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The future of the U.S. post office - and your mail

Sunday, July 8, 2007

The U.S. Postal Service handles more than 40 percent of the world's mail.

WASHINGTON -- Could mail one day go the way of many pizza chains, where customers can pick it up or pay extra for home delivery?

Will the mail still arrive six days a week? Will the government still be involved?

The Postal Service is facing big questions as it struggles to cope with rising costs and major changes in the way people communicate.

Nations' mail systems vary. England's Royal Mail, for example, is a government-owned business, while Germany's Deutsche Post is a publicly traded stock company. All are much smaller operations than the U.S. Postal Service, which handles more than 40 percent of the world's mail.

Few doubt there will be adjustments in the United States, but what those will be remains to be seen.

In 1993, Postmaster General Marvin Runyon drew a barrage of criticism for suggesting mail delivery might be cut to four days a week.

That was a bombshell then, but it's something postal experts say may still be a possibility.

"If you have hard copy delivery, you might have it six days a week, or three days a week or one day a week," William Burrus, president of the American Postal Workers Union, said.

And, he added, it may not even be delivered; the recipient may have to go retrieve it.

Already, hiring private delivery contractors is an issue, prompting informational picketing by letter carriers in Florida to protest contracting out new routes in developing areas.

"I think within the next six to eight months the Congress of the United States is going to decide an issue that's going to determine whether or not we have a reliable, efficient postal service in the future," said William H. Young, president of the National Association of Letter Carriers.

"What I'm referring to is the decision that's been made at the highest levels of the Postal Service to give all the new growth, and the new deliveries that are springing up, to private contractors," he said.

Contracting out

But such changes may be necessary, says Gene Del Polito, president of the American Association for Postal Commerce, which represents advertising mailers.

If the Postal Service is to survive, it will to have to consider outsourcing more of its activities, he said.

It's conceivable, Del Polito said, "that a postal system in the future could evolve into something which I would call the master contractor, where it maintains its government identity by the government being the master contractor but that it puts things out competitively on bid ... ."

"At the end of the day, what you need is a universal mail delivery system, you don't need a universal mail delivery enterprise," Del Polito said.

Burrus points out that "the world is changing dramatically in terms of instant communications. We as a species have discovered the ability to have instant communications. That's not consistent with hard copy. I would suspect that over time hard copy will play less and less of a role in our communications."

Not so sure is Rep. John McHugh, R-N.Y., who believes hard copy will always have a place in the mailstream.

"Clearly, the way Americans communicate on a day-by-day basis is changing," he said, citing computers and cell phones. But there will still be core requirements such as hard copy that the post office will be needed for, said McHugh, a longtime congressional leader on postal issues.

Tony Conway, a longtime postal manager who now heads the Alliance of Nonprofit Mailers, said he expects the Postal Service to "evolve, probably into more of a focus on the strength of the organization, which is its delivery network. That's the heart and soul of the organization, no current private carrier can compete with it."

But, he added, "it may or may not be a government organization."

"The $64,000 question is how to keep the delivery network affordable," Conway said, noting the decline of first-class mail.

The only significant growth area is standard mail, which is primarily advertising, he said, and as the cost of postage rises, "at what point do you start losing that volume growth."

"The days of reckoning are coming sooner than people probably now appreciate," Conway said. The post office is adding 2 million new delivery points every year, raising costs on a declining revenue base. "That's not a pretty financial model."

And both postal service and mailers fret about "do not mail" bills proposed in several state legislatures. Designed to mimic the "do not call" rules, the bills would allow people to opt out of receiving what many call "junk mail."

Competition

Since that mail, advertising and solicitations, is the main postal growth area, passage of such bills would strike a financial blow at the post office, perhaps forcing it to raise rates again.

That worries Del Polito.

"We're already seeing signs that we're at the point now where people are seriously measuring the effectiveness of mail against alternative mechanisms, such as e-mailing or retailing or telemarketing to your known customer base, shifting to direct response TV or any of the other channels that previously one would have looked at and said, 'God, these are expensive venues.' Now, all of a sudden, they're looking at them and they're saying, 'Well, the cost of those venues are coming down but the cost of mail is going up."'

That means there are a lot of unknowns about what the system will look like in the future, he said.

"Sooner or later we're probably going to have to make a decision as a nation as to whether or not the core services that are provided for free are going to be done the way that they are today, or whether they're going to be offered in a more restricted capacity and in a more cost efficient capacity," he said.

For example, he suggested the possibility of requiring centralized delivery and allowing the consumer to pay something extra to get actual delivery service to the door.

"Now, when you do that, that means you must also give the consumer the opportunity to say what I want to get and what I don't want to get, and that could change the nature of the postal system," Del Polito said.

Burrus noted that last year's postal reform legislation set up a system to pay down the post offices' $70 billion to $80 billion unfunded health-care liability.

Once that is done, he said he expects pressure for privatization to increase, perhaps with some legislators calling for limited or partial privatization.

American society guarantees delivery of messages to people wherever they live, but if private companies are allowed to skim off the easiest, least costly routes, the government cannot subsidize delivery only to the expensive places to reach, he said.

Postmaster General John Potter has repeatedly said he is "bullish" on the mail, but the post office declined to make him available for an interview on the future of the service.


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