The U.S. Postal Service is proposing to revise its regulations to enable mailers to additionally qualify for International Customized Mail (ICM) service if they are capable, on an annualized basis, of tendering at least 600 pieces of non letter-post mail (including Global Priority Mail), or paying at least $12,000 in international non letter-post postage to the Postal Service.
Comments regarding this proposed regulatory change must be received on or before April 9, 2001.
Written comments can be mailed or hand delivered to the Manager, International Marketing, International Business, U.S. Postal Service, 1735 North Lynn Street, Room 2018, Arlington, VA 22209-6020. Copies of all written comments will be available for public inspection between 9 a.m. and 4 p.m., Monday through Friday, at the office of International Business to which written comments may be sent.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Angus MacInnes, (703) 292-3601. Start Printed Page 13869End Further Info End Preamble Start Supplemental Information
The Postal Reorganization Act grants the Postal Service the authority to establish international postage rates and fees. The Postal Service has the authority to enter into an ICM agreement with business mailers who meet the requirements of International Mail Manual (IMM) 297.2. The Postal Service provides ICM service to specific mailers pursuant to the terms and conditions of an ICM service agreement consistent with IMM 297.3. To qualify for ICM service, a mailer must currently be capable, on an annualized basis, of either tendering 1 million pounds of international mail or paying at least $2 million in international postage (IMM 297.2). The current qualifying criteria were adopted in a final rule on May 21, 1993.
The nature of the international mail marketplace has substantially changed in the past 7 years since the final rule was adopted, particularly with respect to the expedited and package segment of international business. International mail transactions are conducted in an increasingly complex and substantially competitive marketplace. Competition for U.S. origin and destination international mail and related services is intense. Private competitors and foreign posts compete for customers and business in the processing, transportation, and delivery of letters, printed matter, and parcels.
Over the past 7 years, the availability of pricing incentives has become an even larger factor in mailers' decisions to select one service provider over another, especially for parcels. It is common today for private competitors and foreign posts to establish specific prices and conditions by entering into individual contracts. Individual prices and conditions are set on a customer-by-customer basis; a region, country group, or country-by-country basis; and/or a product-by-product basis. Private competitors have in recent years set very low minimums when they offer individual contracts or price incentives to customers shipping parcels.
The international letter mail and printed matter business is concentrated among a few larger businesses and consolidators. The number of pieces, weight, and postage of letters and printed matter mailed annually by each such mailer is on average very high. Such mailers have the capability of mailing well in excess of $2 million or 1 million pounds. Thus, the existing criteria for qualifying for an ICM allows the Postal Service to be competitive for letter and printed matter business, because that segment is concentrated among a few customers annually mailing large volumes.
In contrast, the international package business is widely dispersed among a large number of customers who send fewer pieces per year. Only one of eight domestic shippers also ships internationally. Normally, the average volume per customer of international shipping is much lower than domestic shipping. Only a very small percentage of business customers ship as much as $2 million or 1 million pounds. Nevertheless, customers still expect discounts for their international packages.
The international package market is extremely price sensitive. Customers who ship as few as 5 packages per week, or 200 packages per year, are offered discounts by private competitors. Customers who ship 10 or more packages a week, or about 520 a year, generate over two-thirds of the international package revenues. These customers are offered discounts by private competitors that are as much as 65 percent below published rates. These discounts are offered under a number of agreement formats and are never made public. Hence, the current ICM qualifying criteria does not allow the Postal Service to offer an ICM to most of the international parcel mailers and compete effectively on the basis of price. This puts the Postal Service at a competitive disadvantage.
The Postal Service has several current ways to be price competitive for most international package business. It offers expedited and package services at published rates. While these rates are generally below the published rates of competitors, they are frequently not competitive for all size business customers because of the pervasive discounting offered by international package carriers.
The Postal Service offers a published discount for one product, Global Express Mail. This discount is 5 percent below published rates for those customers who have an Express Mail Corporate Account (EMCA). A customer can have an EMCA by depositing $250 with the Postal Service. This offer is attractive only to very small businesses that do not receive discounts from international package competitors.
The Postal Service offers an ICM agreement to customers capable of mailing $2 million or 1 million pounds per year. This positions the Postal Service very competitively for the largest international package customers. However, as is explained above, there are very few such customers. This leaves the Postal Service without a way to offer competitive prices or to customize services to thousands of business customers who ship international packages.
The Postal Service will be able to broaden its offerings and be more competitive by lowering the qualifications for entering into an ICM agreement to 600 parcels or $12,000 a year. Competitors offer discounts to shippers sending as few as 200 parcels a year and routinely offer discounts to shippers sending 600 parcels per year. Setting the qualifying criterion at 600 parcels a year will enable many mailers to qualify for an ICM agreement and make the Postal Service more competitive. The qualifying criterion that a mailer is capable of spending at least $12,000 in postage is reasonable since the average postage for a Global Express Mail item is almost $20. Six hundred pieces multiplied by $20 is $12,000. This would make the international package market more competitive, which benefits all customers.
In the international arena, the Postal Service seeks to better serve customers' needs and generate additional revenues and contribution to institutional costs. Both the Postal Service's customers and the public benefit from the contributions to the overall costs of the postal system that its international services provide. Thus, its success in the competitive markets contributes to its ability to provide reasonably priced postal services to all of its customers.
The Postal Service, therefore, concludes that to be competitive in the international marketplace, it needs to establish new qualifying criteria for mailers of international expedited and package services to qualify for an ICM agreement.Start List of Subjects
List of Subjects in 39 CFR Part 20End List of Subjects Start Part
1. The authority citation for 39 CFR Part 20 continues to read as follows:
2. The International Mail Manual (IMM) is amended to incorporate the following changes to Subchapter 290.
International Mail Manual (IMM)
297 International Customized Mail
297.2 Qualifying Mailers
[Replace the current 297.2 with the following changes:]
To qualify for ICM service, a mailer must tender all of its ICM mail to the Start Printed Page 13870Postal Service and must be capable, on an annualized basis, of:
a. Tendering at least 1 million pounds of international letter-post mail (excluding Global Priority Mail) to the Postal Service, or paying at least $2 million in international letter-post postage to the Postal Service; or
b. Tendering at least 600 pieces of international non letter-post mail (including Global Priority Mail) to the Postal Service, or paying at least $12,000 in international non letter-post postage to the Postal Service.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 01-5632 Filed 3-7-01; 8:45 am]
BILLING CODE 7710-12-P