.27% 82.05% 71.39% 88.75% 89.75%

USPS Marketing Mail N/A 80.22% 71.85% 80.71% 83.50%

Periodicals N/A 87.24% 80.46% 79.43% 84.58%

Media Mail 86.60% 79.47% 85.59% 77.51% 78.97% 83.43%

Library Mail 81.62% 76.25% 82.53% 75.52% 80.29% 83.88%

N/A - Residential customers were not asked about their satisfaction with this mailing service.

Source: FY 2021 ACR at 74. In FY 2020, the Postal Service updated the Customer Satisfaction surveys to more accurately measure 

customer satisfaction with Market Dominant products. See FY 2020 ACD at 230-32. In a CHIR response, the Postal Service confirmed that 

FY 2020 and FY 2021 customer satisfaction results are comparable. Response to CHIR No. 9, question 7.

Table V-17 shows that for large businesses, customer satisfaction increased across each 

Market Dominant mailing service between FY 2020 and FY 2021. The biggest improvement 

in large business customer satisfaction was with Periodicals and Media Mail, which 

increased by 5.15 and 4.46 percentage points, respectively, in FY 2021. Large business 

customer satisfaction was highest for First-Class Mail International at 89.75 percent.

However, for residential and small/medium business customers, Market Dominant product 

satisfaction declined across all mailing services. The biggest decrease in Market Dominant 

product satisfaction for both residential and small/medium business customers was with 

First-Class Mail, which declined by 12.30 and 11.81 percentage points, respectively. In 

FY 2021, residential customer satisfaction with Market Dominant mailing services ranged 

between 76.25 and 79.47 percentage points and was highest for Media Mail. Small/medium 

business customer satisfaction ranged between 71.39 and 80.46 percentage points and was 

highest for Periodicals, which was the only mailing service with more than 80 percent 

customer satisfaction.

The Public Representative comments that the FY 2021 ACR does not explain why customer 

satisfaction with Market Dominant products “was dramatically worse for small businesses 
Docket No. ACR2021 - 225 -

and residential customers” compared to large business customers. PR Comments at 100. In 

a CHIR response, the Postal Service states it identified “unusually high” large business 

overall satisfaction scores in FY 2021, Quarters 3 and 4, which raised the large business 

customer satisfaction scores across all Market Dominant mailing services. Response to 

CHIR No. 9, question 8. It notes it is currently investigating the drivers of this increase, but 

currently does not have an explanation. Id.

CHIR No. 12 asked the Postal Service to explain why and how the COVID-19 pandemic, 

increased reliance on package delivery, and decreased demand for letters and flats 

impacted satisfaction with Market Dominant products for residential and small/medium 

business customers, but not large businesses.342 The Postal Service maintains that the 

lingering effects of the COVID-19 pandemic make it difficult to compare Market Dominant 

product customer satisfaction results between years. Response to CHIR No. 12, question 2. 

It states that an increased reliance on package delivery and decreased demand for letters 

and flats only partially explain the declines in residential and small/medium business 

customer satisfaction because drivers of satisfaction may differ among customer types. Id.

It asserts that the survey responses do not contain the type of specific details necessary for 

a clear explanation of why residential and small/medium business customers have lower 

Market Dominant product satisfaction scores. Id.

The Postal Service explains that large businesses have historically expressed higher levels 

of customers satisfaction with Market Dominant products and services compared to small 

businesses because “[l]arger businesses have more resources available [allowing] them to 

adjust their mail entry and preparation in ways that could minimize the impact of service 

performance issues.” Id. For example, it states that large businesses with several PO Boxes 

may use the Post Office Redirect service to mitigate service performance issues at a certain 

location by redirecting their PO Box mail from one location to another. Id. A smaller 

business with only one PO Box could not adjust as easily. Id. The Postal Service contends 

that its “continued efforts to improve predictability and reliability of its services will 

increase customer satisfaction at all levels” and that improving precision in the Postal 

Service’s operating network will drive increased efficiencies and lead to stabilized costs, 

more predictable rates, and increased service reliability. Id.

CHIR No. 12 also asked the Postal Service to “describe specific actions, plans, initiatives, or 

strategies for improving residential and small/medium business customer satisfaction with 

Market Dominant products in FY 2022.” CHIR No. 12, question 3. The Postal Service 

responds that it hired more than 40,000 additional seasonal works to help address some of 

the service performance issues that caused decreased customer satisfaction in FY 2022. 

Response to CHIR No. 12, question 3. It states it will offer an affordable option in the 

expedited delivery market by expanding its USPS Connect Local offering to include a 

Market Dominant version (USPS Connect Local Mail) that includes same-day or next-day 

local document delivery. Id. The Postal Service describes other plans to improve 

small/medium business customer satisfaction with Market Dominant products that include 

 

342 Chairman’s Information Request No. 12, February 7, 2022, question 2 (CHIR No. 12).
Docket No. ACR2021 - 226 -

working with these customers at Postal Customer Council events and making the EDDM 

retail tool more user friendly. Id.

For residential customers, the Postal Service asserts that improvements and enhancements 

to Informed Delivery are expected to improve residential customer satisfaction with 

Market Dominant products. Id. It maintains that some efforts to increase Market Dominant 

product satisfaction for business mailers will also improve residential customer 

satisfaction by making mail more targeted and valuable for individuals. Id. It states that 

improving service performance should result in higher customer satisfaction levels 

specifically for residential and small/medium business customers “who were unable to 

adjust to circumvent geographic areas with poorer service performance scores.” Id.

The Commission commends the Postal Service for increasing large business customer 

satisfaction in FY 2021, especially during the COVID-19 pandemic. The Postal Service is 

effectively using its authority under 39 U.S.C. § 3641 to offer market tests of experimental 

products that may help improve business customer satisfaction with Market Dominant 

products. However, the Commission is concerned about the decline in residential and 

small/medium business customer satisfaction with Market Dominant products and the 

disparity in their satisfaction levels compared to large business customers. The 

Commission will continue to monitor customer satisfaction with Market Dominant 

products in FY 2022.

As previously discussed, the Delivery survey measures residential and small/medium 

business customer satisfaction with Market Dominant products. The Public Representative 

observes that the FY 2021 ACR did not explain whether the Postal Service considered the 

Commission's recommendations to revise the Delivery survey by asking follow-up 

questions and questions about service performance for Market Dominant mailing services. 

PR Comments at 96-97. The Postal Service responds that it considered this 

recommendation, but did not adopt it because of possible negative consequences, such as 

increased survey abandonment rate. Postal Service Reply Comments at 27.

The Commission acknowledges the Postal Service’s authority to decide which questions to 

include in the Customer Satisfaction surveys. Adding follow-up questions and questions 

about service performance to the Delivery survey would increase the survey length and 

could discourage customers from completing the surveys. However, these questions could 

identify drivers of residential and small/medium business customer satisfaction with 

Market Dominant products. This information would help the Postal Service improve 

product satisfaction levels for these customers and thus outweigh any disadvantages to 

increasing the length of the survey. For example, for each Market Dominant mailing service, 

the Delivery survey could ask customers about both their satisfaction with the mailing 

service and their satisfaction with the speed of delivery for that mailing service. Adding 

follow-up questions could provide further insight into whether customers are satisfied 

with the speed of delivery and whether mail arrived on time or by the expected date.
Docket No. ACR2021 - 227 -

In FY 2022, the Postal Service should continue to take appropriate actions to maintain large 

business customer satisfaction with Market Dominant products and improve residential and 

small/medium business customer satisfaction across all mailing services. In the FY 2022 ACR, 

the Postal Service must:

 Describe 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

 Explain how these actions, plans, initiatives, and strategies were targeted to improve 

Market Dominant product satisfaction for each customer type

 Explain how these actions, plans, initiatives, and strategies impacted FY 2022 results

If customer satisfaction with Market Dominant products declines for any customer type 

between FY 2021 and FY 2022, the FY 2022 ACR must explain why. When responding to these 

directives, the FY 2022 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.

The Commission reiterates its recommendation that the Postal Service consider revising the 

Delivery survey to ask follow-up questions and questions about service performance for each 

Market Dominant mailing service to allow the Postal Service to assess how service 

performance results affect customer satisfaction with those mailing services.
Docket No. ACR2021 - 228 -

CHAPTER VI. FLATS COST AND SERVICE 

ISSUES

Introduction

The Postal Service continues to face significant challenges processing and delivering flatshaped mailpieces (flats or flat-shaped mail products) in a cost effective manner. These 

challenges have led to continuous and persistent increases in costs, with five out of eight 

flats products not covering costs in FY 2021.343 These trends have persisted despite 

numerous operational initiatives that the Postal Service has touted as cost reduction 

efforts. In addition, no flat-shaped mail product met its service performance target in 

FY 2021.

The Commission’s review of flats cost and service issues in this docket focuses on five 

areas: (1) flats financial performance, (2) flats service performance, (3) impact of 

operational initiatives and methodological changes on flats, (4) pinch points344 that affect 

flats operational performance, and (5) flats unit costs for mail processing, delivery, and 

purchased transportation. The Commission makes several recommendations to the Postal 

Service regarding specific plans to resolve both cost and service issues for flat-shaped 

products in FY 2022.

FY 2021 Flats Volume and Financial 

Performance

In FY 2021, the attributable costs for flats products continued to increase faster than 

revenue. At the same time, volume has declined and the mail mix for some flats products 

has trended towards more workshared mail.345 In this section, the Commission reviews the 

financial performance and volume of flats products, including changes in unit attributable 

cost and unit revenue.

Cost Coverage, Contribution, and Volume

In FY 2021, the Postal Service had eight flats products. Table VI-1 compares cost coverage 

for these products in FY 2020 and FY 2021. It also includes the total cost coverage for flat-

 

343 In FY 2021, for the first time, the First-Class Mail Flats product did not cover its attributable cost. See Chapter III., supra.

344 In the FY 2015 ACD, the Commission identified and analyzed six “pinch points” that contributed to cost and service issues for flats: (1) bundle 

processing, (2) low productivity on automated equipment, (3) manual sorting, (4) productivity and service issues in allied operations, (5) 

increased transportation time and cost, and (6) last mile/delivery. FY 2015 ACD at 165.

345 Examples include, but are not limited to, Outside County Periodicals and USPS Marketing Mail Flats. See Chapter III., supra.
Docket No. ACR2021 - 229 -

shaped mail.346 Only three of eight flats products covered their costs in FY 2021, and cost 

coverage for all flats decreased compared to FY 2020. As discussed in detail in Chapter III, 

in FY 2021, the First-Class Mail Flats product did not cover its cost for the first time since 

its inception in FY 2007. See Chapter III.C.1., supra. The USPS Marketing Mail Carrier Route 

product failed to cover its cost for the third consecutive year. See Chapter III.C.2.b., supra.

Table VI-1

Flats Cost Coverage, FY 2020–FY 2021

Class/Product FY 2020 Cost Coverage FY 2021 Cost Coverage Difference

First-Class Mail Flats 100% 99% -1%

USPS Marketing Mail High 

Density and Saturation Flats and 

Parcels

130% 125% -4%

USPS Marketing Mail Carrier 

Route 96% 95% -2%

USPS Marketing Mail Flats 63% 60% -3%

USPS Marketing Mail Every Door 

Direct Mail Retail 258% 248% -9%

Periodicals In-County 51% 45% -6%

Periodicals Outside County 57% 54% -3%

Package Services Bound Printed 

Matter Flats 126% 117% -9%

Total 87% 85% -3%

Source: Library Reference PRC-LR-ACR2021-9.

Table VI-2 provides a comparison between the contribution each of these eight products 

made to institutional cost in FY 2020 and FY 2021, as well as the total contribution of all 

flats products. In FY 2021, flats products had a negative contribution of $1.291 billion.

 

346 The total cost coverage is presented as an additional data point to consider the financial performance of flat-shaped mailpieces. Because 

these products span multiple classes of mail, total cost coverage, while illustrative, is not relevant to product and class compliance.
Docket No. ACR2021 - 230 -

Table VI-2

Flats Contribution347 (Millions), FY 2020–FY 2021

Class/Product FY 2020

Contribution

FY 2021

Contribution Difference

First-Class Mail Flats $4 -$17 -$20

USPS Marketing Mail High Density and 

Saturation Flats and Parcels $430 $363 -$67

USPS Marketing Mail Carrier Route -$54 -$77 -$24

USPS Marketing Mail Flats -$780 -$817 -$37

USPS Marketing Mail Every Door Direct

Mail Retail $61 $62 $2

In-County Periodicals -$49 -$59 -$11

Outside County Periodicals -$725 -$767 -$41

Package Services Bound Printed Matter Flats $33 $21 -$12

Total -$1,081 -$1,291 -$210

Source: Library Reference PRC-LR-ACR2021-9.

In FY 2021, the contribution for all but one flats product was lower than in FY 2020. See

Table VI-2. Only USPS Marketing Mail Every Door Direct Mail—Retail (EDDM-R) saw a 

small increase in contribution.

Figure VI-1 shows the total contribution from all eight flats products, and two groups of 

flats products (compensatory and non-compensatory) from FY 2017 through FY 2021.

348

The majority of the losses from non-compensatory flats products come from USPS 

Marketing Mail Flats and Outside County Periodicals.

 

347 This table reports product-level data, therefore non-product inframarginal costs are not included in contribution calculations. See Library 

Reference PRC-LR-ACR2021-1 for non-product inframarginal costs.

348 This figure reports product-level data, therefore non-product inframarginal costs are not included in contribution calculations. See Library 

Reference PRC-LR-ACR2021-1 for non-product inframarginal costs.
Docket No. ACR2021 - 231 -

Figure VI-1

Flats Contribution and Volume, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

FY 2021 was the fourth consecutive year that the combined contribution from all flats 

products was negative. The amount of combined negative contribution has been increasing 

rapidly from negative $78 million in FY 2018 to negative $1.291 billion in FY 2021. As 

shown in Figure VI-1, combined flats volume continues to decline annually. See also Table 

VI-3.

Volumes of all but one flats products continued to decrease in FY 2021; only USPS 

Marketing Mail EDDM-R saw a small increase in volume. See Table VI-3. The Commission is 

very concerned that despite this declining volume, combined negative contribution 

continues to increase.

$1,711 

$1,286 

$840 

$527 

$429 

$(1,277) $(1,364) $(1,416)

$(1,608)

$(1,721)

$434 

$(78)

$(576)

$(1,081)

$(1,291)

31,276 

30,087 

28,618 

24,625 

23,484 

 -

 5,000

 10,000

 15,000

 20,000

 25,000

 30,000

 35,000

-$2,000

-$1,500

-$1,000

-$500

$0

$500

$1,000

$1,500

$2,000

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Volume (millions)

Contribution (millions)

Contribution from Compensatory Products

Contribution from Non-Compensatory Products

Contribution from All Flat-Shaped Products

Total Volume
Docket No. ACR2021 - 232 -

Table VI-3

Flats Volume (Millions), FY 2020–FY 2021

Class/Product FY 2020 

Volume 

FY 2021 

Volume

Percent 

Change

First-Class Mail Flats 1,205 1,176 -2%

USPS Marketing Mail High Density and 

Saturation Flats and Parcels 10,427 9,994 -4%

USPS Marketing Mail Carrier Route 5,048 5,042 0%

USPS Marketing Mail Flats 3,199 2,869 -10%

USPS Marketing Mail Every Door Direct

Mail Retail 530 542 2%

In-County Periodicals 469 447 -5%

Outside County Periodicals 3,537 3,232 -9%

Bound Printed Matter Flats 211 181 -14%

Total 24,625 23,484 -5%

Source: Library Reference PRC-LR-ACR2021-9.

Five non-compensatory products represented 54 percent of all flats product volumes in 

FY 2021.349 Within the group of flats products, USPS Marketing Mail High Density and 

Saturation Flats and Parcels have the largest share of volume.

Unit Attributable Costs

As required by the Commission’s rules, the Postal Service provided a financial analysis for 

FY 2021 that identified flats products for which unit attributable costs increased faster 

than the average unit attributable cost for Market Dominant products.350 In FY 2021, the 

average unit cost increase for total Market Dominant mail was 1.6 percent, and the Postal 

Service reported that each flats product had a percentage change in unit attributable cost 

that was greater than that average.351

Table VI-4 shows the change (increase) in unit attributable cost for each flats product from 

FY 2020 to FY 2021. Five of eight flats products had a percent increase in unit attributable 

costs that was not only higher than the Market Dominant average but also higher than the 

FY 2021 CPI-U, 5.390 percent.352

 

349 The five products are: (1) Outside County Periodicals, (2) In-County Periodicals, (3) USPS Marketing Mail Flats, (4) USPS Marketing Mail 

Carrier Route, and (5) First-Class Mail Flats.

350 The Commission’s rules establish the average change in unit Market Dominant attributable costs as the benchmark for flats cost increases. 

See 39 C.F.R. § 3050.50(b)(4).

351 See Library Reference USPS-FY21-45, December 29, 2021, folder “Rule 3050.50 Flats,” folder “Paragraph (b) – Financial Report,” Excel file 

“FY21.Rule.3050.50.Para.B,” tab “item b4.”

352 The CPI-U was calculated for FY 2021 (October 1, 2020-September 30, 2021) using the following formula: (CPI-U September 2021/CPI-U 

September 2020)-1, and expressed as a percentage; (274.310/260.280)-1 = 5.390%. See U.S. Bureau of Labor Statistics, Consumer Price Index, 

available at https://www.bls.gov/cpi/; Historical Consumer Price Index for All Urban Consumers (CPI-U), Series: All Items, 

https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-202109.pdf.
Docket No. ACR2021 - 233 -

Table VI-4

Flats Unit Attributable Cost, FY 2020–FY 2021

Class/Product FY 2020 FY 2021 Percent Change 

First-Class Mail Flats $1.282 $1.326 3.5%

USPS Marketing Mail High Density and 

Saturation Flats and Parcels $0.138 $0.143 3.6%

USPS Marketing Mail Carrier Route $0.276 $0.286 3.5%

USPS Marketing Mail Flats $0.664 $0.717 8.0%

USPS Marketing Mail EDDM-Retail $0.072 $0.078 7.1%

In-County Periodicals $0.213 $0.242 13.7%

Outside County Periodicals $0.480 $0.514 7.1%

Package Services Bound Printed Matter Flats $0.607 $0.658 8.4%

Total Market Dominant Mail $0.211 $0.214 1.6%

Note: Unit attributable cost increases that are higher than the FY 2021 CPI-U are highlighted in orange.

Source: Library Reference PRC-LR-ACR2021-9.

For each product where unit attributable costs increased faster than the average unit cost 

for total Market Dominant mail, the Postal Service provided a short narrative describing 

the drivers of the change.353 The Postal Service attributes the cost increases in each product 

to increases in mail processing, transportation, and delivery costs. See Part B Narratives. 

The Postal Service did not develop specific plans to reduce unit costs for flats products in 

FY 2021, and cites generally to its efforts to reduce overall flats costs through operational 

initiatives and changes. See id.

3. Above-Average Price Increases and Unit Revenue

To improve cost coverage for non-compensatory classes and products, the Commission 

adopted 39 C.F.R. § 3030.221 in Docket No. RM2017-3, which requires the Postal Service to 

increase rates for non-compensatory products within compensatory classes of mail “by a 

minimum of 2 percentage points above the percentage increase for that class.” See Order 

No. 5763 at 181-97; see also Chapter III.A., supra. In addition, the Commission adopted new 

rules that provide density and retirement rate authorities. See Chapter II.B., supra. Table 

VI-5 shows the price increases for flats products in Docket No. R2021-2. The magnitude of 

these price increases was significant compared to previous rate cases limited by the CPI-U 

price cap.

a. FY 2021 Flats Price Increases

As illustrated in Table VI-5, all non-compensatory flats products received price increases 

above the class average, except for In-County Periodicals. Because the Periodicals class 

consists of two non-compensatory products, both products cannot mathematically receive 

 

353 See Library Reference USPS-FY21-45, folder “Paragraph (b) --Financial Report,” PDF file “Part B Narratives.pdf-FY 21 Rule 3050.50.pdf” (Part 

B Narratives).
Docket No. ACR2021 - 234 -

above average price increases. However, for the Periodicals class, the Postal Service used 

the additional 2 percentage points in rate authority for non-compensatory classes.

Table VI-5

Flats Price Increases, FY 2021

Class/Product Product

Price Increase

Class

Price Increase

Difference

(in percentage points)

First-Class Mail Flats 10.318% 6.814% 3.504%

USPS Marketing Mail High 

Density and Saturation Flats and 

Parcels

5.454% 6.814% -1.360%

USPS Marketing Mail Carrier 

Route 8.866% 6.814% 2.052%

USPS Marketing Mail Flats 8.819% 6.814% 2.005%

USPS Marketing Mail EDDMRetail 4.167% 6.814% -2.647%

In-County Periodicals 7.326% 8.771% -1.445%

Outside County Periodicals 8.845% 8.771% 0.074%

Package Services Bound Printed 

Matter Flats 7.453% 8.804% -1.351%

Source: Library Reference PRC-LR-ACR2021-9.

b. Historical Comparison of Flats Price Increases

Table VI-6 illustrates the product-level price increases and class-average price increases 

for all flat-shaped products from FY 2017 through FY 2021. A positive number indicates 

that a product had an above class-average price increase, while a negative number 

indicates that a product had a below class-average price increase.

Table VI-6

Differences between Product and Class Price Increases (in percentage points)

FY 2017–FY 2021

Class/Product R2017-1 R2018-1 R2019-1 R2020-1 R2021-1 R2021-2

First-Class Mail Flats 1.108% -1.484% -13.415% 7.841% -0.571% 3.504%

USPS Marketing Mail High Density and 

Saturation Flats and Parcels -3.126% -0.787% 1.094% -0.998% -0.520% -1.360%

USPS Marketing Mail Carrier Route -3.932% 0.164% -1.748% -0.731% 2.020% 2.052%

USPS Marketing Mail Flats 1.622% 0.231% 0.139% 2.033% 2.044% 2.005%

USPS Marketing Mail EDDM-Retail -0.332% -1.371% 2.574% 0.279% -0.985% -2.647%

In-County Periodicals -0.006% 0.003% 0.023% 0.021% 0.013% -1.445%

Outside County Periodicals 0.133% -0.089% -0.505% -0.440% -0.254% 0.074%

Package Services Bound Printed 

Matter Flats -0.270% 0.125% -0.057% 0.091% -1.461% -1.351%

Source: Library Reference PRC-LR-ACR2021-9.
Docket No. ACR2021 - 235 -

Table VI-7 provides a comparison between the FY 2020 and FY 2021 unit revenues for flatshaped products. However, since the new prices were implemented on August 29, 2021 

(and therefore were in effect for only one month in FY 2021), the impact of the provided 

price increases on flats cost coverage will not be evident until the end of FY 2022.

Table VI-7

Flats Unit Revenue, FY 2020–FY 2021

Class/Product FY 2020 FY 2021 Percent Change

First-Class Mail Flats $1.285 $1.312 2.1%

USPS Marketing Mail High 

Density and Saturation 

Flats and Parcels

$0.179 $0.179 0.1%

USPS Marketing Mail 

Carrier Route $0.266 $0.271 1.9%

USPS Marketing Mail 

Flats $0.420 $0.432 2.9%

USPS Marketing Mail 

EDDM-Retail $0.187 $0.193 3.1%

In-County Periodicals $0.109 $0.109 0.2%

Outside County 

Periodicals $0.275 $0.277 0.7%

Package Services Bound 

Printed Matter Flats $0.764 $0.772 1.0%

Source: Library Reference PRC-LR-ACR2021-9.

c. Commission Analysis

The Commission is very concerned that the Postal Service is making little, if any, progress 

in addressing the cost coverage issues for flats. Unit revenue has increased for some flats 

products, while it has remained relatively stagnant for other flats products. In FY 2021, unit 

attributable costs for flats products continued to increase faster than the average unit 

attributable costs for all Market Dominant products, and for some products the increases 

were above the average change in CPI-U. Cost coverage continued to decline for all flats 

products. Losses from non-compensatory flats products continued to increase and the 

Postal Service did not adequately explain why this was occurring.

The Postal Service shall continue the combination of above-average price adjustments as 

required by 39 C.F.R. § 3030.221 and cost reductions until unit revenue exceeds unit 

attributable cost for each non-compensatory flats product. The Postal Service is strongly 

encouraged to refocus its efforts to evaluate the success or failure of its cost-control 

initiatives for flat-shaped mail products.

The Commission expects that the Postal Service’s continued attention to controlling unit 

attributable costs for flats, combined with its ongoing compliance with 39 C.F.R. § 

3030.221, will together improve recent cost coverage trends for flat-shaped mail products.
Docket No. ACR2021 - 236 -

Service Performance

No flats product achieved its on-time service performance target in FY 2021, despite all 

performance targets decreasing from FY 2020 to FY 2021, except for Bound Printed Matter 

(BPM) Flats. As shown in Table VI-8 and Figure VI-2, only one flats product improved ontime service performance from FY 2020 to FY 2021. However, this product, BPM Flats, had 

the lowest on-time performance in FY 2020 (at 55.7 percent).

Table VI-8

Flats Service Performance Results, FY 2020–FY 2021

Mail Class / Product

FY 2020 

On-Time 

(%)

FY 2021 

On-Time 

(%)

FY 2020–

FY 2021 

Difference

FY 2021 

Target (%)

First-Class Mail Presort Flats Overnight 80.3 75.2 -5.1 93.99

First-Class Mail Presort Flats 2-Day 76.4 70.3 -6.1 89.20

First-Class Mail Presort Flats 3-5-Day 74.7 64.8 -9.9 84.11

First-Class Mail SPFC Flats 2-Day 78.5 72.2 -6.3 89.20

First-Class Mail SPFC Flats 3-5-Day 68.1 56.4 -11.7 84.11

USPS Marketing Mail Flats 75.7 72.5 -3.2 86.62

USPS Marketing Mail Carrier Route 87.8 85.1 -2.7 86.62

USPS Marketing Mail High Density and Saturation Flats/Parcels 87.5 85.3 -2.2 86.62

USPS Marketing Mail Every Door Direct Mail Retail 77 75.7 -1.3 86.62

Periodicals In-County 80.9 75.6 -5.3 86.62

Periodicals Outside County 80.7 75.0 -5.7 86.62

Package Services Bound Printed Matter Flats 55.7 61.7 6.0 90.00

Source: Library Reference PRC-LR-ACR2021-9.
Docket No. ACR2021 - 237 -

Figure VI-2

Flats Service Performance Results, FY 2020–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

While the Postal Service claims that some operational initiatives will result in improved 

service, as discussed in Section D, infra, it is unable to determine precisely how or if its 

operational changes and/or initiatives will actually impact service.354 The Commission has 

specifically developed directives that elicit information and data regarding the steps that 

the Postal Service will take to restore service performance for flats products, as detailed in 

Chapter V.

Impact of Operational Initiatives and 

Methodological Changes

Operational Initiatives

As required by 39 C.F.R. § 3050.50(f), the Postal Service presented several operational 

initiatives and national operational changes related to flats that it has either implemented 

or plans to implement. See FY 2021 Operational Initiatives Report. The Postal Service states 

 

354 See generally, Library Reference USPS-FY21-45, folder “Paragraph (f) -- Operational Changes Report,” PDF file “FY21 Paragraph (f) 

Report.pdf” (FY 2021 Operational Initiatives Report); see also Library Reference USPS-FY21-45, folder “Paragraph (c) -- Service Performance 

Report,” folder “C2-C6 Timelines,” PDF file “C2-C6 Timelines FY21.pdf” (FY 2021 C2-C6 Timelines).

0 10 20 30 40 50 60 70 80 90 100

First Class Mail Presort Flats Overnight

First Class Mail Presort Flats Two-Day

First Class Mail Presort Flats Three-To-Five-Day

First Class Mail SPFC Flats Two-Day

First Class Mail SPFC Flats Three-To-Five-Day

USPS Marketing Mail Flats

USPS Marketing Mail Carrier Route

USPS Marketing Mail High Density and Saturation...

USPS Marketing Mail Every Door Direct Mail - Retail

Periodicals In-County

Periodicals Outside County

Package Services Bound Printed Matter Flats

FY 2021 Target (%) FY 2020 On-Time (%) FY 2021 On-Time (%)
Docket No. ACR2021 - 238 -

that “COVID-19 continued to have a significant impact on Postal Service operations and 

service performance in FY 2021, especially in the first half of the fiscal year.” Id. at 1. The 

Postal Service described each initiative that applies to all flats unless otherwise specified. 

To respond to § 3050.50(f)(1), the Postal Service identified the areas for which data were 

submitted in response to § 3050.50(b)-(e) that it would reasonably expect to be affected by 

each initiative. Id. The Postal Service continues to maintain that it is “neither possible to 

identify with certainty which initiatives contributed to a particular result nor to isolate the 

effects of each initiative.”355 The Postal Service did not provide any specific goals related to 

the initiatives, and the Commission discusses them generally in this section, and 

throughout this Chapter where applicable.

The Postal Service continues to maintain the Headquarters cross-functional team, which it 

established in FY 2019. FY 2021 Operational Initiatives Report at 2. The Postal Service 

states that “[t]he purpose of the team is to identify and implement cost saving measures 

around flats processing and improvements aimed at boosting service performance.” Id. The 

Postal Service also continues to maintain the joint task force collaboration with the flats 

mailing industry to identify potential initiatives to reduce cost and improve service. See

ACMA Comments at 2; see also Response to CHIR No. 5, question 8.

a. Flats Processing in General

Economies of density continued to have an impact on flats during FY 2021. Flats volumes 

continued to decline, and package volumes surged due to increased e-commerce driven by 

the COVID-19 pandemic. The inability of the Postal Service’s network to support the 

increase in package volume due to insufficient space, processing capacity, and 

transportation capacity led to a gridlock that affected all mail products, including flats. The 

Postal Service attributes the “disappointing service performance” results for flat-shaped 

products to “the cumulative effects of the many unfavorable circumstances experienced in 

FY 2021.” FY 2021 Operational Initiatives Report at 3. The Postal Service notes that it “is 

committed to planning and implementing initiatives that are simple and achievable and 

that will drive down costs and improve service.” Id. at 4.

b. Updates, Clarity and Specificity on Initiatives and Related 

Impacts

Notwithstanding the challenges outlined above, the Postal Service defined the following 

FY 2022 initiatives focusing on flats optimization:

 Equipment right-sizing: stabilization and/or optimization. In FY 2021, the Postal 

Service removed 12 excess FSS machines that were not needed to process the 

 

355 Id. at 2. Compare FY 2021 Operational Initiatives Report at 1-2, with Docket No. ACR2020, Library Reference USPS-FY20-45, folder 

“Paragraph (f) -- Operational Changes Report,” PDF file “Paragraph (f) Report.pdf,” at 2 (Docket No. ACR2020 Operational Initiatives Report). 

The Postal Service also noted that the data provided in response to § 3050.50(b)-(e) would necessarily change from one year to another in 

response to a multitude of factors, some of which are outside of the Postal Service’s control (e.g., the occurrence of natural disasters and 

weather-related incidents, broader economic conditions, and changes in customer preferences and behavior). FY 2021 Operational Initiatives 

Report at 1.
Docket No. ACR2021 - 239 -

current volumes at selected sites. This effort will realign operations with volume 

and density thereby removing machine operational cost and maintenance. This 

initiative will continue in FY 2022 as needed. Id. at 5.

 Site-specific flats operating plans. In FY 2021, the Postal Service worked with each 

flat-processing site to establish a site-specific flats operating plan in order to 

streamline operations and set predictable, service-responsive, achievable goals for 

operational clearance times. This initiative will continue in FY 2022. Id. at 6.

 Labeling list updates and/or changes. In FY 2021, labeling lists played an important 

role in the makeup and distribution of mail products, and careful labeling list review 

was a focus in FY 2021. Labeling list reviews will continue in FY 2022. Id. at 5.

 FSS delivery point compression. The FSS sorts flats into delivery point sequence 

(DPS). FSS processing is a multifaceted process that requires coordination by 

several functional groups, including the mailing industry. See Response to CHIR 

No. 2, question 15 a-b. In FY 2021, FSS delivery point compression was 

implemented in targeted sites for optimization of sort programs to reflect FY 2021 

volumes. FY 2021 Operational Initiatives Report at 4-5. Compression removes 

delivery points with little to no volume from the FSS sequencing but still sorts them 

to the carrier. Reducing the number of delivery points on FSS sort programs allows 

sites to process more FSS volume within the same operating window. Delivery Point 

Compression will continue to be rolled out nationally to all FSS sites in FY 2022. Id.

 Combined efforts with engineering on experimental/pilot opportunities. In FY 2021, 

the Postal Service added 896 sortation bins to 18 Automated Parcel and Bundle 

Sorter (APBS) machines, particularly aimed at helping sort Periodicals and 

Marketing Mail Flats. The Postal Service installed over 30 new Automated Delivery 

Unit Sorter (ADUS) and Small Package Sorting System (SPSS) machines (which are 

capable of processing both package and bundles) at mail processing facilities. The 

Postal Service also installed over 30 Single Induction Package Sorter (SIPS) 

machines, which may be retrofitted to process bundles. Increasing the number of 

sortation bins on bundle sorters helps to finalize more mail on a primary automated 

operation, thereby reducing the amount of mail that must be reworked on a 

secondary automated operation or reworked manually. The addition of 

package/bundle sorting equipment also increases overall bundle processing 

capacity. Finer sortation and increased capacity are expected to lead to increased 

service performance. In FY 2022, the Postal Service plans to add additional 

package/bundle sorting machines in locations with capacity shortfalls. Engineering 

will explore retrofitting SIPS machines to process bundles. Further bin expansions 

will be evaluated based on the network transition and facility modernization 

schedule. Id. at 6-7.

In addition, the Postal Service will continue the following FY 2021 initiatives: development 

and dissemination of Standard Work Instructions, Automated Flats Sorting Machine 
Docket No. ACR2021 - 240 -

(AFSM) Certification, AFSM Software enhancement, the Grid Initiative and Full Service 

bundle visibility.356

c. Commission Analysis

The Commission continues to empathize with the Postal Service on the broader impact the 

COVID-19 pandemic had on several aspects of flats operations in general. However, 

overcoming the COVID-19 pandemic impediments as challenging as it may appear, is not 

insurmountable. The Postal Service should have developed an executable plan to use 

available resources and implement the FY 2021 and FY 2022 flats operational initiatives 

strategically, to help reduce flats costs and improve the financial performance of flats 

products. The Commission continues to be specifically concerned that the Postal Service 

allocates resources on initiatives without any ability to measure the impact of the 

initiatives on flats costs. The initiatives identified by the Postal Service for FY 2021 and 

FY 2022 should result in some cost savings at the aggregate level, despite the Postal 

Service’s continued assertion that it is impossible to determine their impact. The Postal 

Service should work to quantify the impact of these initiatives on costs in FY 2022 to 

ensure its efforts are effective.

As discussed in Sections B.2. and C., supra, and throughout Chapter III and Chapter V, 

despite the existence of the operational initiatives in FY 2021, and similar initiatives in 

previous years, unit costs for flats products continue to rise and no flat-shaped mail 

product is meeting its service performance target. Operational initiatives should have 

meaningful impacts in lowering cost and/or improving service performance, which are not 

visible in FY 2021.

Cost Impact of Methodological Changes

The Postal Service identified two methodological changes that affected flat-shaped mail 

products in FY 2021.357

a. Transportation Variabilities

The first methodological change is related to new transportation variabilities in Docket 

No. RM2021-1 (Proposal Seven). Order No. 5999 at 2. In Order No. 5999, the Commission 

approved the updated variabilities for certain types of purchased highway transportation 

contracts to reflect operational changes. These operational changes included an increased 

reliance on additional highway transportation during the seasonal volume peak and a new 

type of highway contract called a Dynamic Route Optimization contract. Id. at 16-32. The 

update was accomplished through an analysis of the operational changes and through the 

 

356 Id. at 7. “The Grid is a template/tool that was designed to provide managers and employees at all levels of the organization the ability to 

clearly see the gaps in work in process (cycle time) performance through the scan events and stall points of processing and transportation.” 

Docket No. ACR2020, Responses of the United States Postal Service to Questions 1-30 of Chairman’s Information Request No. 5, February 2, 

2021, question 23 (Docket No. ACR2020 Response to CHIR No. 5).

357 See Library Reference USPS-FY21-45, folder “Paragraph (g) – Data Enhancement Report,” PDF file “FY21.Paragraph G_Data Enhancements 

.pdf” (Paragraph G Data Enhancements).
Docket No. ACR2021 - 241 -

estimation or re-estimation of the affected highway transportation variability equations. 

See Paragraph G Data Enhancements at 1. The update produced new variabilities that 

resulted in higher unit costs for all flat-shaped mail products with the exception of

EDDM-R.

358

b. City Carrier Special Purpose Route Costs

The second methodological change involved the use of Product Tracking and Reporting 

(PTR) scan data for distributing city carrier special purpose route costs for regular Monday 

through Saturday delivery. In Docket No. RM2021-7 (Proposal Four), the Postal Service 

replaced the old system of distributing delivery costs for Special Purpose Routes (SPRs) 

with a revised system that replaced manual sampling with the scan data from PTR using 

clock rings from the Time and Attendance Collection System (TACS). Order No. 5991 at 1-2. 

This revised system is designated the Special Purpose Carrier Cost System (SPCCS). Id. at 2. 

In addition, Proposal Four separated the weekday SPRs cost pools and distribution factors 

into peak and non-peak pools. Paragraph G Data Enhancements at 2-3. Proposal Four 

continues the momentum of using operational data in product costing and allows the Postal 

Service to calculate the distribution factors more precisely and cost efficiently. Id. at 3. 

Proposal Four, however, did not provide any visible impact on unit costs for the vast 

majority of flat-shaped products, with the exception of BPM Flats, which had a slight 

decrease in unit cost (by 0.2 cents). Paragraph G Data Enhancements at 3, Table 2.

c. Commission Analysis

Methodological changes are made to improve the quality, accuracy, or completeness of 

Postal Service data. These changes can apply to a specific product or to all Market 

Dominant products, which includes flat-shaped mail. Even if a methodological change is not 

targeted at flats products, holding everything else equal, it will inevitably impact the costs 

of flats products. The Postal Service should conduct a preliminary assessment of 

methodological changes involving cost studies and determine the cost of the study. As

observed by the Public Representative “methodological redistribution of costs does not 

have the same overall beneficial financial impact as cost reduction initiatives that eliminate 

costs without redistribution.” See PR Comments at 133.

Pinch Points

In the FY 2015 ACD, the Commission identified and analyzed six “pinch points” that 

contribute to cost and service issues for flats:

 Bundle processing

 Low productivity on automated equipment

 Manual sorting

 Productivity and service issues in allied operations

 Increased transportation time and cost

 

358 See Docket No. RM2021-1, Library Reference PRC-LR-RM2021-1/1, October 6, 2021, folder “Analysis and Impact,” Excel file “Impacts of New 

Variabilities.Public_PRC.xlsx.”
Docket No. ACR2021 - 242 -

 Last mile/delivery

FY 2015 ACD at 165.

In Docket No. RM2018-1, the Commission developed specific reporting requirements 

related to each pinch point. See Order No. 5086. In this section, the Commission discusses 

trends in metrics related to each pinch point, and recommends areas where the Postal 

Service should focus its resources and/or provide additional reporting in future years.

Bundle Processing

As the Postal Service seeks additional revenues to improve cost coverage, mail preparation, 

especially “bundles,” has been a focus. In a recent Postal Service Office of the Inspector 

General (OIG) report359 titled Cost Reduction Initiative for Mail Products, the OIG 

“identified several mail preparation issues related to bundle strapping, the use of sacks, 

shrink-wrap, and paper quality that increased mail production costs. These issues caused 

increased bundle breakage which resulted in manual mail processing and increased cost 

for mail products.” OIG Report No. at 1. The Postal Service states that “[o]ngoing attention 

has yielded an increase[d] internal awareness of bundle breakage occurrences and recordation 

in order to trigger efforts to abate/reduce bundle breakage. Such efforts include reviewing both 

internal operational processes and customer communication practices.”360

a. Bundle Breakage Rates

In the FY 2021 ACR, the Postal Service provided data on Bundle Breakage Performance361

from FY 2016 through FY 2021. See Table VI-9.

 

359 United States Postal Service, Office of Inspector General, Report No. 20-088-R20, Cost Reduction Initiatives for Mail Products, August 3, 

2020, available at https://www.uspsoig.gov/sites/default/files/document-library-files/2020/20-088-R20.pdf (OIG Report No. 20-088-R20).

360 See Library Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (e) -- Pinch Point Reports,” folder “e.9 Trend 

Narrative.PRC.LR.9 Update,” PDF file “FY21 Rule 3050.50(e.9) Narrative.pdf,” at 1 (Section e.9 Narrative).

361 See Library Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (e) -- Pinch Point Reports,” folder “e.9 Trend 

Narrative.PRC.LR.9 Update,” Excel file CH 6 Data and Tables FY21. PRC.LR9.9 Update.xlsx, tab “VI-3 Bundle Breakage.” See also Library 

Reference PRC-LR-ACR2021-9, Excel file “CH 6 Data and Tables 2021.xlsx,” tab “Table VI-9 Bundle Breakage.”
Docket No. ACR2021 - 243 -

Table VI-9

Bundle Breakage, FY 2016–FY 2021

Fiscal Year Total Bundles Broken Bundles % Broken

FY 2016 497,658,730 12,960,619 2.60%

FY 2017 492,575,354 13,882,003 2.82%

FY 2018 460,468,758 22,081,833 4.80%

FY 2019 423,461,111 23,211,989 5.48%

FY 2020 357,469,115 20,432,791 5.72%

FY 2021 326,280,168 20,528,870 6.29%

Source: Library Reference PRC-LR-ACR2021-9.

In response to a FY 2019 ACD Directive, under the rubric “Efforts to Reduce Bundle 

Breakage,” the Postal Service stated “[it] has focused its efforts on lowering the incidence of 

bundle breakage at the individual level.”362 The data in Table VI-9 show that in FY 2021, the 

percent of broken bundles increased by 0.57 percentage points to 6.29 percent, 

representing an accelerated growth rate relative to last year’s 0.23 percentage point

increase.

Figure VI-3 depicts the bundle breakage by machine type in FY 2020 and FY 2021.

 

362 See Docket No. ACR2019, Response of the United States Postal Service to Commission Requests for Status Reports in the FY 2019 Annual 

Compliance Determination, July 15, 2020, at 4 (Docket No. ACR2019 Status Reports).
Docket No. ACR2021 - 244 -

Figure VI-3

Bundle Breakage by Machine Type363

Source: Library Reference PRC-LR-ACR2021-9.

The majority of bundles (roughly 95 percent) are processed on either the Automated 

Package Processing System (APPS) or the Sorter/Small Parcel and Bundle Sorter Tracking 

(SPBST) with an average broken rate of 6.36 percent.364 Given that there was a 9 percent 

drop in the number of bundles processed on the APPS and SPBST machines combined from 

FY 2020 to FY 2021, and the aggregate breakage rate on these two machines is 0.6 

percentage points higher in FY 2021 than in FY 2020, the Commission concludes that the 

Postal Service has not succeeded in its efforts to reduce the occurrence of bundle breakage.

However, the Postal Service continues to utilize the Mailer Irregularity Application to provide 

specific and actionable information on bundle breakage and other preparation and/or 

quality issues to mailers.365 The Mailer Irregularity Application identifies mail irregularities 

such as mail with preparation and/or quality issues. See Section e.9 Narrative at 1. The Mailer 

Irregularity Application resides on the Surface Visibility Mobile scanner platform and in 

FY 2020, was made available on the Mailer Scorecard, allowing it to be easily shared with 

mailers for corrective action. Id.

 

363 Machines displayed on this graph are the Automated Delivery Unit Sorter (ADUS), the Automated Package Processing System (APPS), the 

Enhanced Package Processing System (EPPS), the High Throughput Package Sorter (HTPS), the Small Parcel and Bundle Sorter Tracking System

(SPBSTS), and the Small Package Sorting System (SPSS).

364 See Library Reference PRC-LR-ACR2021-9, Excel file “CH 6 Data and Tables.xlsx,” tab “Table VI-9 – Bundle Breakage.”

365 Docket No. ACR2019 Status Reports at 4. The Mailer Irregularity Application resides on the Surface Visibility Mobile scanner platform and 

utilizes available barcode information, a selectable issue list, and images to provide specific insight into bundle breakage. Id. n.1.

0%

5%

10%

15%

20%

25%

30%

35%

ADUS APPS EPPS HTPS SPBSTS SPSS

FY 2020 FY 2021
Docket No. ACR2021 - 245 -

There is unequivocal evidence supporting the Postal Service’s effort to collaborate with the 

flats mailing industry to reduce the incidence of bundle breakage. See Response to CHIR No. 5, 

question 8. Unfortunately, recent events such as the COVID-19 pandemic and changes in the 

Postal Service’s organizational structure have slowed efforts to increase or improve 

communications with mailers related to Mailer Scorecard irregularities, such as bundle 

breakage. Section e.9 Narrative at 1-2. The Postal Service continues to study the causes of 

bundle breakage, impacts and ways to reduce bundle breakage, while also envisioning 

improved methods to engage mail preparers to improve the product and service by reducing 

breakage risk. Id. at 2.

Table VI-10 shows the FY 2019 through FY 2021 bundle breakage by groups of noncompensatory products and its cost impact, as estimated by the Postal Service.

b. Bundle Breakage Cost Impacts

In response to a FY 2019 ACD Directive, the Postal Service estimated the FY 2019 cost 

impact of bundle breakage for both Periodicals products and two USPS Marketing Mail 

products (Flats and Carrier Route). Docket No. ACR2020 Response to CHIR No. 5, question 

16; Excel File “Q16 CHIR No. 5.xlsx.” The total cost impact of broken bundles in FY 2021 is 

$68.4 million and the cumulative cost impact for the period from FY 2019 to FY 2021 is 

$183.2 million. See Table VI.10.

Table VI-10

Bundle Breakage by Groups of Products366 and Cost Impact, FY 2019–FY 2021

Fiscal

Year

Bundles 

Processed

(millions)

Broken 

Bundles

(millions)

Percent 

Broken 

Total Cost 

impact

($ millions)

Total Bundle 

Processing Cost 

Excluding Cost of 

Broken Bundles

($ millions) 

Total 

Processing 

Cost

($ millions)

Broken Bundle 

Percent of 

Total 

Processing 

Cost 

FY 2019 423.5 23.2 5.48% $ 59.81 $ 160.56 $ 220.37 27.1%

FY 2020 357.5 20.4 5.72% $ 54.96 $ 123.25 $ 178.21 30.8%

FY 2021 326.3 20.5 6.29% $ 68.43 $ 116.51 $ 184.94 37.0%

Cumulative Cost Impact FY 2019-FY 2021 $ 183.21 

Source: Library Reference PRC-LR-ACR2021-9.

Bundle processing and bundle breakage rates are different between flats products in two 

mail classes: Periodicals and USPS Marketing Mail, and their relative cost impacts also vary. 

In FY 2021, the bundle breakage percent rate for USPS Marketing Mail was 7.12 percent, 

while the bundle breakage percent rate for Periodicals was 4.52 percent.367 The bundle 

breakage percent rate difference between Periodicals products and the USPS Marketing 

Mail Flats and USPS Marketing Mail Carrier Route products continues to exhibit the same 

 

366 The group of products includes both Periodicals products, USPS Marketing Mail Flats, and USPS Marketing Carrier Route.

367 See Library Reference PRC-LR-ACR2021-9, Excel file “CH 6 Data and Tables.xlsx,” tab “Table VI-10 – Bundle Cost Impact.”
Docket No. ACR2021 - 246 -

pattern with more incidences of bundle breakage reported for USPS Marketing Mail Flats 

and USPS Marketing Mail Carrier Route. This pattern is expected to continue unless bundle 

preparation requirements are modified. As the Postal Service explained, bundles for 

Periodicals are typically more uniform in size than the USPS Marketing Mail Flats and USPS 

Marketing Mail Carrier Route bundles, which are often poly wrapped and strapped by the 

mailer. Docket No. ACR2020 Response to CHIR No. 5, question 18. The USPS Marketing Mail 

bundles, on the other hand, vary widely in size, and are roughly twice as likely to be prepared 

in sacks rather than placed on pallets. Id. Sacked bundles have higher breakage rates because 

they do not have the protection that pallets provide. Id.

Table VI-11

Increase in the Estimated Cost Impact, FY 2021368

Mail Class/Product

FY 2021 Increase in Estimated 

Cost Impact Per Broken 

Bundle

FY 2021 Increase in Estimated 

Cost Impact Per Piece in 

Broken Bundle

Periodicals 30% 27%

USPS Marketing Mail Flats and USPS 

Marketing Mail Carrier Route 22% 17%

Source: Library Reference PRC-LR-ACR2021-9.

Table VI-11 shows a substantial increase in both the per piece and per bundle estimated 

cost impact for Periodicals and USPS Marketing Mail Flats and USPS Marketing Mail Carrier 

Route. The Postal Service explained that several factors could have contributed to the 

increase in cost between FY 2020 and FY 2021. Higher percentages of broken bundles 

would result in higher cost estimates. Furthermore, cost models used to develop the 

underlying data contain mail processing unit cost estimates by shape for Periodicals, USPS 

Marketing Mail Flats and USPS Marketing Mail Carrier Route, and all such costs have 

increased.369 Additionally, as described in the Docket No. ACR2019 Status Reports, 

increases in the CRA proportional adjustment factor also affect these cost estimates.

c. Commission Analysis

The Commission commends the Postal Service for its persistent effort in working with the 

flats mailing industry amidst the challenges posed by the COVID-19 pandemic to resolve 

flats issues, especially bundle hygiene and integrity. Both the Postal Service and the flats 

mailing industry are to be commended for the breadth of information shared and the 

degree of participation demonstrated.

 

368 See Responses of the United States Postal Service to Questions 1-3 of Chairman’s Information Request No. 10, February 9, 2022, question 1. 

See also Library Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (e) -- Pinch Point Reports,” folder “e.9 Trend 

Narrative.PRC.LR9 Update,” Excel file “CH 6 Data and Tables FY21. PRC.LR.9 Update.xlsx,” tab “LR9 -Table 5-Bundle Cost Impact,” cells F4:G5.

369 See Library Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (b)--Financial Report,” Excel file 

“FY21.Rule.3050.50.Para.B.xlsx,” tab “Item b2.”
Docket No. ACR2021 - 247 -

In FY 2021, the Postal Service spent $116.5 million on bundle processing, which accounts 

for approximately 6.0 percent of flats processing costs.370 In FY 2021, the Commission 

estimated the cost impact of broken bundles to be $68.4 million, a 25 percent increase from 

FY 2020.371 The cumulative impact of $183.2 million from FY 2019 to FY 2021 is alarming. 

Given that the cost impact of broken bundles was excluded from the calculation of the cost 

impact of bundle processing, adding the calculated cost impact of broken bundles to the 

total cost of bundle processing results in roughly $184.9 million. This estimate is 58.7 

percent higher than the cost of bundle processing had there been no bundle breakage. Id.

The Commission therefore concludes:

 The percentage of broken bundles during processing reported by the Postal Service 

continued to increase.

 The total cost impact of broken bundles in FY 2021 was $68.4 million, while the cost 

of processing bundles was $116.5 million, resulting in a 57.8 percent increase in 

total bundle processing cost.

 The cumulative cost impact of broken bundles from FY 2019 to FY 2021 was $183.2 

million.

The Commission recommends that the Postal Service continue to estimate and report the 

additional cost that bundle breakage adds to flats processing. In FY 2022, the Postal Service 

must work to reduce the number of broken bundles while continuing to increase the number 

of tracked bundles. In addition, the Postal Service shall continue to study the causes, impacts, 

and ways to reduce bundle breakage; enhance reporting and tracking of bundle irregularities; 

and work with mailers to ensure corrective actions are implemented when irregularities are 

shared through the Mailer Irregularity Application on the Mailer Scorecard.

Low Productivity on Automation Equipment

In FY 2019, the Postal Service began providing additional data related to this pinch point, 

including specific data for machines and facilities. Below, the Commission analyzes the 

ability of specific machines to achieve productivity targets, trends in productivities of 

different mail processing machines, and trends in productivities at the facility level.

a. Productivity Targets and Results

The Postal Service has specific productivity targets for its automation equipment and in 

FY 2021, none of those targets were achieved. See Section e.9 Narrative at 2-3. As discussed 

in more detail below, most productivities decreased in FY 2021. The Postal Service notes 

that reactions to the COVID-19 pandemic have been contributing factors to the decline in 

flats automation processing productivities in FY 2020 and FY 2021. Id. at 2. The Postal 

Service’s goal in FY 2022 “...is to stabilize operations now that employee availability has 

improved and complement has risen to levels needed to sufficiently staff operations to 

 

370 See Library Reference USPS-FY21-45, folder “Paragraph (b) -- Financial Report,” Excel file “FY21.Rule.3050.50.Para.B.xlsx,” tab “Item b8.”

371 See Library Reference PRC-LR-ACR2021-9, Excel file “CH 6 Data and Tables.xlsx,” tab “Table VI-10 – Bundle Cost Impact.”
Docket No. ACR2021 - 248 -

meet service targets. The Postal Service is committed to holding sites accountable to 

improve year-over-year productivities.” Id. at 2-3.

The only machines with increased productivities in FY 2021 were the Flats Postal 

Automated Redirection Systems (FPARS) and flats sorting machine (FSM) 1000, however 

they handle a very small portion, 2.6 percent, of automation processed flats volumes.372

The primary machines used to process flats are the APBS, the APPS, the AFSM 100, and the 

FSS. Figure VI-4 shows productivity results and targets for the different types of AFSM 100 

machines in FY 2015 through FY 2021. While productivity targets have remained constant, 

annual productivities have been steadily decreasing. The FY 2021 productivity value is less 

than half of its target.

Figure VI-4

Machine Productivities for AFSM 100 Machines, FY 2015–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

 

372 See Library Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (e) -- Pinch Point Reports,” folder “e.2 Mail Processing 

Variance,” Excel file “National MPVar FY17.FY21.xlsx.”

 -

 500

 1,000

 1,500

 2,000

 2,500

 3,000

 3,500

 4,000

 4,500

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Productivity (Pieces per Hour)

AFSM 100 (Target: 2335) AFSM AI (Target: 3682)

AFSM AI ATHS (Target: 7054) AFSM ATHS (Target: 2647)
Docket No. ACR2021 - 249 -

Figure VI-5 shows productivity results and targets for the AFSM Automatic Induction (AI) 

Automatic Tray Handling System (ATHS) machine from FY 2017 through FY 2021. This 

machine processes more flats volume than any other mail processing equipment, 42 

percent of all flats processed in FY 2021. While productivity targets have remained 

constant, annual productivities on the AFSM AI ATHS machine have varied, experiencing a 

net decrease since FY 2015. The FY 2021 productivity value was only 36 percent of its 

target.

Figure VI-5

Machine Productivities for AFSM AI ATHS, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

The FSS is another machine used by the Postal Service to process flats and sort pieces into 

DPS. Figure VI-6 shows productivity results and targets for the FSS machine from FY 2017

through FY 2021. While productivity targets have remained constant, annual productivities 

on the FSS machine have been steadily decreasing since FY 2018. While FSS productivity is 

closer to its target than other mail processing machines, the FY 2021 productivity value 

was only 61 percent of its target.

 -

 1,000

 2,000

 3,000

 4,000

 5,000

 6,000

 7,000

 8,000

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Productivity (Pieces per Hour)

 Productivity Target
Docket No. ACR2021 - 250 -

Figure VI-6

Machine Productivities for FSS, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

To address the low productivity of the AFSM 100 machines, the Postal Service created an 

AFSM certification process in FY 2019.373 The certification process was initiated in FY 

2020, but was not completed in FY 2020 and did not continue in FY 2021. See FY 2021 

Operational Initiatives Report at 5-6. The AFSM certification process “...is intended to 

impact cost and service performance by reducing unnecessary work hours, maximizing 

equipment utilization, improving flow of flats volume to reduce opportunity for error, and 

ensuring proper and continued maintenance of equipment.” Id. at 5. The Postal Service plans to 

revisit the AFSM certification initiative in FY 2022. Id. at 6. In FY 2021, the Postal Service 

implemented software patches to all AFSM sites and established site-specific operating plans. 

Id. These software patches “...implemented a number of improvements to Mail Image Collection 

System functionality and maintenance activities, such as camera diagnostic and calibration 

efficiency improvements.” Id.

b. FSS Performance Metrics

Table VI-12 highlights the general declines in performance for the FSS in FY 2021. 

Specifically, the percentage of mail that was put into DPS on the FSS machines declined to 

65.6 percent and the productivity of the FSS machines continued to decline. The Postal 

Service notes that “[w]hile the FSS machines resumed normal processing in FY 2021, residual 

effects of the FSS-candidate mail shift to AFSM100 machines at some sites caused a smaller 

 

373 See Docket No. ACR2019, Library Reference USPS-FY19-45, folder “Paragraph (f) -- Operational Changes Report,” PDF file “Paragraph (f) 

Report.pdf,” at 9-10 (Docket No. ACR2019 Operational Initiatives Report).

 -

 500

 1,000

 1,500

 2,000

 2,500

 3,000

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Productivity (Pieces per Hour)

 Productivity Target
Docket No. ACR2021 - 251 -

proportion of mail to be finalized to DPS on the FSS machines compared to [same period last

year] SPLY.” See Part B Narratives at 13. The FSS Leakage percentage, which measures mail 

destined for the FSS, but processed elsewhere, increased to 38.5 percent in FY 2021. In 

addition, the Postal Service provided the capacity percentage of the FSS, which measures 

the total capacity of the machines utilized. Id. The data show that this percentage decreased 

from 44.4 percent in FY 2020 to 39.9 percent in FY 2021, down by 23.8 percentage points 

from FY 2018.

Table VI-12

FSS Performance Metrics, FY 2015–FY 2021

2015 2016 2017 2018 2019 2020 2021

DPS % 60 56.7 54.7 77.1 78.6 71.7 65.6

Productivity (TPF/Hour) 797 768 744 758 730 663 638

Mail pieces at risk (%) 5.4 5.7 5.8 4.6 4.7 4.7 5.5

Leakage (%) n/a 20.1 21.9 25.4 32.7 38.5

Capacity (%) n/a n/a 63.7 58.4 44.4 39.9

Volume (TPF, in millions) 4,121 3,993 3,883 3,705 3,393 2,617 2,255

Mail Processing Cost $(000) 202,259 205,802 208,243 197,704 192,883 166,825 145,627

Source: Library Reference PRC-LR-ACR2021-9.

The Postal Service described three initiatives designed to improve FSS processing. FY 2021 

Operational Initiatives Report at 4-5.

1. Delivery Point Compression “removes delivery points with little to no 

volume from the FSS...[r]educing the number of delivery points on FSS sort 

programs allows sites to process more FSS volume within the same operating 

window.” Id. at 4.

2. The Postal Service removed 12 excess FSS machines that were not needed to 

process volumes at selected sites. Id. at 5.

3. Labeling List Comparison played an important role in the makeup and 

distribution of mail products. Id.

The Postal Service plans to continue implementing all FSS initiatives in FY 2022.

c. Analysis of Productivity and Volume

The Postal Service also provided Mail Processing Variance Report data that includes the 

productivities for various mail processing machines at the facility level.374 In the FY 2019 

ACD, the Commission analyzed productivities by facility size for a single year and found 

there was a weak correlation between volume and productivity for every machine. FY 2019 

ACD at 167-68. In response, the Postal Service stated that:

 

374 See Library Reference USPS-FY21-NP31, December 29, 2021, Excel file “NONPUBLIC MP Variance FY16_21.xlsx.”
Docket No. ACR2021 - 252 -

Differences in productivities from plant to plant may arise due to a 

number of other factors—many of which are difficult or impossible 

to quantify—such as differences in facility layouts, facilities’ network 

roles, internal mailflows, operating windows, staffing practices, and 

management effectiveness. These factors can amplify or counteract 

direct effects of size on productivity.

Docket No. ACR2019 Status Reports at 6-7.

In FY 2020, the Commission attempted to account for facility-specific differences by 

filtering by each mail processing facility, then calculating the correlation between volume 

and productivity over time for the AFSM AI ATHS machine. FY 2020 ACD at 253. The 

Commission’s analysis showed that many individual mail processing facilities showed no 

correlation between volume and productivity over time. Id. While all these facilities 

experienced volume losses, these volume declines did not necessarily result in lower 

productivities. Id.

In Docket No. RM2020-13 (Proposal Six), the Postal Service proposed, but the Commission 

denied, a new methodology for estimating volume variabilities for certain mail processing 

cost pools using its Management Operating Data System (MODS) data on volume and 

productivities.375 Among other issues, the Commission found that the estimated 

variabilities fluctuate substantially when the sample period changes. Id. at 49. These 

findings suggest that measuring the correlation between volume and productivity in a 

single facility over time may not be a sound approach.

In an attempt to identify relationships between volume and productivity in FY 2021, the 

Commission chose to take a different look at mail processing data. The Commission 

examined the correlation between the overall FY 2021 volume and productivity for small, 

medium, and large volume facilities for the AFSM AI ATHS type of machine that processes 

the highest percentage of flats volumes. See Table VI-13. Three facility groups were created 

by sorting the data by volume, then classifying each third of facilities into a volume group 

(i.e., small, medium, and large facilities). All three volume groups exhibited correlations 

close to zero.376

 

375 See Docket No. RM2020-13, Order on Analytical Principles Used in Periodic Reporting (Proposal Six). January 26, 2022, at 1-2 (Order 

No. 6096).

376 Data points with zero volumes were removed from Mail Processing Variance data prior to estimating the correlations.
Docket No. ACR2021 - 253 -

Table VI-13

Correlations by FY 2021 Volume Group for AFSM AI ATHS Machine

Correlation

Large Volume Facilities -0.063

Medium Volume Facilities -0.069

Small Volume Facilities -0.117

Source: Library Reference PRC-LR-ACR2021-NP3.

Another approach to establish a potential relationship between volume and productivity is 

to analyze data by type of machine for different facility types. The Postal Service’s data 

include volume and productivities for different types of facilities, including but not limited 

to P&DC, processing and distribution facility (P&DF), and NDC. Each facility type exhibits 

significant variation in terms of both volume and productivity.377 Table VI-14 singles out 

the most common facility type, P&DC, and examines the correlation between volume and 

productivity for every machine by year. Annual data, instead of quarterly data, were used 

to account for any seasonal variation. The data show that none of the machines exhibited 

any strong correlation between productivity and volume for this facility type. For some 

machines and years, the volume-productivity correlation is negative. Such negative 

correlation, although still weak, may indicate that for P&DC facilities, certain machines are 

more productive when they process less volume.

Table VI-14

Volume-Productivity Correlation, P&DC Facilities, FY 2017–FY 2021

Source: Library Reference PRC-ACR2021-LR-NP3.

d. Data Used in the Analysis of Productivity and Volume

The Postal Service states that it is “committed to holding sites accountable to improve yearover-year productivities.” Section e.9 Narrative at 3. However, the use of the same mail 

processing machine category productivity target across all sites (given the differences that 

 

377 For more information on different facility types, see Docket No. RM2020-1, Responses of the United States Postal Service to Questions 1-16 

of Chairman’s Information Request No. 3, June 10, 2020, question 1.

Facility Machine 2017 2018 2019 2020 2021

P&DC MANUAL FLATS -0.062 -0.072 -0.052 -0.059 0.082

P&DC AFSM AI ATHS -0.199 -0.212 -0.173 -0.084 -0.130

P&DC AFSM 100 -0.200 0.168 -0.173 -0.076 -0.299

P&DC FSS -0.139 -0.164 -0.085 0.181 0.096

P&DC AFSM AI -0.304 -0.126 -0.180 -0.135 -0.380

P&DC AFSM ATHS -0.384 -0.325 -0.488 -0.202 -0.359
Docket No. ACR2021 - 254 -

likely exist)378 and the Postal Service’s overall aggregation methodology, raises the 

question whether and how the data provided in the mail processing variance workbooks 

can be used to hold specific sites accountable.379

The Postal Service does not provide any specific information in either its Library Reference 

USPS-FY21-45 or Library Reference USPS-FY21-NP31 regarding any screening procedures 

it employs prior to aggregating the mail processing variance data to the facility, mail 

processing category, quarterly, and annual levels. The Commission aggregated the FY 2021 

MODS data by facility, operation, and tour,380 to the same level as the data in the Postal 

Service’s mail processing variance workbooks.381 The Commission obtained very similar 

productivity results, but it appears that the Postal Service aggregates the MODS workhours 

and volume382 without screening facility specific data that has either zero workhours or 

zero volume for a specific operation, tour, day, or month within the mail processing 

variance category group in the fiscal year and quarter.383

e. Commission Findings

Throughout the past 3 years, the Commission has analyzed the potential for a relationship 

between productivity and volume, but has not been able to identify any strong correlation. 

In FY 2019, the Commission took a cross-sectional snapshot of all facilities in a given year. 

FY 2019 ACD at 167-68. In FY 2020, the Commission examined correlation between volume 

and productivity for a single year and single facility over time. FY 2020 ACD at 253, n.460. 

This year, the Commission examined the relationship between productivity and volume by 

 

378 Docket No. ACR2019 Status Reports at 7-8.

379 See productivity targets in Library Reference USPS-FY21-NP31, folder “Rule 3050.50 Flats,” folder “Paragraph (e) -- Pinch Point Nonpublic 

Reports,” folder “e.2 Mail Processing Variance,” Excel file “NONPUBLIC MP Variance FY17_21.xlsx,” tab “2021,” column J; Library Reference 

USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (e) -- Pinch Point Reports,” folder “e.2 Mail Processing Variance,” Excel file 

“National MPVar FY17.FY21.xlsx,” tab “FY17-21 By Qtr,” column K.

For the Postal Service’s explanation on the methodology used to develop its mail processing machine category target productivities, see Library 

Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (e) -- Pinch Point Reports,” folder “e.2 Mail Processing Variance,” Excel 

file “National MPVar FY17.FY21.xlsx,” tab “Target Narrative;” Library Reference USPS-FY21-NP31, folder “Rule 3050.50 Flats,” folder “Paragraph 

(e) -- Pinch Point Nonpublic Reports,” folder “e.2 Mail Processing Variance,” Excel file “Nonpublic MP Variance FY17_21.xlsx,” tab “Target 

Narrative.”

380 See Library Reference USPS-FY21-NP18, December 29, 2021, folder “USPS-FY21-NP18 MODS Data,” Zip file “modstour2021-np.zip,” CSV file 

“modstour2021-np.csv.” The Postal Service filed a revised, corrected FY 2021 MODS tour dataset in Library Reference USPS-FY21-NP42, 

February 22, 2022, Zip file “USPS-FY21-NP42.Files,” CSV file “modstour2021r-np.csv.”

381 Library Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (e) -- Pinch Point Reports,” folder “e.2 Mail Processing 

Variance,” Excel file “National MPVar FY17.FY21.xlsx,” tab “FY17_21 By Qtr;” Library Reference USPS-FY21-NP31, folder “Rule 3050.50 Flats,” 

folder “Paragraph (e) -- Pinch Point Nonpublic Reports,” folder “e.2 Mail Processing Variance,” Excel file “Nonpublic MP Variance FY17_21.xlsx,” 

tab “2021.”

382 As noted above, the Postal Service aggregates MODS data by facility, mail processing category, fiscal year, and quarter. The MODS tour 

dataset contains the daily MODS data by facility, operation, and tour. A MODS day is made up of three tours (or work shifts) of 8 hours each. 

See Library Reference USPS-FY21-7, December 29, 2021, folder “USPS-FY21-7,” PDF file “M-32 MODS Handbook.pdf,” Section 2-6.2, at 9.

383 There were small differences in the Commission’s results (using this same aggregation methodology) which possibly may be attributed to 

changes in the MODS data, different retrieval dates or other errors. See Library Reference USPS-FY21-NP42, PDF file 

“FY21,NP42.Preface.Responses.pdf,” question 6, at 6; United States Postal Service, Office of Inspector General, Report No. CP-AR-19-001,

Management Operating Data System Errors and Adjustments, April 3, 2019, available at https://www.uspsoig.gov/document/managementoperating-data-system-errors-and-adjustments.
Docket No. ACR2021 - 255 -

facility volume group and facility type, and still found weak or even unexplained negative 

productivity-volume correlations for each machine it analyzed. Despite these findings, the 

Postal Service continues to attribute declining productivities and increasing mail 

processing costs to falling flats volumes. FY 2021 ACR at 20. The Postal Service also claims 

that volume declines necessarily lead to higher unit mail processing costs, because setup 

and breakdown activities are largely invariant to volume. However, these costs account for 

only 5.7 percent of all mail processing costs for the AFSM 100.384 The Commission 

concludes that there is no evidence to support the Postal Service’s theory that productivity 

declines are linked to volume declines.

The Commission directs the Postal Service to implement initiatives to reduce mail processing 

costs, as costs must be controlled even in a declining volume environment. Further, if mail 

processing facilities have extreme (unusually high or low) productivity values or have 

quarterly productivity values based on a large number of missing workhours or volume at the 

operation and daily tour-level,385 the Commission directs the Postal Service to target those 

sites to improve their reporting or explain why the provided productivity is accurate for a 

given facility, mail processing category, fiscal year, and quarter.

Manual Sorting

The Postal Service made progress in lowering the manual sortation portion of unit mail 

processing costs of flats in FY 2021. Figure VI-7 shows the unit mail processing costs of 

manually handling a piece of flat-shaped mail versus letter-shaped mail. In the period from 

FY 2018 through FY 2020, the average unit cost of manually handled pieces of flat-shaped 

mail has grown much faster than for letters. This difference was particularly stark in 

FY 2020, when the cost of manually processing flats grew at double the rate for letters. 

However, this trend ended in FY 2021 when the unit mail processing costs of manually 

handling a flat-shaped mail piece decreased by 7.2 percent. The Postal Service attributes 

this decline in manual unit cost to a “recovery this year from the more substantial effects of 

COVID-19 on volume in FY 2020, rather than a harbinger of any longer-term positive trend.” 

Section e.9 Narrative at 3. This decrease was nearly double the decrease in unit manual 

mail processing of letter-shaped mailpieces.

 

384 See Responses of the United States Postal Service to Questions 1-6 of Chairman’s Information Request No. 3. January 26, 2022, question 5.

385 As reported in the mail processing variance workbook of Library Reference USPS-FY21-45 and Library Reference USPS-FY21-NP31.
Docket No. ACR2021 - 256 -

Figure VI-7

Change in Unit Mail Processing Cost for Letters and Flats, FY 2017–FY 2021386

Source: Library Reference PRC-LR-ACR2021-9.

The decline in manual productivities in recent years has been troubling. Figure VI-8 shows 

manually processed flats mailpieces per workhour from FY 2017 through FY 2021. While 

the Postal Service has been processing fewer flats mailpieces per workhour from FY 2018 

through FY 2020, this trend reversed in FY 2021. The Postal Service processed 9 percent 

more flats mailpieces per workhour in FY 2021.

 

386 This figure shows annual changes in mail processing costs of manually handling letters and flats. Between FY 2017 and FY 2018, the average 

cost of manually handling letters was roughly unchanged, while the average cost of manually handling flat-shaped mail changed by 0.3% only.

-8%

-6%

-4%

-2%

0%

2%

4%

6%

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Letters Unit Cost Growth Flats Unit Cost Growth
Docket No. ACR2021 - 257 -

Figure VI-8

Manual Flats Mailpieces per Workhour, FY 2017–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

The eFlash data show an increase (by 6.2 percent) in the number of flat-shaped pieces that 

receive manual handling in FY 2021. Section e.9 Narrative at 3. The Postal Service partially 

attributes this increase to the FSS compression initiative. Part B Narratives at 14. This 

initiative removed FSS delivery points with a zero average daily volume, thereby allowing 

more mail to be processed in a shorter window. Id. Mailpieces that are removed from the 

FSS processing ultimately will be handled manually at the delivery unit. Id. The Postal 

Service also attributes a 6.2 percent increase in manual flats volumes to a recovery from 

the more substantial effects of the COVID-19 pandemic. Section e.9 Narrative at 3. Noting 

that, while manual flats volumes did increase in FY 2021, these volumes are still below 

their FY 2019 level. Id.

Commission analysis. The Commission is encouraged by the reduction in the cost of manual 

processing for flat-shaped mail in FY 2021.

The Commission recommends that in FY 2022, the Postal Service develop an accurate method

to track flat-shaped mail that is manually processed. Once there is an accurate measurement 

of such flat-shaped mail, the Postal Service shall develop a specific plan to: (1) continue to 

decrease the quantity of flat-shaped mailpieces processed manually, and (2) achieve a 

proportional reduction in unit mail processing costs for manual operations.

 920

 940

 960

 980

 1,000

 1,020

 1,040

 1,060

 1,080

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Manual Flats Mailpieces per Workhour
Docket No. ACR2021 - 258 -

Productivity and Service Issues in Allied 

Operations

To gain insight into allied operations, the Postal Service uses Work in Process (WIP), also 

known as cycle time, which is the amount of time mail spends in mail processing 

operations. See Section e.9 Narrative at 4. The Postal Service stated that “[m]ail processing 

operations run on planned schedules and any additional time spent in one operation can 

adversely impact the next operation and can potentially lead to service failures.” Id. An 

updated version of the Cycle Time report is now available in Informed Visibility for USPS 

Marketing Mail letters and flats and Periodicals. Id.

Figure VI-9 shows WIP cycle times for various flats mail processing operations. The earliest 

WIP data available was from Quarter 3 of FY 2019. To account for seasonal variation, 

Figure VI-9 compares WIP cycle times for FY 2020 and FY 2021. While “SV Unload to Tray” 

and “SV Unload to Bundle” showed small declines, all other allied operations activities 

showed increases in cycle times in FY 2021.

Figure VI-9

Cycle Time, FY 2020–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

Commission analysis. The Commission is encouraged by the Postal Service’s effort in using 

operational efficiency tools, the GRID initiative, and cycle times update to provide 

additional visibility into allied operations. However, cycle times increased for most 

activities despite the fact that this initiative was utilized in FY 2021.

0

10

20

30

40

50

60

70

Bundle to Piece SV Unload First

Automation

SV Unload to

Bundle

SV Unload to

Tray

Tray to Next

Automation

Hours

FY 2020 FY 2021
Docket No. ACR2021 - 259 -

The Postal Service must develop a plan to reduce the costs associated with allied operations 

and gain additional insight into allied operations. In addition, the Postal Service must use the 

updated version of the Cycle Time report to generate detailed data/reports on mail entry 

points. Furthermore, the Postal Service must indicate the WIP cycle time for each processing 

point, and the corrective action(s) taken when delays occur in processing points.

Transportation Cost and Time

In FY 2021, unit transportation costs increased by 12.3 percent, which is a continuation of a 

trend that began in FY 2017. See Figure VI-10. Moreover, transportation costs increased 

even though flats volume and weight both decreased in FY 2021. The Postal Service notes 

that the COVID-19 pandemic affected transit failures by impacting employee and contractor 

availability and that increases in e-commerce put stress on transportation capacity for all 

mail products. Section e.9 Narrative at 6. The Postal Service increased hiring and converted 

64,000 non-career employees to career to address employee shortages.

Figure VI-10

Flats Transportation Unit Costs FY 2015–FY 2021387

Source: Library Reference PRC-LR-ACR2021-9.

 

387 The data in this table reflects all but one flat-shaped mail products that contain at least 80 percent flat-shaped mailpieces, and which are 

generally discussed in this Chapter. EDDM-Retail is omitted as it does not have any cost in cost segment 14.

 $-

 $0.01

 $0.01

 $0.02

 $0.02

 $0.03

 $0.03

 $0.04

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Unit Transportation Cost

Unit Cost
Docket No. ACR2021 - 260 -

The Postal Service provided data from SVWeb388 related to transportation. See Section e.9 

Narrative at 6-7. Results are displayed in Table VI-15. These data show that although the 

FY 2021 load percentages have increased, both On-time departures and On-time arrivals 

have declined relative to FY 2020. The Postal Service attributes these declines to 

disruptions in the network caused by the COVID-19 pandemic.

Table VI-15

On-Time Departure, On-Time Arrival, and Average Load, FY 2018–FY 2021

Metric FY 2018 FY 2019 FY 2020 FY 2021

On-time Departure 70.50% 72.60% 87.20% 84.60%

On-time Arrival 62.00% 63.40% 74.70% 73.14%

Average Load 32.10% 32.10% 38.60% 39.75%

Source: Library Reference PRC-LR-ACR2021-9.

Commission analysis. In FY 2021, the unit transportation costs increased and the Postal 

Service does not have a specific plan to address this issue.

In FY 2022, the Postal Service must develop a plan to reduce the costs associated with 

transporting flat-shaped mail. The plan shall establish specific achievable goals to reduce 

transportation costs for flat-shaped mail. The Commission will continue to monitor the 

SVWeb transportation metrics to ensure the Postal Service continues to make progress 

towards its goals.

Last Mile/Delivery

The Postal Service spent a total of $3.9 billion on delivery costs for flats in FY 2021, or 16.9 

cents per piece.389 There are two parts of city delivery operations, in-office and street time. 

FY 2015 ACD at 177. City carrier in-office costs include the cost of casing to DPS. See Figure 

VI-11. When the additional mail processing costs associated with the FSS are added to the 

city carrier in-office costs, the Postal Service spent $1.15 billion processing flats to DPS in 

FY 2021.390 This is a 4.6 percent reduction from FY 2020, when the Postal Service spent 

$1.61 billion on processing flats to DPS.391 However, it is only $491 million less than the 

 

388 The SVWeb applications allow managers to pull reports presenting Area, District, and facility data, such as the number of trips that have 

arrived and departed over a given period of time, the percentage of the load on each trip (utilization), and the on-time performance for each 

trip. See Docket No. ACR2015, Third Response of the United States Postal Service to Commission Requests for Additional Information in the 

FY 2015 Annual Compliance Determination, July 26, 2016, at 61-62. Using these reports, the Postal Service is able to track the usage of 

transportation resources, and identify opportunities to mitigate costs. Id.

389 Total delivery cost for all flats pieces is calculated by using total piggybacked city delivery costs and total piggybacked rural delivery costs. 

See Library Reference USPS-FY21-24, December 29, 2021. The analysis of unit delivery cost is further detailed in Section F.

390 The cost of FSS processing in for NDC facilities in FY 2020 was $167 million. See Library Reference USPS-FY21-45, folder “Paragraph (b) --

Financial Report,” Excel file “FY21.Rule.3050.50.Para.B.xlsx,” tab “Item b6.

391 See Library Reference PRC-LR-ACR2021-9, Excel File “CH 6 Data and Tables.xlsx,” tab “Table VI-12-FSS.” The unit cost of processing flats to 

DPS in FY 2021 was 6.4 cents per piece. See id.
Docket No. ACR2021 - 261 -

amount spent casing flats in FY 2008, when volume was more than double.392 In FY 2008, 

the Postal Service manually cased all flats because there were no FSS machines. Despite the 

addition of FSS machines and 50.1 percent less volume, the Postal Service has only reduced 

the cost of the final sortation operation for flats by 23 percent since FY 2008.

Figure VI-11

Cost Segment 6: City Delivery Carriers – Office Activity393

Unit Costs, FY 2015–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

To monitor the service impact of last-mile delivery, the Postal Service uses last mile 

indicator (LMI) quarterly scores. For every quarter in FY 2021, the LMI average quarterly 

scores decreased compared to the same quarter in FY 2020. See Library Reference PRC-LRACR2021-9.

Commission analysis. In FY 2021, unit in-office delivery costs increased significantly and the 

Postal Service does not have a specific plan to address this issue.

 

392 See Library Reference PRC-LR-ACR2021-9, Excel file “CH 6 Data and Tables.xlsx,” tab “Figure VI-11-Delivery.” As detailed in Library Reference 

PRC-LR-ACR2021-9, the cost segment 6 in-office cost for flats in FY 2008 was $1.64 billion, $491 million more than the combined FSS mail 

processing and in-office cost of $1.149 billion in FY 2021. As further detailed in Library Reference PRC-LR-ACR2021-9, flats volume was 47.94

billion pieces in FY 2008 and declined to 23.48 billion pieces in FY 2021, which represents a 51.0 percent decline. See id.

393 The data in this table reflects all eight flat-shaped mail products that contain at least 80 percent flat-shaped mailpieces.

 $-

 $0.010

 $0.020

 $0.030

 $0.040

 $0.050

 $0.060

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Unit Delivery Cost

Unit Cost (cents)
Docket No. ACR2021 - 262 -

The Postal Service must develop a plan in FY 2022 to reduce the costs associated with 

delivering flat-shaped mail. The plan should establish specific achievable goals that reduce 

delivery costs for flat-shaped mail. The Commission will continue to monitor the costs of lastmile delivery in FY 2022 to ensure the Postal Service efforts result in improvements.

Analysis of Unit Costs for Major Functional 

Categories (by Dependent Component)

For each product that consists of more than 80 percent flat-shaped mail, 39 C.F.R §

3050.50(b)(2) requires the Postal Service to provide the functional analysis of unit 

attributable cost disaggregated into the following cost categories: mail processing, delivery, 

vehicle service driver, purchased transportation, window service, and other.394 These 

functional cost categories are identified as relevant to providing context to the Pinch Points 

discussed in Section E, supra. Functional cost categories are not the same as cost segments. 

They include all relevant cost segments, e.g., delivery category includes city delivery (cost 

segment 6 and cost segment 7) and rural delivery (cost segment 10) and multiple 

dependent components from other cost segments based on the piggyback factors.395

Specifically, dependent components costs are calculated using non-operation piggyback 

factors employed in cost studies to augment labor cost estimates for the major functions by 

adding the costs associated with supervisors and administration, service-wide benefits, 

along with facility-related and equipment-related costs.396

Table VI-16 provides average unit costs for eight flats products by functional cost category 

from FY 2019 through FY 2021. In FY 2021, mail processing, delivery, and purchased 

transportation unit costs constituted on average 40.9 percent, 47.1 percent and 8.1 

percent, respectively, of the total unit cost for all flats products. See Table VI-17. The 

Commission focuses on these three major unit attributable cost categories and analyzes 

such costs by dependent component.397 Table VI-17 provides the unit cost structure by 

flat-shaped product by major functional category.

 

394 See Library Reference USPS-FY21-45, folder “Rule 3050.50 Flats,” folder “Paragraph (b) -- Financial Report,” Excel file 

“FY20.Rule.3050.50.Para.B.xlsx,” tab “Item b2.”

395 See Library Reference USPS-FY21-24, PDF file “USPS-FY21-24 Preface.pdf,” Excel file FY21Public.PB.xlsx, tab “Doc.” The exception to this 

framework, in the analysis that follows, is for the cost category of purchased transportation, as purchased transportation costs are captured in 

their entirety in cost segment 14, and do not require the use of piggyback factors to glean a complete picture of costs in the category. Id.

396 See Library Reference USPS-FY21-24, PDF file “USPS-FY21-24 Preface.pdf,” Excel file FY21Public.PB.xlsx, tab “Doc.”

397 The term “dependent component” is therefore different from the term “component.” See, e.g., Library Reference USPS-FY21-2, PDF file 

“USPS-FY21-2 Preface.pdf,” at 1; Library Reference USPS-FY21-24, PDF file “USPS-FY21-24 Preface.pdf,” Excel file FY21Public.PB.xlsx, tab “Doc.”
Docket No. ACR2021 - 263 -

Table VI-16

Flats Average Unit Cost by Functional Cost Category ($), FY 2019–FY 2021398

Functional Cost Category FY 2019 FY 2020 FY 2021

Mail Processing 0.133 0.142 0.146

Delivery 0.145 0.160 0.169

Vehicle Service Driver 0.005 0.006 0.005

Purchased Transportation 0.024 0.026 0.029

Window Service 0.002 0.003 0.002

Inframarginal 0.002 0.001 0.001

Other 0.005 0.006 0.005

Total 0.316 0.344 0.358

Source: Library Reference PRC-LR-ACR2021-9.

Table VI-17

Distribution of Flats Unit Cost by Major Functional Cost Category, FY 2019–FY 2021

Functional Cost Category FY 2019 FY 2020 FY 2021

Mail Processing 42.2% 41.3% 40.9%

Delivery 45.9% 46.5% 47.1%

Vehicle Service Driver 1.6% 1.7% 1.4%

Purchased Transportation 7.6% 7.6% 8.1%

Window Service 0.7% 0.9% 0.6%

Inframarginal 0.5% 0.4% 0.4%

Other 1.5% 1.7% 1.5%

Source: Library Reference PRC-LR-ACR2021-9.

The Commission uses the non-operation specific piggyback factor analysis to review and 

analyze components for mail processing and delivery functional cost categories.399 For 

purchased transportation, that does not include any piggyback factors, the Commission 

uses the Public Version of the Cost Segment and Component Report. See Part B Narratives 

at 2.

 

398 Average unit cost is calculated as a weighted average for eight flats products. See Library Reference PRC-LR-ACR2021-9.

399 See Library Reference USPS-FY21-24, PDF file “USPS-FY21-24 Preface.pdf,” Excel file “FY21Public.PB.xlsx,” tab “MailProc” for Mail Processing,

tab “CityCarriers” for City Delivery, tab “Rural” for Rural Delivery; Library Reference USPS-FY20-24, December 29, 2020, Excel file 

FY20.Public.PB.xlsx, tab “MailProc” for Mail Processing, tab “CityCarriers” for City Delivery, tab “Rural” for Rural Delivery; Library Reference 

USPS-FY19-24, December 27, 2019, Excel file “FY19.Public.PB.xlsx,” tab “MailProc” for Mail Processing, tab “CityCarriers” for City Delivery, tab

“Rural” for Rural Delivery. See also Part B Narratives.
Docket No. ACR2021 - 264 -

Considering that postal operations are generally structured around shape, rather than 

products within a particular shape, the Commission examines, first, the relative unit cost 

impact of each functional category for flat-shaped products and, second, the relative unit 

cost impact of major dependent components associated with mail processing, delivery, and 

purchased transportation.

Table VI-18

Distribution of Flats Unit Cost by Functional Cost Category by Product, FY 2021

Mail Class/Product Mail 

Processing Delivery

Vehicle 

Service 

Driver

Purchased 

Transportation

Window 

Service Inframarginal Other

First-Class Mail Flats 56.3% 20.2% 2.1% 17.5% 2.2% 0.2% 1.4%

USPS Marketing Mail High 

Density and Saturation 

Flats/ Parcels

11.8% 82.3% 0.3% 0.8% 0.2% 1.2% 3.6%

USPS Marketing Mail Carrier 

Route 28.3% 65.6% 1.0% 3.4% 0.1% 0.4% 1.2%

USPS Marketing Mail Flats 55.8% 33.0% 1.6% 8.0% 0.4% 0.2% 0.9%

USPS Marketing Mail 

EDDM-Retail 6.0% 88.9% 0.0% 0.0% 0.5% 0.1% 4.6%

Periodicals 44.0% 43.1% 1.8% 10.0% 0.2% 0.2% 0.8%

Package Services Bound 

Printed Matter Flats 45.9% 40.4% 2.5% 8.9% 0.5% 0.0% 1.8%

Source: Library Reference PRC-LR-ACR2021-9.

Mail Processing Unit Cost

The “Mail Processing”400 unit cost generally consists of costs for clerks and mail handlers 

(cost segment 3), which includes salaries, benefits and related costs of clerk and mail 

handler work. This mail processing functional cost category includes more than 30 

dependent components.401

For the following products/classes in FY 2021, mail processing unit cost share was the 

greatest: First-Class Mail Flats (56.3 percent), USPS Marketing Mail Flats (55.8 percent), 

BPM Flats (45.9 percent), and Periodicals class overall402 (44.0 percent). See Table VI-18.

Figure VI-12 illustrates the mail processing unit cost trends for flats products from FY 2018 

through FY 2021. Mail processing unit costs for the majority of flats products have 

increased steadily since FY 2019 (except for High Density and Saturation Flats/Parcels, 

Carrier Route and BPM Flats that experienced a decrease in unit cost in FY 2020). The mail 

 

400 Note the distinction between the mail processing functional unit cost category, and the mail processing dependent component within cost 

segment 3.

401 See Library Reference USPS-FY21-24, PDF file “USPS-FY21-24 Preface.pdf,” Excel file “FY21Public.PB.xlsx,” tab “MailProc.”

402 The Postal Service has not separated Periodicals products in this analysis of unit costs.
Docket No. ACR2021 - 265 -

processing unit cost for First-Class Mail Flats dwarfs the mail processing unit costs of all 

other flat-shaped mail products.

Substantial increases in unit costs are prevalent for products requiring primary sortation. 

The mail processing unit cost is much lower for High Density and Saturation Flats/Parcels, 

which do not require a primary sort.

Figure VI-12

Mail Processing Unit Cost by Product, FY 2018–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

In FY 2021, First-Class Mail Flats became non-compensatory for the first time. Its mail 

processing unit cost is higher than other flats products and has grown significantly over the 

past 4 years. See Figure VI-12. Consequently, the Commission specifically examines the 

First-Class Mail Flats unit cost. Table VI-19 illustrates the percentage changes in First-Class 

Mail Flats mail processing category unit cost by major dependent component from FY 2018 

through FY 2021. The percentage changes in flats mail processing functional unit cost 

category mirrors the percentage changes in flats mail processing component unit cost from 

FY 2019 to FY 2020. However, the significant increase (by 23.8 percent) in operating 

equipment maintenance component unit cost from FY 2018 to FY 2019 did not necessarily 

translate into a significant unit cost increase in mail processing functional unit category. 

This underscores the relevance of mail processing unit cost changes amongst all dependent 

components.

0.394 0.392

0.429

0.453

0.008 0.010 0.009 0.010

0.185 0.193

0.223

0.240

0.042

0.046 0.044 0.048

0.119 0.125 0.129

0.155 0.141

0.159 0.150

0.187

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

0.450

0.500

FY 2018 FY 2019 FY 2020 FY 2021

Unit Cost

FCM Flats HD/SAT Flats/Parcels

MM Flats Carrier Route Flats

Periodicals Outside County BPM Flats
Docket No. ACR2021 - 266 -

Table VI-19

Change in First-Class Mail Flats Mail Processing Unit Cost by Dependent Component,

FY 2018–FY 2021403

Dependent Component FY 2018-FY 2019 FY 2019-FY 2020 FY 2020-FY 2021

Mail Processing -0.5% 9.4% 5.8%

Operating Equipment Maintenance 23.8% -1.2% 2.2%

Retiree Health Benefits Current 2.8% 7.5% 11.5%

All Others 2.5% 13.0% -0.3%

Source: Library Reference PRC-LR-ACR2021-9.

First-Class Mail Flats mail processing cost category has three major dependent 

components: mail processing, operating equipment maintenance, and retiree health 

benefits current. The share of the mail processing dependent component in the product’s 

mail processing cost category is by far the largest, approximately 61 percent from FY 2018 

through FY 2021. See Library Reference PRC-LR-ACR2021-9. Retiree health benefits 

current and operating equipment maintenance both have a share of approximately 6 

percent from FY 2018 to FY 2021. Id. The shares of other dependent components are in the 

range between 0.1 and 3.4 percent. Id.

It is important to specifically focus on the mail processing dependent component because a 

small change in its unit cost has a more significant impact on flats unit cost than a change in 

the unit costs of all other dependent components of the overall mail processing cost 

category. In FY 2021, the unit cost for the mail processing dependent component continued 

to rise despite the initiatives pursued to curb its growth. The Commission finds this 

concerning. The Postal Service states that “[o]n average, the First-Class [Mail] Flats mail 

processing unit costs have increased 6.4 percent each of the past four years.” See FY 2021 

ACR at 9. Higher mail processing unit cost leads to an increase in overall unit attributable 

cost for flats products, which has the domino effect of suppressing efforts to improve 

product cost coverages. Low productivity, volume decline and mail mix changes also 

contributed to mail processing unit cost increases. In FY 2021, unit attributable cost 

increases for most flats products were primarily driven by increases in mail processing 

unit cost, which increased by 4.1 percent for First-Class Mail Flats, 5.4 percent for USPS 

Marketing Mail Flats, alarming 164.8 percent for EDDM-R, 7.3 percent for Outside County 

Periodicals, and 20.0 percent for BPM Flats. However, mail processing unit cost still 

declined by 3.9 percent for High Density and Saturation Flats/Parcels. See Part B Narratives 

at 2-3.

Delivery Unit Cost

Generally, the Delivery functional cost category comprises City Delivery (cost segment 6 

and cost segment 7) and Rural Delivery (cost segment 10) cost segments, which both 

include multiple additional dependent components from different cost segments. For three 

 

403 First-Class Mail Flats is singled out because it has the highest unit cost and has only recently become non-compensatory.
Docket No. ACR2021 - 267 -

flat-shaped products delivery costs constitute the largest share of overall unit attributable 

cost: USPS Marketing Mail EDDM-R (88.9 percent), USPS Marketing Mail High Density and 

Saturation Flats/Parcels (82.3 percent) and USPS Marketing Mail Carrier Route (65.6 

percent). The Commission examines city and rural delivery costs separately.404

The Commission identifies five major dependent components for city delivery: In-Office 

Direct Labor, Delivery Activities, In-Office Support Overhead, In-Office Support Other, and 

Retiree Health Benefits Current. The Commission examines unit cost trends for In-Office 

Direct Labor and Delivery Activities for flats products.405 Unit cost trends for In-Office 

Direct Labor for most flats products show an interesting dynamic especially between FY 

2019 and FY 2020. Table VI-20 illustrates significant increases in costs for all flats products 

except USPS Marketing Mail Flats from FY 2019 to FY 2020. Specifically, BPM Flats 

experienced the most significant unit cost increases: from 25.3 percent between FY 2018 

and FY 2019 to 98.8 percent between FY 2019 and FY 2020. Between FY 2019 and FY 

2020, In-Office Direct Labor unit cost increased by 24.2 percent for First-Class Mail Flats, 

27.9 percent for Marketing Mail Carrier Route, 59.5 percent for Outside County Periodicals 

and 63.9 percent for High Density and Saturation Flats/Parcels. The Postal Service 

attributed increases in City Carrier In-Office unit costs in FY 2020, in part, to a costing 

methodology change regarding sampling of city carriers in the office which led to higher 

delivery costs. FY 2020 ACD at 47. However, increases between FY 2020 and FY 2021 were 

relatively smaller.

Table VI-20

Change in City Delivery In-Office Direct Labor Unit Cost

Product/Class FY 2018-FY 2019 FY 2019-FY 2020 FY 2020-FY 2021

First-Class Mail Flats -2.4% 24.2% -6.8%

USPS Marketing Mail Flats -5.7% -2.8% 8.3%

USPS High Density and Saturation Flats/Parcels -0.3% 63.9% 3.7%

USPS Marketing Mail Carrier Route 1.0% 27.9% 4.0%

Outside County Periodicals 1.8% 59.5% 4.9%

Package Services Bound Printed Matter Flats 25.3% 98.8% 1.4%

Source: Library Reference PRC-LR-ACR2021-9.

Figure VI-13 shows unit cost trends by flats product for In-Office Direct Labor. Except for 

FY 2020, which experienced a marked increase in component’s unit cost, In-Office Direct 

Labor unit cost has increased only moderately from FY 2018 to FY 2021 with First-Class 

Mail Flats experiencing decreases in FY 2019 and FY 2021.

 

404 City carriers have more than 50 dependent components. See Library Reference USPS-FY21-24, PDF file “USPS-FY21-24 Preface.pdf,” Excel file 

“FY21Public.PB.xlsx,” tab “CityCarriers” for City Delivery, tab “Rural” for Rural Delivery.

405 This analysis is only for City Delivery. Also, USPS Marketing Mail EDDM-R and In-County Periodicals products are not included.
Docket No. ACR2021 - 268 -

The Delivery Activities dependent component, on the other hand, experienced decreases in 

unit cost between FY 2019 and FY 2020, except for USPS Marketing Mail Flats and BPM 

Flats, which had increases in unit costs of 4.5 percent and 14.0 percent, respectively. High 

Density and Saturation Flats/Parcels experienced the largest decrease of 10.8 percent in 

FY 2020. USPS Marketing Mail Flats experienced increases in Delivery Activities unit cost 

between FY 2018 and FY 2021 from a 2.1 percent increase in FY 2019 to a 10.6 percent 

increase in FY 2021. All other flat-shaped products experienced moderate increases from 

FY 2018 through FY 2021, ranging from 2.0 percent to 5.7 percent. See Table VI-21.

Figure VI-13

City Delivery In-Office Direct Labor Unit Cost Trends by Product

Source: Library Reference PRC-LR-ACR2021-9.

0.083 0.081

0.101

0.094

0.079

0.075

0.072

0.079

0.006 0.006

0.010 0.010

0.037 0.037

0.048 0.050

0.038 0.039

0.062

0.065

0.040

0.050

0.099 0.100

0.000

0.020

0.040

0.060

0.080

0.100

0.120

FY 2018 FY 2019 FY 2020 FY 2021

Unit Costs (cents per piece)

First-Class Mail Flats

USPS Marketing Mail Flats

USPS Marketing High Density and Saturation Flats/Parcels

USPS Marketing Mail Carrier Route

Outside County Periodicals

Package Services Bound Printed Matter Flats
Docket No. ACR2021 - 269 -

Table VI-21

Change in City Delivery Activities Unit Cost by Product, FY 2018–FY 2021

Product/Class FY 2018-FY 2019 FY 2019-FY 2020 FY 2020-FY 2021

First-Class Mail Flats 5.8% -1.3% 3.6%

USPS Marketing Mail Flats 2.1% 4.5% 10.6%

USPS High Density and Saturation 

Flats/Parcels 4.3% -10.8% 5.7%

USPS Marketing Mail Carrier Route 10.4% -1.4% 2.0%

Outside County Periodicals 8.1% -1.3% 3.0%

Package Services Bound Printed Matter 

Flats 7.7% 14.0% -3.1%

Source: Library Reference PRC-LR-ACR2021-9.

Figure VI-14 displays city Delivery Activities unit cost trends for flats from FY 2018 

through FY 2021. First-Class Mail Flats and BPM Flats bear the highest unit costs. From 

FY 2019 to FY 2021, unit costs of USPS Marketing Mail Carrier Route and Outside County 

Periodicals were relatively stable.

Figure VI-14

City Delivery Activities Unit Cost Trends by Product, FY 2018–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

Rural Delivery includes 34 dependent components. However, only one component, 

evaluated routes, which constitutes more than 70 percent of the rural delivery unit cost, 

0.044

0.031

0.034

0.033

0.028

0.033

0.046

0.032

0.035

0.036

0.031

0.035

0.045

0.033

0.031

0.036

0.030

0.040

0.047

0.037

0.033

0.036

0.031

0.039

0.000 0.010 0.020 0.030 0.040 0.050

First Class Mail Flats

USPS Marketing Mail Flats

USPS Marketing Mail High Density and Saturation

Flats/Parcels

USPS Marketing Mail Carrier Route

Outside County Periodicals

Package Services Bound Printed Matter Flats

Unit Cost

FY 2021

FY 2020

FY 2019

FY 2018
Docket No. ACR2021 - 270 -

merits discussion in this section.406 Similar to In-Office Direct Labor unit cost, unit cost for 

evaluated routes increased on average 21.2 percent from FY 2019 to FY 2020. However, 

while unit cost for evaluated routes experienced increases each year for most flats from 

FY 2018 to FY 2021, BPM Flats experienced a 25.4 percent decrease from FY 2018 to 

FY 2019 before increasing in FY 2020 and FY 2021. See Table VI-22.

Table VI-22

Change in Rural Delivery Evaluated Routes Unit Cost

by Product, FY 2018– FY 2021407

Product/Class FY 2018-FY 2019 FY 2019-FY 2020 FY 2020-FY 2021

First-Class Mail Flats 11.5% 20.2% 14.6%

USPS Marketing Mail Flats 10.3% 20.1% 20.5%

USPS Marketing Mail High Density and 

Saturation Flats/Parcels 10.0% 24.2% 6.6%

USPS Marketing Mail Carrier Route 11.0% 18.7% 6.9%

Periodicals 14.0% 20.6% 13.6%

Package Services Bound Printed Matter 

Flats -25.4% 23.1% 10.8%

Source: Library Reference PRC-LR-ACR2021-9.

Figure VI-15 illustrates annual increases in unit cost for evaluated routes for all flats 

products from FY 2018 through FY 2021 except BPM Flats which decreased in FY 2019, but 

increased in FY 2020 and FY 2021.

 

406 Rural routes are divided into two broad categories, depending on the way the carrier is paid. Most rural routes are evaluated routes, that is, 

the rural route is evaluated in terms of time standards, and the carrier is paid a salary based on the evaluated time.

407 USPS Marketing Mail EDDM-R is not included in this analysis.
Docket No. ACR2021 - 271 -

Figure VI-15

Rural Delivery Evaluated Routes Unit Cost Trends by Product, FY 2018–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

Unit attributable cost increases for most flats products were driven in part, by increases in 

delivery unit costs. See Part B Narratives at 2-4. In FY 2021, these unit costs increased for 

most flat-shaped products: by 5.7 percent for High Density and Saturation Flats/Parcels, by 

4.2 percent for Carrier Route, by 11.7 percent for USPS Marketing Mail Flats, by 3.3 percent 

for EDDM-R, by 7.0 percent for Outside County Periodicals, and by 2.0 percent for BPM 

Flats.

Purchased Transportation Unit Cost

Purchased Transportation (cost segment 14) is another important functional cost category 

for flats. It consists of only three components, and two of them, highway and domestic air, 

are the major components. See Table VI-23.

Purchased transportation as a share of total unit cost is consistently lower than mail 

processing for all flat-shaped products. The purchased transportation unit cost share of 

total unit attributable cost for First-Class Mail Flats is 17.5 percent, for the two Periodicals 

0.023

0.026

0.025

0.027

0.029

0.036

0.026

0.029

0.027

0.031

0.033

0.027

0.031

0.035

0.034

0.036

0.039

0.033

0.036

0.042

0.036

0.039

0.045

0.036

0.000

0.005

0.010

0.015

0.020

0.025

0.030

0.035

0.040

0.045

0.050

First-Class Mail

Flats

USPS Marketing

Mail Flats

USPS Marketing

Mail High Density

and Saturation

Flats/Parcels

USPS Marketing

Mail Carrier

Route

Periodicals Package Services

Bound Printed

Matter Flats

Unit Cost

FY 2018 FY 2019 FY 2020 FY 2021
Docket No. ACR2021 - 272 -

products together it is 10.0 percent, for BPM Flats it is 8.9 percent, and for USPS Marketing 

Mail Flats it is 8.0 percent. See Table VI-18.

Purchased transportation cost consists of three components: Domestic Air, Highway, and 

Rail. Since FY 2019, domestic air and highway as a percent of purchased transportation 

unit costs have trended in opposite directions. The domestic air share has decreased from 

21.7 percent to 17.7 percent in 2 years, while the highway unit cost share has increased 

slightly from 76.2 percent in FY 2019 to 80.1 percent in FY 2021. Railroad has maintained a 

relatively consistent share ranging from 1.5 to 1.7 percent in the same time period. See

Table VI-23.

Table VI-23

Purchased Transportation Unit Cost by Component, FY 2019–FY 2021

FY 2019 FY 2020 FY 2021

Domestic Air 21.7% 21.0% 17.7%

Highway 76.2% 76.8% 80.1%

Rail 1.5% 1.7% 1.6%

Source: Library Reference PRC-LR-ACR2021-9.

Table VI-24 illustrates changes in the purchased transportation unit costs for some noncompensatory products in the period from FY 2018 through FY 2021. In FY 2021, the 

purchased transportation unit costs for First-Class Mail Flats and USPS Marketing Mail 

Flats increased by 13.4 percent and 17.2 percent respectively, and for Outside County 

Periodicals by 20.2 percent. Between FY 2018 and FY 2021, the purchased transportation 

unit cost for these three products have experienced large increases: 44.1 percent for FirstClass Mail Flats, 29.9 percent for USPS Marketing Mail Flats, and 34.3 percent for Outside 

County Periodicals.

Table VI-24

Change in Purchased Transportation Unit Cost by Product, FY 2018–FY 2021408

Product FY 2018-FY 2019 FY2019-FY 2020 FY 2020-FY 2021 FY 2018-FY 2021

First-Class Mail Flats 19.6% 6.2% 13.4% 44.1%

USPS Marketing Mail Flats -5.3% 17.0% 17.2% 29.9%

Outside County Periodicals 12.8% -1.0% 20.2% 34.3%

Source: Library Reference PRC-LR-ACR2021-9.

Figure VI-16 depicts trends in purchased transportation unit cost (in dollar amounts) by 

product in the period from FY 2018 through FY 2021. At a product level, there is a 

substantial unit cost difference between First-Class Mail Flats and other flats products. For 

 

408 USPS Marketing Mail Carrier Route and In-County Periodicals are not included because the impact of changed in purchased transportation 

unit cost is relatively small.
Docket No. ACR2021 - 273 -

example, in FY 2021, the unit cost difference between First-Class Mail Flats and BPM Flats 

was $0.175. See Figure VI-16.

Figure VI-16

Purchased Transportation Unit Cost by Product, FY 2018–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

Purchased transportation unit cost increases also contributed to unit attributable cost 

increases for two flats products: First-Class Mail Flats (a 12.3 percent increase in 

purchased transportation unit cost) and USPS Marketing Mail Flats (a 16.8 percent increase 

in purchased transportation unit cost). However, for BPM Flats, the purchased 

transportation unit cost declined by 10.1 percent. See Part B Narratives at 2-4.

As illustrated by Figure VI-17, at the component level, unit cost trends for purchased 

highway transportation and domestic air are diverging.

0.163

0.195

0.207

0.234

0.044 0.042 0.049 0.057

0.041 0.046 0.046 0.055 0.038 0.048

0.065 0.059

 $-

 $0.050

 $0.100

 $0.150

 $0.200

 $0.250

FY 2018 FY 2019 FY 2020 FY 2021

Purchased Transportation Cost

First Class Mail Flats USPS Marketing Mail Flats

Outside County Periodicals Package Services Bound Printed Matter Flats
Docket No. ACR2021 - 274 -

Figure VI-17

Purchased Transportation Unit Cost by Component, FY 2019–FY 2021

Source: Library Reference PRC-LR-ACR2021-9.

The purchased transportation unit cost increased by 13.4 percent, which is attributed in 

part to higher variabilities presented in Docket No. RM2021-1 (Proposal Seven). FY 2021 

ACR at 9. Higher highway variabilities led to increases in attributable costs for all flats 

products except EDDM-R. See Order No. 5999 at 35. Furthermore, the declining flats 

volumes could have resulted in fewer average pieces per container, which would also lead 

to higher transportation unit costs, assuming all other factors were unchanged. FY 2021 

ACR at 9.

Summary of Analysis

Depending on the magnitude, unit cost changes in any of the three major functional 

categories (mail processing, delivery, and purchased transportation) will lead to a change 

in unit attributable costs for flat-shaped products. The Postal Service notes that “eight flatshaped products experienced a percentage change in average unit attributable cost that 

was greater than the percentage change in total market dominant unit attributable cost” in 

FY 2021. Part B Narratives at 2. While the main cost drivers are increases in mail 

processing, purchased transportation, and delivery, either singularly or collectively, 

changes in unit costs for their respective major dependent components further enhance 

unit cost increases. Within the mail processing category, mail processing dependent 

component unit cost increases have been one of the main reasons for unit attributable cost 

increases for flats products. Similarly, increases in unit costs for the highway 

transportation dependent component have especially influenced purchased transportation 

0.005 0.005 0.005

0.018

0.020

0.024

0.000 0.000 0.000

0.000

0.005

0.010

0.015

0.020

0.025

FY 2019 FY 2020 FY 2021

Unit Cost

Domestic Air Highway Railroad
Docket No. ACR2021 - 275 -

unit attributable costs for flats products. Increases in unit costs for two major dependent 

components of city delivery (In-Office Direct Labor and Delivery Activities) influenced 

delivery unit costs. Likewise, increases in unit cost for the evaluated routes dependent 

component of rural delivery also influenced delivery unit costs. The impact of changes in 

unit costs for other dependent components was less visible than the impact of changes in 

unit costs for major dependent components discussed above.

Comments

ACMA states that “flats costs are either inefficiently incurred or lack the validity required to 

place reliance on them.” ACMA Comments at 2. It also contends that continued rate 

increases are counterproductive. Id. at 2-3. ACMA states that unit costs are not a good 

measure of changes in cost due to the effects of mix changes. Id. at 3. In addition, ACMA 

states the Postal Service should extend its Rule 3050.50(b)(5)(ii) response back to 2008 or 

even 1998.409 It further suggests that “the Commission should consider requiring the 

[Postal] Service to develop a weighted index that recognizes workshare and workshare-like 

changes within the products. ACMA Comments at 11(emphasis omitted).

MPA observes that “the Postal Service’s longstanding cost control and service performance 

problems for flats worsened again in FY 2021.” MPA Comments at 1. MPA states that the 

Postal Service has partnered with the flats mailing industry on a cross-functional, 

executive-level team to develop a plan to improve flats cost and service performance by 

consolidating mail processing and transportation flows, eliminating excess USPS flats 

processing capacity, and aligning flats preparation with the Postal Service’s transitioning 

network. Id. at 3-4. MPA recommends that the Commission encourage the Postal Service to 

complete this plan and implement it expeditiously. Id. at 4. In addition, MPA suggests that 

“the Commission hold the Postal Service accountable for this network redesign and ensure 

that the desired cost coverage and service performance improvements materialize.” Id.

NPPC asserts that “[t]he continued inability of flats products in different classes to cover 

costs, despite more than a decade of exhortations by the Commission, the imposition of a 

plethora of reporting requirements, and higher rates, is evidence that the remedies tried to 

date have not proven very effective.” NPPC Comments at 17. NPPC suggests that “the 

Commission and the Postal Service should try a different approach – one that addresses the 

problem of increasing per-unit costs by trying to increase the number of pieces. Id. 

(footnote omitted). It proffers that “[o]ffering lower, rather than higher, prices for flats is 

more likely to do so than the unsuccessful tactics of the past decade.” Id. at 18.

PostCom states that “[y]ear after year, the Postal Service presents increasingly 

disappointing performance on flats” and FY 2021 is no different. PostCom Comments at 7. 

It reiterates its concern that the annual compliance process has failed for flats and it states 

that there is no reason to believe that this review will ever produce the intended result. Id. 

 

409 Id. at 9. Rule 3050.50(b)(5)(ii) requires the Postal Service to submit a report analyzing volume trends and mail mix changes that includes a 

comparison of the calculated estimate of aggregate unit attributable costs for combined flat-shaped products for each fiscal year, using FY 2013 

fiscal year’s volume distribution. 39 C.F.R. § 3050.50(b)(5)(ii).
Docket No. ACR2021 - 276 -

at 8. It contends that “[t]o the extent that the Postal Service must expend additional 

resources collecting and supplying information on flats performance, the overall costs of 

the Postal Service – which are ultimately borne by mailers – will increase.” Id. PostCom 

states that “[i]f there are no corresponding improvements in productivity or performance, 

the Commission’s actions will further compound an already acute problem. Id.

The Public Representative states that “the Postal Service appears to have complied with 

most of the requirements that require responses, including data, information and reports 

of management initiatives regarding current flats service and costs.” PR Comments at 103. 

Citing the disruption of ordinary operations caused by the COVID-19 pandemic, he notes 

that the Postal Service was unable to provide meaningful year-to-year data comparisons or 

to fully implement planned management initiatives. Id. He requests “the Commission urge 

the Postal Service to find opportunities to make progress on improving flats’ service and 

costs.” Id. He states that “it is fair to conclude that initiatives should focus particularly on 

reducing the costs of delivering flats and the associated mail processing costs.” Id. at 117. 

Nevertheless, he states that “the data that is captured can be used as a basis for analyses 

and initiatives to adjust to volume and mix changes going forward.” Id. at 119.

The Public Representative “asks the Commission to urge the Postal Service to reinstitute 

some or all of the meaningful FSS initiatives that were suspended in FY 2020 through FY 

2021, so that they may be reviewed in the FY 2022 [ACR]. Id. He observes that the Postal 

Service “does not indicate many instances of new initiatives undertaken to reduce the 

impact of the pinch points on costs and service.” Id. at 122. He requests “the Commission to 

recommend the Postal Service increase its efforts to comply with the Commission’s 

recommendations in the FY 2020 ACD” regarding bundle breakage. Id. at 123. He also 

requests that the Commission “reemphasize its recommendations related to manual 

sorting of flat-shaped mail in the FY 2020 ACD.” Id. at 125. In addition, he notes that 

“methodological redistribution of costs does not have the same overall beneficial financial 

impact as cost reduction initiatives that eliminate costs without redistribution.” Id. at 133. 

He concludes that “[e]xpressions of concern and directives recommending that greater 

effort should be directed toward reducing costs overall or at pinch points in operations and 

improving service performance are a part of the Commission’s oversight, but regulators 

cannot do the job for the Postal Service’s management.” Id. at 136.

Commission Analysis of Comments. The Commission acknowledges the concerns of the 

commenters regarding flats cost and service performance issues. Given the duration and 

pervasiveness of issues with flats’ costs and service, identifying and procuring data that can 

assist the Commission and stakeholders with understanding and facilitating the 

remediation of those issues is critically important. With reporting requirements entering 

their third year and price increases targeted to non-compensatory products only in effect 

for a few months during FY 2021, the Commission cannot find that these requirements are 

counterproductive, overly burdensome, or ineffective. The Commission will continue to 

monitor flats service and financial performance, and if necessary, take appropriate action 

within its authority should the pricing or reporting requirements prove to be 

counterproductive.
Docket No. ACR2021 - 277 -

In contrast, the Commission finds that expanding the reporting requirements to include 

additional historical data, as advocated by ACMA, would not be particularly relevant to 

current flats performance issues, especially given the potential effects of the COVID-19 

pandemic on the last 2 years as well as operational and mail mix changes.

Finally, in response to comments calling for more focus on cost reduction, the Commission 

has previously explained that it has limited tools that directly affect costs. See Order No. 

5337 at 156-57; Order No. 5763 at 183. The Commission maintains that the Postal Service 

must develop and implement plans that result in meaningful cost reductions for flats. In 

addition, the Commission encourages the Postal Service to continue to work with the 

mailing community as it develops these plans.

Conclusion

As highlighted above, flats had a combined negative contribution of $1.291 billion in 

FY 2021. Attributable costs for flats have continued to increase despite numerous 

operational initiatives aimed at reducing flats costs. At the same time, flats service 

performance has continued to decline. For a number of the pinch points, there was still no 

improvement: bundle breakage increased, mail processing productivity decreased, 

transportation costs increased, and delivery costs increased.

Since FY 2015, the Commission has worked to identify available data to develop metrics to 

measure, track, and report the cost and service performance issues for flats. In FY 2019, the 

Commission finalized its annual reporting requirements for flats, which leverages data 

collected internally by the Postal Service to increase transparency and enhance the 

accountability of the Postal Service to solve these persistent problems. See Order No. 5086.

FY 2021 represents the third year that the Postal Service was required to provide specific 

information related to flats cost and service issues. The Commission appreciates the 

information provided by the Postal Service this year. The Commission recognizes the 

impact of the COVID-19 pandemic on flats cost and service issues, including the delayed 

implementation of several initiatives intended to address these issues. However, because of 

the continuing trend of increased costs and declines in service, the Commission continues 

to have concerns related to the lack of specific plans to reduce costs and improve service 

for flats. The Commission is also concerned that the Postal Service is unable to determine 

how its operational initiatives and/or changes will impact cost and service. To resolve 

these concerns, the Commission has identified several areas where the Postal Service 

should improve its data and/or develop specific plans and goals to improve service and 

reduce costs. In addition, the Commission encourages the Postal Service to quantify the 

impact of its current and future initiatives on costs and service. The fact that in FY 2021 

flats products collectively had a cumulative negative contribution of almost $1.3 billion 

highlights the urgency and importance of this task.
Docket No. ACR2021 Appendix A

 Page 1 of 24

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 the workshare discounts identified in 

Table II-1 cannot be changed in any rate adjustment proceedings occurring prior to 

the issuance of the FY 2022 ACD consistent with 39 C.F.R. § 3030.282(a). FY 2021 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. In 

addition, the workshare discounts identified in Table II-2 cannot be increased in the 

next rate adjustment proceeding consistent with 39 C.F.R. § 3030.282(b). FY 2021 

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. In 

addition, all workshare discounts set below their avoided costs, including those 

identified in Table II-3, cannot be decreased in the next rate adjustment proceeding 

consistent with 39 C.F.R. § 3030.282(c). FY 2021 ACD, Chapter II.
Docket No. ACR2021 Appendix A

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Market Dominant, Non-Compensatory Classes:

 Periodicals:

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 2021 ACD, Chapter III.

o All of the Commission recommendations pertaining to reducing flat-shaped mail 

costs in Chapter VI. of this Report apply to Periodicals. In Chapter VI., the 

Commission reiterates its longstanding finding that despite numerous costreduction initiatives designed to reduce flat-shaped mail costs, these costs continue 

to rise. FY 2021 ACD, Chapter III.

 Package Services—Bound Printed Matter Parcels:

o The Commission finds that FY 2021 revenue for BPM Parcels was not sufficient to 

cover attributable cost and that the Postal Service did not take adequate steps in 

FY 2021 to improve the cost coverage for this product. As a result, the Commission 

directs the Postal Service to increase BPM Parcels’ prices by at least 2 percentage 

points above the class average in each Market Dominant rate adjustment affecting 

the Package Services class through the issuance of the FY 2022 ACD. In addition to 

an above-average price increase, the Commission directs the Postal Service to 

further explore initiatives to reduce the unit cost of BPM Parcels in FY 2022. In the 

FY 2022 ACR, the Postal Service must explain in detail the initiatives it considered 

but did not implement in FY 2022 as well as the initiatives it implemented in FY 

2022 or plans to implement in FY 2023. For any initiative that was implemented or 

is planned to be implemented, the Postal Service must describe the actual or 

expected effects on BPM Parcels’ unit cost and provide any available quantitative 

support. FY 2021 ACD, Chapter III.

 Package Services—Media Mail/Library Mail:

o The Commission finds that the FY 2021 revenue for Media Mail/Library Mail was 

not sufficient to cover attributable cost. The Commission strongly recommends that 

the Postal Service continue to apply above-average price increases to Media 

Mail/Library Mail in rate adjustment proceedings consistent with the FY 2021 

ACR’s pricing plan for Media Mail/Library Mail. FY 2021, Chapter III.
Docket No. ACR2021 Appendix A

 Page 3 of 24

Market Dominant, Non-Compensatory Products in Compensatory Classes:

 First-Class Mail Flats:

o The Commission finds that FY 2021 revenue for First-Class Mail Flats was not 

sufficient to cover attributable cost. Consistent with 39 C.F.R. § 3030.221, the 

Commission requires that the Postal Service increase First-Class Mail Flats’ prices 

by at least 2 percentage points above the class average in each Market Dominant 

rate adjustment affecting First-Class Mail through the issuance of the FY 2022 ACD. 

In addition to above-average price increases, the Postal Service must continue to 

explore and implement opportunities to further reduce the unit costs of flat-shaped 

mail products, including First-Class Mail Flats, as further discussed in Chapter VI. 

of this Report. FY 2021 ACD, Chapter III.

 USPS Marketing Mail Flats:

o The Commission finds that the Postal Service has been unsuccessful at improving 

the cost coverage of USPS Marketing Mail Flats as required by the Commission’s FY 

2010 and FY 2018 through FY 2020 ACD directives. FY 2021 ACD, Chapter III.

o The Commission finds that USPS Marketing Mail Flats continues to violate 39 U.S.C. 

§ 101(d) and possesses an unacceptable deficient cost coverage that continues to 

constitute an intra-class subsidy, unfairly burdening other mailers within the USPS 

Marketing Mail class. FY 2021 ACD, Chapter III.

o The Commission finds that the Postal Service’s cost-reduction efforts with regard to 

USPS Marketing Mail Flats have been unsuccessful. In Chapter VI., the Commission 

explains its continued concerns with the Postal Service’s inability to quantify the 

cost savings of its initiatives to reduce costs for flat-shaped mail products, 

including USPS Marketing Mail Flats. FY 2021 ACD, Chapter III.

o The Commission finds that the issues initially raised in the FY 2010 ACD regarding 

USPS Marketing Mail Flats have continued to worsen and that the product did not 

cover its attributable costs in FY 2021. Consistent with 39 C.F.R. § 3030.221, and in 

line with the FY 2018 through FY 2020 directives, the Commission requires that the 

Postal Service propose a price increase for USPS Marketing Mail Flats that is at 

least 2 percentage points above the average for the class. The Postal Service is 

encouraged to remain cognizant of mail mix changes when adjusting prices. 

Additionally, the Postal Service must continue responding to the requirements of 

the FY 2010 ACD directive by reducing USPS Marketing Mail Flats’ costs and 

providing required documentation of those efforts in future Annual Compliance 

Reports. Moreover, the Postal Service must continue to comply with the FY 2015 
Docket No. ACR2021 Appendix A

 Page 4 of 24

directive, as further discussed in Chapter VI. of this Report. FY 2021 ACD, Chapter 

III.

 USPS Marketing Mail Carrier Route:

o The Commission finds that FY 2021 revenue for USPS Marketing Mail Carrier Route 

was not sufficient to cover attributable cost. The Commission finds it appropriate 

to continue to direct above class-average price increases as the Commission did in 

its FY 2020 directive. In the each generally applicable Market Dominant price 

adjustment, and in compliance with the requirements of 39 C.F.R. § 3030.221, the 

Postal Service must propose a price increase for USPS Marketing Mail Carrier 

Route that is at least 2 percentage points above the class average for the USPS 

Marketing Mail class. In addition, the Postal Service shall continue to explore and 

implement opportunities to further reduce the unit costs of flat-shaped mail 

products, including USPS Marketing Mail Carrier Route, as further discussed in 

Chapter VI. of this Report. FY 2021 ACD, Chapter III.

 USPS Marketing Mail Parcels:

o The Commission finds that FY 2021 revenue for USPS Marketing Mail Parcels was 

not sufficient to cover attributable costs. The Commission finds it appropriate to 

continue to direct above class-average price increases as the Commission did in its 

FY 2019 and FY 2020 directives. In each generally applicable Market Dominant 

price adjustment, and in compliance with 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 class average for the USPS Marketing Mail class. In 

addition, the Postal Service is encouraged 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 

shall report on those opportunities and results in the FY 2022 ACR. FY 2021 ACD, 

Chapter III.

 Special Services—Money Orders:

o The Commission finds that FY 2021 revenue for Money Orders was not sufficient to 

cover attributable cost. Consistent with 39 C.F.R. § 3030.221, the Commission 

requires that the Postal Service increase Money Orders’ prices 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 2022 

ACD. FY 2021 ACD, Chapter III.
Docket No. ACR2021 Appendix A

 Page 5 of 24

Competitive Products, Cross-Subsidization:

 The Commission finds Competitive products satisfied 39 U.S.C. § 3633(a)(1) in FY 2021. 

FY 2021 ACD, Chapter IV.

Competitive Products, Cost Coverage, Domestic:

 The Commission finds that, in FY 2021, 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 2021 ACD, Chapter IV.

Competitive Products, Cost Coverage, International:

 International Money Transfer Service—Inbound:

 The Commission finds that the IMTS—Inbound product was not in compliance with 

39 U.S.C. § 3633(a)(2) in FY 2021. The Commission encourages the Postal Service 

to continue its efforts towards termination of the remaining agreements 

comprising the IMTS—Inbound product, if any, during FY 2022. 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 agreements’ modifications, including the impact 

on the IMTS—Inbound product’s reportable transactions and revenues, as part of 

its FY 2022 ACR filing. In addition, the Commission 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 2022, as part of its FY 2022 

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 a foreign postal operator or other financial institution. These data 

shall additionally include information on the number of money orders cashed at 

Postal Service retail windows and those cashed at United States banks, as well as 

information on whether a fee or a commission was paid to the Postal Service, to the 

extent possible. FY 2021 ACD, Chapter IV.

 International Money Transfer Service—Outbound:

 The Commission finds that the IMTS—Outbound product was not in compliance 

with 39 U.S.C. § 3633(a)(2) in FY 2021. The Commission directs 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 
Docket No. ACR2021 Appendix A

 Page 6 of 24

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, 

Chapter IV.

 International Ancillary Services—Inbound Competitive International Registered 

Mail:

 The Commission finds that the International Ancillary Services product was not in 

compliance with 39 U.S.C. § 3633(a)(2) in FY 2021, and that one of its subcomponents, Inbound Competitive International Registered Mail, did not cover 

cost. The Commission directs 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. This detailed analysis shall separately describe the 

attribution of costs and revenues associated with the delivery of host mail pieces 

and those associated with the provision of registered service (ancillary to delivery 

of host mail pieces), and be supported with data sources from the FY 2021 

International Cost and Revenue Analysis. Additionally, the analysis shall identify 

any potential new methodology that would improve the accuracy of cost and 

revenue attribution for inbound registered items included under the applicable 

MCS sections, including items under Inbound Competitive International Registered 

Mail. FY 2021 ACD, Chapter IV.

 International Ancillary Services—Outbound International Insurance:

 The Commission finds that the International Ancillary Services product was not in 

compliance with 39 U.S.C. § 3633(a)(2) in FY 2021, and that one of its components, 

Outbound International Insurance, did not cover cost. The Commission 

recommends that the Postal Service investigate the increases in window service 

costs and international indemnities, and take adequate and appropriate corrective 

action that would lead to compensatory Outbound International Insurance. Such 

corrective action might not be limited to a price increase for Outbound 

International Insurance in the next request to adjust prices of general applicability 

for Competitive products. FY 2021 ACD, Chapter IV.
Docket No. ACR2021 Appendix A

 Page 7 of 24

Competitive Products, Cost Coverage, Competitive Outbound International Products 

Consisting of NSAs:

 Outbound:

 The Commission concludes that Competitive outbound 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 outbound 

international NSA and take steps to terminate or renegotiate agreements that are 

not compensatory. FY 2021 ACD, Chapter IV.

 Inbound:

 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 

not compensatory. FY 2021 ACD, Chapter IV.

Competitive Products, Cost Coverage, Nonpostal Services:

 The Commission concludes that Competitive Nonpostal Services satisfied 39 U.S.C. 

§ 3633(a)(2) because revenues exceeded attributable cost for each product. FY 2021 

ACD, Chapter IV.

Competitive Products, Appropriate Share:

 The Commission finds that in FY 2021 Competitive products satisfied 39 U.S.C. 

§ 3633(a)(3) by covering an appropriate share of the Postal Service’s institutional 

costs. FY 2021 ACD, Chapter IV.
Docket No. ACR2021 Appendix A

 Page 8 of 24

Competitive Products, Pilot Program—Gift Cards:

 The Commission directs 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 remains in effect. In addition, the Commission directs 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 program past its initially anticipated 

end date of March 2022. Should the Pilot Program remain in effect after March 2022, 

the Commission will initiate a Mail Classification proceeding pursuant to 39 C.F.R. § 

3040 to explore and review the issues discussed in this section. FY 2021 ACD, Chapter 

IV.

Service Performance Targets for Market Dominant Products:

 At the time of filing the FY 2022 ACR, if the Postal Service maintains its current goal to 

“transition over approximately the next two to three years” all Market Dominant 

product service performance targets to 95 percent on-time (see Response to CHIR No. 

18, question 1.a.i.1.), the Commission directs the Postal Service to include as a part of 

its FY 2022 ACR filing a specific plan for moving service performance targets from 

their current interim levels to 95 percent for each Market Dominant product. This plan 

should include a proposed timeline for setting interim targets and key criteria for each 

product that the Postal Service uses to assess what those interim targets will be. In 

developing this plan, the Postal Service should balance the interests of setting 

realistically achievable interim targets with its stated goal of moving service 

performance targets up to 95 percent over “approximately the next two to three 

years.” If the Postal Service does not maintain this goal at the time of filing the FY 

2022 ACR, the Commission directs the Postal Service to identify its revised goal and the 

rationale for the change as a part of its FY 2022 ACR filing. FY 2021 ACD, Chapter V.

Service Performance Measurement for Market Dominant Products:

 The Commission recommends that, as the impacts to the Postal Service caused by the 

COVID-19 pandemic begin to abate, the Postal Service renew its focus on analyzing 

and improving its mail in measurement. FY 2021 ACD, Chapter V.
Docket No. ACR2021 Appendix A

 Page 9 of 24

First-Class Mail Service Performance:

 The Commission finds that the Postal Service did not meet its service performance 

targets for First-Class Mail in FY 2021 and directs the Postal Service to improve service 

performance results to achieve the applicable on-time percent target level for its FirstClass Mail products in FY 2022. The Commission recognizes that the COVID-19 

pandemic has continued to exacerbate the Postal Service’s difficulty in achieving its 

service performance targets and takes that into account in formulating its directives.

 The Commission is concerned that FY 2021 is the seventh consecutive year that no

First-Class Mail product category achieved its service performance target and over 

that time, service performance results for First-Class Mail have continued to decline, 

particularly for the 3-5-Day product categories. The Commission has found SinglePiece Letters/Postcards out of compliance since FY 2015, and Single-Piece Outbound 

International out of compliance since FY 2020. See FY 2020 ACD at 180. However, 

Presorted Letters/Postcards has also been below target since FY 2015 for all 

categories. Flats have been below-target since FY 2010 for all categories. Inbound 

Letter Post, like Single-Piece Outbound International, has been below-target since 

FY 2009. In FY 2021, the Postal Service revised service performance targets 

substantially downward for every First-Class Mail product category, yet every product 

category still failed to achieve its applicable service performance target, in some cases 

(as with Flats and Single-Piece Outbound International) by a significant margin. Given 

the long-standing problems the Postal Service has had achieving its service 

performance targets, and given 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 determines that all First-Class Mail 

products were out of compliance in FY 2021.

 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. ACR2021, if necessary. Where appropriate, the Postal 

Service shall explain the reasons for any differences in the calculation of data in FY 

2022 versus FY 2021 and shall propose a method for comparing the FY 2022 data to 

the FY 2021 data.
Docket No. ACR2021 Appendix A

 Page 10 of 24

(a) FY 2022 Nationwide Transit and Last Mile 

Improvement Initiatives

First, the Commission directs the Postal Service to evaluate the efficacy of its FY 2022 

nationwide initiatives to improve transit and Last Mile and to provide specific detailed 

plans to improve service performance results for First-Class Mail, as described in items 

1 and 2.

1. The transit evaluation shall explain how the progress made in FY 2022 (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 2022. 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 2022 (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 2022. 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 2022 Quarter 1 to FY 2021 Quarter 1) and provide a narrative 

explaining the practices employed to remediate the underlying problem(s) in FY 2022. 

Because every First-Class Mail product remains below its applicable target and 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, 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, 2022). An 

updated evaluation and plan shall be filed at the time of the FY 2022 ACR (by 

December 29, 2022).
Docket No. ACR2021 Appendix A

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(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.

1. For each Division, the Postal Service shall evaluate the efficacy of its FY 2022 

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 2022. This evaluation shall 

include quantitative comparisons of the same period last year (e.g., compare 

FY 2022 Quarter 1 to FY 2021 Quarter 1) and provide a narrative explaining 

the practices employed to remediate the underlying problem(s) in FY 2022.

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 every First-Class Mail product remains below its applicable target and the 

Postal Service has indicated that its progress and plans apply to all categories of FirstClass Mail generally, the Commission will allow the Postal Service to describe its 

progress and plans at a class level. 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, 2022). An updated report from each Division shall be filed at 

the time of the FY 2022 ACR (by December 29, 2022).
Docket No. ACR2021 Appendix A

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(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 through 5. Data shall be provided for FY 2022 Quarter 1, Quarter 2, and “midyear” within 90 days of the issuance of this ACD (by June 27, 2022). Data shall be 

provided for FY 2022 Quarter 3, Quarter 4, “second-half” and annualized for the fiscal 

year, in the FY 2022 ACR (by December 29, 2022). The Commission continues to direct 

the Postal Service to provide Area- and District-level data to allow comparability to 

prior fiscal years.

1. The top five root cause point impacts for First-Class Mail, disaggregated by 

shape/product and service standard, presented for the nation and each Area. 

Present results for Flats at the product level and disaggregated by the singlepiece and presorted categories.

2. The air carrier capacity requested, air carrier capacity received, and air 

capacity gap calculated, using daily cubic feet volume.

3. The number of CLTs (any HCR that is late by more than 4 hours), presented for 

the nation, each Area, and each District.

4. The performance for each national operating plan target (also referred to as 

the 24-Hour Clock national clearance goals), presented for the nation, each 

Area, and each District.

5. The 10 facilities with the most failures in meeting each of the 24-Hour Clock 

national clearance goals during FY 2022. For each facility identified, please 

state the number of times that the facility failed to meet that national 

clearance goal during FY 2022, and the corresponding number of times that 

the facility failed to meet that national clearance goal during FY 2021.

(d) FY 2022 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 2022 

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 
Docket No. ACR2021 Appendix A

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facility’s progress (or lack thereof) toward addressing each identified 

deficiency affected results for these products in FY 2022.

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 2021. The report for each facility 

shall be filed within 90 days of the issuance of this ACD (by June 27, 2022). An 

updated report from each facility shall be filed at the time of the FY 2022 ACR 

(by December 29, 2022).

With respect to Inbound Letter Post specifically, the Postal Service shall further 

provide information on the following matters, described in items 3 and 4.

3. In its FY 2022 ACR, the Postal Service shall provide both SPM and QLMS CY 

2021 and CY 2022 reports, aggregations of weekly failure reports, and an 

analysis of the failures and steps being taken to improve QLMS service 

performance. The Postal Service shall state in its FY 2022 ACR whether it 

forfeited revenue in CY 2021 and CY 2022 based on its QLMS results for the 

Inbound Letter Post product. If the Postal Service forfeited revenue in CY 2021 

and CY 2022, the Commission directs the Postal Service to provide the forfeited 

amounts for CY 2021 and for CY 2022 based on all results available to date and 

explain how this amount is calculated based on service performance results.

4. The Postal Service shall file a report within 90 days of issuance of this ACD (by 

June 27, 2022) that includes the following: QLMS service performance reports 

for CY 2021 and all available reports for CY 2022; a status update on projects 

and initiatives to improve QLMS service performance in FY 2021, and their 

effectiveness in improving service performance based on available KPI(s); root 

cause failures identified through coordination with the UPU and International 
Docket No. ACR2021 Appendix A

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Post Corporation (IPC) and steps that have been taken to address them; and the 

amount of Inbound Letter Post forfeited revenue due to not meeting UPU 

service performance targets in CY 2021 and CY 2022. The Postal Service shall 

provide an update to this report at the time of the FY 2022 ACR (by December 

29, 2022).

(e) National Monthly Service Performance Results

To monitor the Postal Service’s initiatives to remediate the decline from FY 2020 to FY 

2021, the Commission directs the Postal Service to provide national service 

performance results, disaggregated by month, for each First-Class Mail product (all 

service standards and combined). These monthly results shall be due on the following 

schedule: May 10, 2022 (monthly results for October 2021 through March 2022), 

August 9, 2022 (monthly results for April 2022 through June 2022), November 9, 2022 

(monthly results for July 2022 through September 2022), February 9, 2023 (monthly 

results for October 2022 through December 2022), and May 10, 2023 (monthly results 

for January 2023 through March 2023).

FY 2021 ACD, Chapter V.

USPS Marketing Mail Service Performance:

 The Commission finds that the Postal Service did not meet its service performance 

targets in FY 2021 for High Density and Saturation Flats/Parcels, Carrier Route, Flats, 

Every Door Direct Mail—Retail, or Parcels. 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 2022. The Commission recognizes that the COVID19 pandemic has continued to exacerbate the Postal Service’s challenges in achieving 

its service performance targets and takes that into account in formulating its 

directives.

 The Commission is concerned that service performance problems with respect to many 

of these products have been long-standing and that generally results for many of these 

products have continued to decline over time. High Density and Saturation 

Flats/Parcels has been below-target since FY 2013. Except for FY 2017, Carrier Route 

has been below-target since FY 2012. Flats have been below-target since FY 2012. 

Every Door Direct Mail—Retail has been below target since FY 2015. For the first time, 

the Postal Service reports that Parcels results failed to meet the applicable target in FY 

2021, and the Parcels results reported in FY 2021 decreased rapidly from the 

corresponding results reported in FY 2020. In FY 2021, the Postal Service revised 

service performance targets substantially downwards for all USPS Marketing Mail 

products, yet five out of seven products still failed to achieve the applicable service 
Docket No. ACR2021 Appendix A

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performance target, in some cases (as with Flats, Every Door Direct Mail—Retail, and 

Parcels) by a significant margin. In light of this, the Commission finds that High 

Density and Saturation Flats/Parcels, Carrier Route, Flats, Every Door Direct Mail—

Retail, and Parcels were each out of compliance in FY 2021.

 To monitor the Postal Service’s initiatives to remediate service performance issues 

with respect to these noncompliant products, which have been exacerbated by the 

COVID-19 pandemic, the Commission directs the Postal Service to provide information 

concerning the following four matters for High Density and Saturation Flats/Parcels, 

Carrier Route, Flats, Every Door Direct Mail—Retail, and Parcels (as well as any other 

USPS Marketing Mail product that fails to meet its applicable service performance 

target in FY 2022).

(a) Consistent Data

First, the Commission directs the Postal Service to provide the top five root cause point 

impacts for USPS Marketing Mail for each quarter and annually for FY 2022, 

disaggregated by shape/product and entry level/service standard. Data shall be 

provided for FY 2022 Quarter 1, Quarter 2, and “mid-year” within 90 days of the 

issuance of this ACD (by June 27, 2022). Data shall be provided for FY 2022 Quarter 3, 

Quarter 4, “second-half” and annualized for the fiscal year, in the FY 2022 ACR (by 

December 29, 2022).

(b) FY 2021 Improvement Initiatives

Second, 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, Carrier Route, Flats, Every Door Direct Mail—Retail, and 

Parcels (as well as any other USPS Marketing Mail product that fails to meet its 

applicable service performance target in FY 2022), 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 2022 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. 

ACR2019, ACR2020, and ACR2021) and explaining how the Postal Service’s 

progress (or lack thereof) affected on-time results for these products in 

FY 2022. The evaluations shall include quantitative comparisons of the same 

period last year (e.g., compare FY 2022 Quarter 1 to FY 2021 Quarter 1) and 

provide a narrative explaining the practices observed to remediate the 

underlying problem(s) in FY 2022.
Docket No. ACR2021 Appendix A

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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, 2022). An updated report shall 

be filed at the time of the FY 2022 ACR (by December 29, 2022).

(c) National Monthly Service Performance Results

Third, to monitor the Postal Service’s initiatives to remediate the decline from FY 2020 

to FY 2021, the Commission directs the Postal Service to provide national on-time 

percent results, disaggregated by month (all service standards and combined), for 

High Density and Saturation Flats/Parcels, Carrier Route, Flats, Every Door Direct 

Mail—Retail, and Parcels. These monthly results shall be due on the following 

schedule: May 10, 2022 (monthly results for October 2021 through March 2022), 

August 9, 2022 (monthly results for April 2022 through June 2022), November 9, 2022 

(monthly results for July 2022 through September 2022), February 9, 2023 (monthly 

results for October 2022 through December 2022), and May 10, 2023 (monthly results 

for January 2023 through March 2023).

(d) Status Report on Parcels

Fourth, the Postal Service shall provide a report on the status of its initiative to correct 

the source system error with respect to Parcels identified in Response to CHIR No. 2, 

question 6. The report shall be filed within 90 days of the issuance of this ACD (by June 

27, 2022). An updated report shall be filed at the time of the FY 2022 ACR (by 

December 29, 2022).

FY 2021 ACD, Chapter V.
Docket No. ACR2021 Appendix A

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Periodicals Service Performance:

 The Commission finds that the Postal Service did not meet its service performance 

targets for either Periodicals product in FY 2021 and directs the Postal Service to 

improve service performance results to achieve the applicable on-time percent target 

level for these products in FY 2022. The Commission is concerned that for these 

products, for which on-time service performance scores have remained below target 

since FY 2009, the Postal Service in FY 2021 revised service performance targets 

substantially downwards, yet both products nevertheless scored substantially below 

the applicable targets and declined from the levels observed in FY 2020. Therefore, the 

Commission determines that In-County and Outside County Periodicals remained out 

of compliance for FY 2021. The Commission recognizes that the COVID-19 pandemic 

has continued to exacerbate the Postal Service’s challenges in achieving its service 

performance targets and takes that into account in formulating its directives.

 To monitor the Postal Service’s initiatives to remediate service performance issues 

with respect to these noncompliant products, the Commission directs the Postal Service 

to provide information concerning the following three matters.

(a) Consistent Data

First, the Commission directs the Postal Service to provide the top five root cause point 

impacts for Periodicals for each quarter and annually for FY 2022. Data shall be 

provided for FY 2022 Quarter 1, Quarter 2, and “mid-year” within 90 days of the 

issuance of this ACD (by June 27, 2022). Data shall be provided for FY 2022 Quarter 3, 

Quarter 4, “second-half” and annualized for the fiscal year, in the FY 2022 ACR (by 

December 29, 2022).

(b) FY 2021 Improvement Initiatives

Second, the Commission directs the Postal Service to evaluate the efficacy of its FY 

2022 nationwide initiatives to improve In-County and Outside County Periodicals 

service performance and to provide specific detailed plans to improve Periodicals 

service performance, as described in items 1 and 2.

1. The Postal Service shall evaluate the efficacy of its FY 2022 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. 

ACR2019, ACR2020, and ACR2021) and explaining how the Postal Service’s 

progress (or lack thereof) affected on-time results for Periodicals in FY 2022. 

The evaluations shall include quantitative comparisons of the same period last 

year (e.g., compare FY 2022 Quarter 1 to FY 2021 Quarter 1) and provide a 
Docket No. ACR2021 Appendix A

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narrative explaining the practices employed to remediate the underlying 

problem(s) in FY 2022.

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 

within 90 days of the issuance of this ACD (by June 27, 2022). An updated report shall 

be filed at the time of the FY 2022 ACR (by December 29, 2022).

(c) National Monthly Service Performance Results

Third, to monitor the Postal Service’s initiatives to remediate the decline from FY 2020 

to FY 2021, the Commission directs the Postal Service to provide national on-time 

percent results, disaggregated by month, for In-County and Outside County Periodicals. 

These monthly results shall be due on the following schedule: May 10, 2022 (monthly 

results for January 2022 through March 2022), August 9, 2022 (monthly results for 

April 2022 through June 2022), November 9, 2022 (monthly results for July 2022 

through September 2022), February 9, 2023 (monthly results for October 2022 

through December 2022), and May 10, 2023 (monthly results for January 2023 

through March 2023).

FY 2021 ACD, Chapter V.

Package Services Service Performance:

 The Commission finds that the Postal Service did not meet its service performance 

targets for BPM Flats and Media Mail/Library Mail in FY 2021 and directs the Postal 

Service to improve service performance results to achieve the applicable on-time 

percent target level for these products in FY 2022. The Commission recognizes that the 

COVID-19 pandemic has exacerbated the Postal Service’s challenges in achieving its 

service performance targets and takes that into account in formulating its directives.

 While the on-time performance result for BPM Flats increased from FY 2020 to FY 

2021 by 6.0 percentage points, the Commission remains concerned that this product is 

substantially below its target. Moreover, FY 2021 marks the tenth consecutive year 

that BPM Flats has remained below its target. The Commission is also concerned that 

the FY 2021 on-time performance result for Media Mail/Library Mail remains below 
Docket No. ACR2021 Appendix A

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target and declined again for the fourth consecutive year. 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. Nevertheless, given 

the history of service performance problems for these products, the Commission finds 

that both BPM Flats and Media Mail/Library Mail were out of compliance in FY 2021.

 To monitor the Postal Service’s initiatives to remediate these ongoing issues related to 

these noncompliant products, which have been exacerbated by the COVID-19 

pandemic, the Commission directs the Postal Service to provide the information in the 

FY 2022 ACR for BPM Flats and Media Mail/Library Mail concerning the following 

three matters.

(a) Consistent Data

First, for BPM Flats, the Commission directs the Postal Service to provide the top five 

root cause point impacts for each quarter and annually for FY 2022. See, e.g., 

Response to CHIR No. 11, question 13. Data shall be provided for FY 2022 Quarter 1, 

Quarter 2, and “mid-year” within 90 days of the issuance of this ACD (by June 27, 

2022). Data shall be provided for FY 2022 Quarter 3, Quarter 4, “second-half” and 

annualized for the fiscal year, in the FY 2022 ACR (by December 29, 2022).

(b) FY 2021 Improvement Initiatives

Second, the Postal Service shall evaluate the efficacy of the Postal Service’s FY 2022 

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. 

ACR2019, ACR2020, and ACR2021) 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, 2022). An 

updated report shall be filed at the time of the FY 2022 ACR (by December 29, 2022).

(c) National Monthly Service Performance Results

Third, to monitor the Postal Service’s initiatives to remediate the decline from FY 2020 

to FY 2021, the Commission directs the Postal Service to provide national on-time 
Docket No. ACR2021 Appendix A

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percent results, disaggregated by month, for BPM Flats and Media Mail/Library Mail. 

These monthly results shall be due on the following schedule: May 10, 2022 (monthly 

results for October 2021 through March 2022), August 9, 2022 (monthly results for 

April 2022 through June 2022), November 9, 2022 (monthly results for July 2022 

through September 2022), February 9, 2023 (monthly results for October 2022 

through December 2022), and May 10, 2023 (monthly results for January 2023 

through March 2023).

FY 2021 ACD, Chapter V.

Special Services Service Performance Targets:

 The Commission finds that the Postal Service did not meet its service performance 

targets for Post Office Box Service or Ancillary Services in FY 2021 and directs the 

Postal Service to improve service performance results to achieve the applicable ontime percent target level for these products in FY 2022. The Commission recognizes 

that the COVID-19 pandemic has exacerbated the Postal Service’s challenges in 

achieving its service performance targets and takes that into account in formulating 

its directives.

 Post Office Box Service results have been below-target since FY 2015. Ancillary 

Services results have been below-target since FY 2020 but have decreased rapidly. 

Given the ongoing nature of service performance problems with respect to Special 

Services, the Commission finds that both Post Office Box Service and Ancillary Services 

were out of compliance in FY 2021. To monitor the Postal Service’s initiatives to 

remediate these ongoing issues with respect to these noncompliant products, which 

have been exacerbated by the COVID-19 pandemic, the Commission directs the Postal 

Service to provide the following information in the FY 2022 ACR for Post Office Box 

Service and Ancillary Services: (1) an evaluation of the efficacy of the Postal Service’s 

FY 2022 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. 

ACR2019, ACR2020, and ACR2021) to improve on-time service performance for each 

product; and (2) a detailed plan explaining how each product’s results will be 

improved.

 The Commission further directs the Postal Service to provide national on-time percent 

results, disaggregated by month, for Post Office Box Service and Ancillary Services. 

These monthly results shall be due on the following schedule: May 10, 2022 (monthly 

results for October 2021 through March 2022), August 9, 2022 (monthly results for 

April 2022 through June 2022), November 9, 2022 (monthly results for July 2022 

through September 2022), February 9, 2023 (monthly results for October 2022 
Docket No. ACR2021 Appendix A

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through December 2022), and May 10, 2023 (monthly results for January 2023 

through March 2023).

FY 2021 ACD, Chapter V.

Customer Access:

 The Commission reiterates the importance of providing consistent information among 

the Annual Report, ACR, and CHIR responses. In the FY 2022 Annual Report and the FY 

2022 ACR, the Postal Service must 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 2022 ACR instead of in CHIR 

responses. FY 2021 ACD, Chapter V.

Post Office Suspensions:

 The Commission directs the Postal Service to continue filing quarterly reports on the 

status of the suspensions remaining from FY 2016. The Postal Service must file this 

information within 40 days after the end of each quarter in FY 2022 and in FY 2023 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. ACR2020 on November 9, 2021.

 Each quarterly report must provide 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. Also, the FY 2022 ACR must 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, Chapter V.

Collection Boxes:

 The Commission will continue to monitor the number of collection boxes in Docket No. 

ACR2022. In FY 2022, 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 2022 ACR any plans or initiatives to remove collection boxes 

beyond the procedures specified in the POM. FY 2021 ACD, Chapter V.
Docket No. ACR2021 Appendix A

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Wait Time in Line:

 The Commission encourages the Postal Service to continue implementing strategies 

designed to improve wait time in line in FY 2022. In the FY 2022 ACR, the Postal 

Service must describe actions taken during FY 2022 to improve wait time in line. If 

wait time in line worsens during FY 2022, the FY 2022 ACR should:

o Explain why wait time in line increased and identify factors contributing to the 

increase

o Describe plans for improving wait time in line during FY 2023 that include specific 

actions, strategies, and initiatives designed to address factors contributing to 

increased wait time in line, including reduced employee availability

FY 2021 ACD, Chapter V.

Alternative Access:

 The Commission recommends that the Postal Service continue to expand alternative

access channels to ensure customers have ready access to essential postal services 

during the COVID-19 pandemic and beyond. To promote transparency, the Commission 

suggests that the Postal Service continue to disaggregate alternative access data and 

track the number of transactions and revenue by class or product. FY 2021 ACD, 

Chapter V.

Customer Satisfaction:

 In FY 2022, the Postal Service should continue to take appropriate actions to maintain 

large business customer satisfaction with Market Dominant products and improve 

residential and small/medium business customer satisfaction across all mailing 

services. In the FY 2022 ACR, the Postal Service must:

o Describe 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

o Explain how these actions, plans, initiatives, and strategies were targeted to 

improve Market Dominant product satisfaction for each customer type

o Explain how these actions, plans, initiatives, and strategies impacted FY 2022 

results

 If customer satisfaction with Market Dominant products declines for any customer 

type between FY 2021 and FY 2022, the FY 2022 ACR must explain why. When 

responding to these directives, the FY 2022 ACR must group explanations and 
Docket No. ACR2021 Appendix A

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descriptions by customer type (residential, small/medium business, and large 

business) or otherwise identify which explanations and descriptions apply to each 

customer type.

 The Commission reiterates its recommendation that the Postal Service consider 

revising the Delivery survey to ask follow-up questions and questions about service 

performance for each Market Dominant mailing service to allow the Postal Service to 

assess how service performance results affect customer satisfaction with those mailing 

services.

FY 2021 ACD, Chapter V.

Flat-Shaped Mail:

 The Commission recommends that the Postal Service continue to estimate and report the 

additional cost that bundle breakage adds to flats processing. In FY 2022, the Postal 

Service must work to reduce the number of broken bundles while continuing to increase 

the number of tracked bundles. In addition, the Postal Service shall continue to study the 

causes, impacts and ways to reduce bundle breakage; enhance reporting and tracking of 

bundle irregularities; and work with mailers to ensure corrective actions are implemented 

when irregularities are shared through the Mailer Irregularity Application on the Mailer 

Scorecard. FY 2021 ACD, Chapter VI.

 The Commission directs the Postal Service to implement initiatives to reduce mail 

processing costs, as costs must be controlled even in a declining volume environment. 

Further, if mail processing facilities have extreme (unusually high or low) productivity 

values or have quarterly productivity values based on a large number of missing 

workhours or volume at the operation and daily tour-level, the Commission directs the 

Postal Service to target those sites to improve their reporting or explain why the 

provided productivity is accurate for a given facility, mail processing category, fiscal 

year, and quarter. FY 2021 ACD, Chapter VI.

 The Commission recommends that in FY 2022, the Postal Service develop an accurate 

method to track flat-shaped mail that is manually processed. Once there is an accurate 

measurement of such flat-shaped mail, the Postal Service shall develop a specific plan 

to: (1) continue to decrease the quantity of flat-shaped mailpieces processed manually, 

and (2) achieve a proportional reduction in unit mail processing costs for manual 

operations. FY 2021 ACD, Chapter VI.

 The Postal Service must develop a plan to reduce the costs associated with allied 

operations and gain additional insight into allied operations. In addition, the Postal 

Service must use the updated version of the Cycle Time report to generate detailed 

data/reports on mail entry points. Furthermore, the Postal Service must indicate the 
Docket No. ACR2021 Appendix A

 Page 24 of 24

WIP cycle time for each processing point, and the corrective action(s) taken when 

delays occur in processing points. FY 2021 ACD, Chapter VI.

 In FY 2022, the Postal Service must develop a plan to reduce the costs associated with 

transporting flat-shaped mail. The plan shall establish specific achievable goals to 

reduce transportation costs for flat-shaped mail. The Commission will continue to 

monitor the SVWeb transportation metrics to ensure the Postal Service continues to 

make progress towards its goals. FY 2021 ACD, Chapter VI.

 The Postal Service must develop a plan in FY 2022 to reduce the costs associated with 

delivering flat-shaped mail. The plan should establish specific achievable goals that 

reduce delivery costs for flat-shaped mail. The Commission will continue to monitor 

the costs of last-mile delivery in FY 2022 to ensure the Postal Service efforts result in 

improvements. FY 2021 ACD, Chapter VI.
Docket No. ACR2021 Appendix B

 Page 1 of 1

Appendix B: Commenters

2021 Annual Compliance Determination

Commenter Comment Citation Citation Short Form

American Catalog Mailers 

Association (ACMA)

Initial Comments of the American Catalog 

Mailers Association (ACMA)

January 31, 2022

ACMA Comments

The Association of Magazine Media 

(MPA)

Comments of MPA – The Association of 

Magazine Media, January 31, 2022 MPA Comments

Association for Postal Commerce 

(PostCom)

Comments of the Association for Postal 

Commerce, Jamuary 31, 2022 PostCom Comments

Greeting Card Association (GCA) Initial Comments of the Greeting Card 

Association, January 31, 2022 GCA Comments

The Lexington Institute (LI) Comments of the Lexington Institute

January 31, 2022 LI Comments

National Association of Presort 

Mailers (NAPM)

Comments of the National Association of 

Presort Mailers, January 31, 2022 NAPM Comments

National Postal Policy Council 

(NPPC)

Comments of the National Postal Policy 

Council, January 31, 2022 NPPC Comments

Pitney Bowes Inc. (Pitney Bowes) Comments of Pitney Bowes Inc.

January 31, 2022 Pitney Bowes Comments

Public Representative (PR) Public Representative Comments

January 31, 2022 PR Comments

United States Postal Service (Postal 

Service)

Reply Comments of the United States Postal 

Service, February 14, 2022

Postal Service Reply 

Comments
Docket No. ACR2021 Appendix C

 Page 1 of 3

Appendix C: Acronyms and 

Abbreviations

Acronym/Abbreviation Meaning

AADC automated area distribution center

ACD Annual Compliance Determination

ACMA American Catalog Mailers Association, Inc.

ACR Annual Compliance Report

ADC area distribution center

ADUS Automated Delivery Unit Sorter

AFSM Automated Flats Sorting Machine

APBS Automated Parcel and Bundle Sorter

APPS Automated Package Processing System

BPM Bound Printed Matter

C.F.R. Code of Federal Regulations

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 Post Unit Technology

CRA Cost and Revenue Analysis

CRID Customer Registration Identification

CV coefficient of variation

CX customer experience

CY Calendar Year

DDU destination delivery unit

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
Docket No. ACR2021 Appendix C

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Acronym/Abbreviation Meaning

EMS Express Mail Service

EPPS Enhanced Package Processing System

FAST Facility Access and Shipment Tracking

FIFO First-In-First-Out

FPARS Flats Postal Automated Redirection Systems

FPO foreign postal operator

FSS Flats Sequencing System

FY Fiscal Year

GCA Greeting Card Association

GEPS Global Expedited Package Services

GEPS—NPR Global Expedited Package Services—Non-Published Rates

HCR Highway Contract Route

HD High Density

HD+ High Density Plus

HTPS High Throughput Package Sorter

IBRS International Business Reply Service

ICRA International Cost and Revenue Analysis

IMb Intelligent Mail barcode

IMMS International Mail Measurement System

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

IPA International Priority Airmail

IPC International Post Corporation

IPPS irregular parcels and pieces

ISAL International Surface Air Lift

ISC International Service Center

IV Informed Visibility

KPI key performance indicator

LI Lexington Institute

LMI last mile indicator

MAQ/PAQ Mail Arrival Quality/Plant Arrival Quality

MCS Mail Classification Schedule

Mixed ADC mixed area distribution center

MODS Management Operating Data System

MPA MPA – The Association of Magazine Media

NAPM National Association of Presort Mailers

NDC network distribution center
Docket No. ACR2021 Appendix C

 Page 3 of 3

Acronym/Abbreviation Meaning

NPPC National Postal Policy Council

NSA negotiated service agreement

OIG Office of Inspector General

P&DC processing and distribution center

P&DC/F processing and distribution center/facility

P&DF processing and distribution 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

PSAs Package Support Annexes

PTR Product Tracking and Reporting

QLMS Quality Link Measurement System

RFID Radio Frequency Identification

SCF sectional center facility

SDR Special Drawing Right

SIPS Single Induction Package Sorter

SPBSTS Sorter/Small Parcel and Bundle Sorter Tracking

SPCCS Special Purpose Carrier Cost System

SPM Service Performance Measurement

SPR Special Purpose Routes

SRP supplementary remuneration program

SSKs Self-Service Kiosks

STC surface transfer center

TACS Time and Attendance Collection System

THS Terminal Handling Service

TPF total pieces fed

U.S.C. United States Code

UPS United Parcel Service, Inc.

UPU Universal Postal Union

VPO Village Post Office

WIP Work in Process
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