Copyright 2000 The Atlanta Constitution
The Atlanta
Journal and Constitution
September 9, 2000, Saturday, Home Edition
SECTION: Business; Pg. 1C
LENGTH: 570 words
HEADLINE:
FedEx exec critic of Postal Service
BYLINE: Dave
Hirschman, Staff
SOURCE: AJC
BODY:
The most eloquent and outspoken opponent of a
planned alliance between FedEx Corp. and the U.S. Postal Service may turn out to
be the FedEx founder himself.
Frederick W. Smith, chairman and chief
executive at FedEx, has been a vocal critic of the Postal Service and testified
before Congress in 1999 that the agency ought to be barred from competing
against private companies, then abolished as fax machines, e-mail and more
efficient, profit-oriented firms take over its territory.
"The financial
and operational core of the Postal Service --- the monopoly over the carriage
and delivery of letters --- will one day dissolve in a technological mist,"
Smith said.
"Either the Postal Service must be wound down in an orderly
manner as competitors are able to take over its functions or the Postal Service
must be allowed, and required, to compete on terms that are identical to those
faced by private competitors."
Postmaster General William Henderson
stunned the transportation industry Thursday when he announced FedEx and the
Postal Service are negotiating a far- reaching alliance in which the
Memphis-based company will carry Postal Service products on its airplanes, and
mail carriers will deliver FedEx Ground shipments.
The deal is expected
to be finalized in October and the two organizations could coordinate their
operations early next year.
The move is being strongly opposed by United
Parcel Service Inc. of Sandy Springs, the world's largest transportation firm
and a fierce rival of both FedEx and the Postal Service.
Private
delivery companies led by UPS and FedEx have long complained that the Postal
Service, a government corporation, abuses its monopoly on first- class mail by
subsidizing products such as Priority Mail, Express Mail and international
shipments. And no critic has been more consistent than FedEx's Smith.
"The only proper justification for a government Postal Service is to act
as a provider of last resort for necessary public postal services that would
otherwise be unavailable from the private market," he testified last year.
"A government Postal Service --- which does not need to make a profit,
does not answer to shareholders, loads its fixed costs on a legal monopoly and
cannot go out of business --- behaves so differently from private competitors
that it distorts the entire market.
''These dangers are compounded by
the perverse tendency of the Postal Service to use governmental powers for
commercial ends."
Scorn for alliance
Smith also heaped scorn on
an international alliance between the Postal Service and European partners DHL
and the German post office. The German agency bought a minority stake in DHL
with taxpayer funds.
In this way, Smith said, "the Postal Service is
able to piggyback on the anti-competitive accomplishment of foreign post
offices."
FedEx apparently began talks aimed at creating a similar
public/private partnership in the United States less than a year after Smith
made those comments.
On Friday, FedEx spokesman Jess Bunn said the
company's position remains unchanged, however.
"As we pursue these
broad-based strategic discussions with the Postal Service,
we'll continue to support postal reform as we have in the
past," Bunn said. "There's no contradiction."
FedEx shares on the New
York Stock Exchange closed Friday at $ 39.26, down 56 cents. UPS shares finished
the day at $ 53.31, down $ 1.25.
GRAPHIC: Photo
Frederick W. Smith
LOAD-DATE: September 10, 2000
