THE SUMMER OF MAILERS' DISCONTENT

The following is a perspective by postal commentator Gene Del Polito prepared for Direct magazine.

There's a lot of postal grousing going on these days. Much of it is for good reason. No one is particularly delighted with the postal rate increases proposed by the U.S. Postal Service (USPS); advertising mail service has dropped a notch or two, magazine publishers are still reeling from the dampening of subscriber demand resulting from the bad PR surrounding sweepstakes promotions; the absence of a legislative light at the end of a postal crisis tunnel has caused melancholy to set in; consumer confidence in the economy is beginning to weaken; and, with one rate case not yet over, postal officials already are talking about putting another on the drawing boards. While postal officials have tried to buoy mailers' confidence with news that the mail automation program is reducing costs at a faster rate than ever before, mailers are smart enough to know that rising labor costs are eating up automation-related savings even faster than they are created.

As institutions go, the USPS is sick. Senior postal executives privately say that the decline in First-Class Mail volume predicted to begin in 2003 already shows signs of having begun. While advertising mail growth remains impressive, nobody wants to bet that with rising postal rates and increased access to cost-efficient electronic alternatives, new mail volume and revenue can be taken for granted.

The Postal Service can better its current position in only one of three ways. It can lower its operating (read--"labor") costs; it can raise postal rates; and it can generate new volume (while retaining the old) by enhancing the value of mail as a medium of business communication and commerce through new products and service offerings.

In the case of lower labor-operating costs, mailers would be wisely counseled if they were told to not hold their breath. The significant increase in city labor carrier costs resulting from the last round of binding arbitration bodes ill for the Postal Service. There is little likelihood that any of the other postal unions or management associations will mitigate their demands for "more and more" despite signs of an impending postal fiscal crisis.

The idea of raising postal rates, while apparently being contemplated by postal managers, should be rejected outright by the postal Governors. In fact, it's time for the nation to see the Governors exercise some measure of leadership in helping Congress diagnose and remedy the Postal Service's ills.

The only real card postal management has any hope of playing is the development of newer, more innovative postal products and services, which are required by a changing business communications marketplace. The only question is when...when will the Postal Service get off its duff and start talking with customers about their changing postal needs?