[Federal Register Volume 66, Number 46 (Thursday, March 8, 2001)]
[Proposed Rules]
[Pages 13868-13870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-5632]


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POSTAL SERVICE

39 CFR Part 20


International Customized Mail Service

AGENCY: Postal Service.

ACTION: Proposed rule.

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SUMMARY: 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.

DATES: Comments regarding this proposed regulatory change must be 
received on or before April 9, 2001.

ADDRESSES: 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.

FOR FURTHER INFORMATION CONTACT: Angus MacInnes, (703) 292-3601.

[[Page 13869]]


SUPPLEMENTARY 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.

List of Subjects in 39 CFR Part 20

    Foreign relations, incorporation by reference, international postal 
services.

PART 20--[AMENDED]

    1. The authority citation for 39 CFR Part 20 continues to read as 
follows:

    Authority: 5 U.S.C. 552(a); 39 U.S.C. 401, 404, 407, 408.

    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

[[Page 13870]]

Postal 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