USPS Files FY 2017 Annual Compliance Report

01/02/2018

On December 29, 2017, the USPS filed their FY 2017 Annual Compliance Report, ACR.

The Postal Service is required to an ACR within 90 days after the end of each fiscal year (FY). It includes a variety of data on costs, revenues, rates, and quality of service, in order to “demonstrate that all products during such year complied with all applicable requirements” of title 39.

Report Summary:

  • Report demonstrates that the Postal Service maintained stead progress on most metrics, despite an environment of falling mail volumes.
  • Market dominant and competitive products were broadly in compliance with the requirements of chapter 36 over the course of FY 2017.
  • The Postal Service reduced the number of workshare passthroughs above 100 percent by eleven, and, in many cases, those passthroughs that remained above 100 percent either fit into one of the statutory exceptions or will be corrected when with the January 2018 price change.
  • The report outlines service performance improvements and customer satisfaction survey results

First Class Summary:

  • With the exception of Inbound Letter Post, all First-Class Mail products covered their attributable costs in FY 2017, with most of them contributing significantly to institutional costs.
  • First-Class Mail volume had been slowing in recent years, it accelerated in FY 2017, with the class losing 4.1 percent, or 2.5 billion pieces.
  • Four of the nine First-Class Mail Presorted Letters and Cards workshare discounts exceeded 100 percent of avoided costs: AADC Letters (117.6 percent), Automation Mixed AADC Cards (142.9 percent), Automation AADC Cards (133.3 percent), and Automation 5-Digit Cards (118.2 percent).

Marketing Mail Summary:

  • All USPS Marketing Mail products, other than USPS Marketing Mail Parcels and USPS Marketing Mail Flats, covered their attributable costs in FY 2017. As a class, USPS Marketing Mail covered its attributable costs and contributed significantly to institutional costs.
  • Parcels: covered 62.8 percent of its attributable costs in FY 2017, down from 63.8 percent in FY 2016.
  • Mail Flats: Covered 73.9 percent of its attributable costs in FY 2017, down 5.8 percentage points from FY 2016. Per-piece revenue rose modestly over the previous year, increasing 2.4 percent, but this was offset by a 9.7 percent increase in per-piece cost. The increase in cost was due in part to the migration of Flats Sequencing System (FSS) pieces from Flats to Carrier Route Flats, as a result of the Docket No. R2017-1 price change.
  • Letters: The FY 2017 passthroughs for DNDC and DSCF dropship letters were 152.9 percent and 161.9 percent, respectively. In Docket Nos. R2017-1 and R2018-1, the Commission accepted the Postal Service’s justification of these passthroughs, contingent on the Postal Service’s adherence to a plan to reduce the passthroughs by 10 percentage points in each market dominant rate case. The Postal Service continues to justify these passthroughs; it plans to recommend to the Governors a reduction of at least 10 percentage points in the next market dominant rate case

Periodicals Summary:

  • Cost coverage for the Periodicals class overall decreased in FY 2017, from 73.96 percent to 69.33 percent. In-County Periodicals declined in cost coverage from 70.07 percent to 67.16 percent, and Outside County Periodicals declined in cost coverage from 73.73 percent to 68.81 percent.
  • Revenue per piece for Periodicals as a whole decreased from 27.0 cents in FY 2016 to 25.9 cents in FY 2017, or 4.07 percent. At the same time, cost per piece increased from 36.5 cents to 37.4 cents, or 2.5 percent. The combination of these factors led to the FY 2017 decline in cost coverage.