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Postal Agency Faces Fight With High-Tech Rivals

U.S. MAIL: The Postal Service Under Siege. Last of three parts

December 16, 1994|MICHAEL A. HILTZIK | TIMES STAFF WRITER

The U.S. Postal Service is confronting a technological assault that as never before threatens its cherished monopoly over the delivery of letters, even as its mail volume this year is expected to rise to a record 177 billion pieces.

And how is it responding? Critics say the agency has an instinct to answer competition with brute force that is one of the clearest signs that it mistrusts--rather than values--its customers.

That defensive posture, say analysts, is among the many qualities that must change if the Postal Service is to survive into the 21st Century as a going concern rather than a ward of the federal government.

"The model of a mail monopoly is gone," said Robert Reisner, the agency's vice president for technology applications. "The customers have choices, and they will choose."

But while postal officials may know the change is coming, it has proved hard to live with.

At the Atlanta headquarters of Equifax, armed postal inspectors arrived one day, demanding to know whether all the mail that the large financial services company was sending via Federal Express was truly urgent. They also asked why paychecks being sent to outlying offices should not go by regular mail and even wanted to open personal mail.

"They lived with me for four months," recalls Joseph Steinbeck, Equifax's vice president for mail distribution. "They questioned everything."

Equifax refused to allow the personal mail to be opened, but it did eventually agree to pay the Postal Service a penalty of $30,000. It was essentially a fee allowing the firm to use Federal Express as it wished for the following year without Postal Service harassment.

The Postal Service initially maintained that it had the authority to investigate the use of express mail and levy the fine because such urgent mail is carried privately only under a special agency exemption. But the agency's enforcement of the exemption proved so excessive that it led to a congressional investigation this year and a pledge by Postmaster General Marvin T. Runyon Jr. not to use postal inspectors to audit customer mailings.

"I pay $150,000-$200,000 a month in postage," Steinbeck said. "That means they jumped on the people who are supporting them. It hurt my feelings more than anything else."

These days, electronic mail, fax and electronic funds transmissions all can move information and money faster, cheaper and more securely than the Postal Service. Alternate delivery services can hang advertising material and magazines on your doorknob for less than the cost of mailing them--and their business soars every time the Postal Service wins a rate increase.

Federal Express, Roadway Express, DHL and a host of other firms beat the Postal Service by hours on express delivery--and if your business does enough volume with them they'll do it at a price per envelope well below the Postal Service's Express Mail minimum of $9. Private carriers typically offer faster and more reliable service and the capability to track a package's route from sender to recipient.

Land's End, the Wisconsin-based "mail-order" merchandiser, actually receives only 15% of its orders by post, as opposed to its 800 order line; the vast majority of customers using the mail today are those who pay by check rather than credit card. On the other end, the company forsakes the Postal Service's parcel post to ship 98% of its merchandise by United Parcel Service.

"It wasn't a price issue with us," said Philip Schaecher, Land's End senior vice president for operations, noting that parcel post rates to some locations are lower than those of UPS. "It's that their service levels are not what we want them to be. If UPS says it will take two days, they make that 99% to 99.5% of the time. The post office is lucky to meet its standards 80%-90% of the time, and its standards are looser."

As competition has grown the rate of increase in first-class volume has sharply leveled off, from 4% in 1990 to 1.5% in 1993. In that time business-to-business mail has declined by almost a third, to just over 20 million pieces, as businesses embrace new money-saving and lightning-fast communications media.

The shift by business customers to electronic communications cost the Postal Service about $1.8 billion in lost revenue from 1988 to 1991, according to a study by the General Accounting Office. (The GAO, the investigative arm of Congress, also warned that all of those services have been growing much faster--on average 25% to 40% a year--than mail volume.)

So far the drop has been offset by an increase in mail between businesses and consumers--much of it bills, bill payments and merchandise orders--but postal officials attribute much of that to a nationwide rise in the number of households.

"The risk to the Postal Service posed by competition and changing technology is very real," GAO Associate Director Michael E. Motley recently told a U.S. House committee.

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