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BCG_Detailed presentation - Projecting US Mail volumes to...

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March 2, 2010 Projecting US Mail volumes to 2020 Final Report – Detail
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1 Xxxxx-xx/Footer Objectives and approach
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2 Xxxxx-xx/Footer Objectives of BCG's assignment BCG was asked to develop base case projections of mail volumes to 2020 Base Case is a business-as-usual scenario with the following assumptions • No new revenue or cost savings initiatives beyond those already in the current USPS plan • No legislative or regulatory changes • Economy returns to historical long-term growth rate in two to three years • No major economic or other disruptions Base Case forecast incorporates extensive, recent independent research • Interviews, surveys, BCG expertise, benchmarks from other countries, and commercial research
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3 Xxxxx-xx/Footer Approach Segmented mail into components with common behaviors Interviewed and surveyed Senders and Consumers Incorporated broad set of industry data and research Leveraged global benchmarks Projected revenues • First-Class Mail: invoices, statements, ad mail, payments • Standard Mail: letters, flyers, catalogs • Other categories: magazines, packages, etc • 50+ Senders interviewed for views on future use of mail • Average USPS revenue of $200M for sample, and representation from all major industry segments • 3,000+ Consumers were surveyed by phone and by internet on perception of online alternatives to mail • Forrester, Celent, Winterberry, Federal Reserve, etc • BCG industry experience in multiple markets • Developed countries with high broadband penetration • Also, selected US peer for direct comparison • Leveraged USPS business-as-usual price assumptions
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4 Xxxxx-xx/Footer Mail was classified into segments with similar characteristics and market behaviors Bills and invoices General B2C mail Bank statements C2B / B2B payments Standard Mail ad letters Flyers First-Class ad letters Catalogs First-Class Mail First-Class Mail Standard Mail Standard Mail Postcards Large envelopes
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5 Xxxxx-xx/Footer 80 40 20 100 0 60 All mail volume (%) (%) 2009 Total 177 B (100%) Consumer Volume Sender: Business volume Both First-Class Mail Volume (47%) Standard Mail Volume (46%) Misc C2B 4 B (2%) C2C 5 B (3%) C2B pmts 9 B (5%) Flyers 24 B (14%) Catalogs 12 B (7%) Newsletters 5 B (3%) Large Envelopes 5 B (3%) Postcards 3 B (2%) Bills / Invoices 22 B (12%) General B2C Mail 14 B (8%) Bank Statements 8 B (5%) B2B/B2C Payments 6 B (3%) General B2B Mail 4 B (2%) First-Class Ad Letters 11 B (7%) Standard Mail Ad Letters 32 B (18%) Volume forecasts were created by segment Magazines 8 B (4%) Packages 3 B (2%) Note: segments do not sum to 177B pieces due to rounding. Source: BCG analysis Packages Magazines Standard First Class – Business First Class – Consumer
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6 Xxxxx-xx/Footer Results
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7 Xxxxx-xx/Footer 2020 projections were then developed by aggregating segments into major mail classes Forecast Forecast Volume to fall to approx. 150B pieces from 177B in 2009 (-1.5% CAGR) Volume to fall to approx. 50B pieces from 84B in 2009 (-4% CAGR) Volume to remain roughly flat at 85B pieces (+0.4% CAGR) A bright spot with projected 1B piece gain (+3% CAGR) – but not offsetting loss in core business
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