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Postal News
FOR IMMEDIATE RELEASE
October 22, 2002
Contact: (202) 268-2155
Release No. 02-079
Industry Commitment Key To Legislative Change
Says Postmaster General
Says Postmaster General
SAN FRANCISCO - The Postmaster General told mailing industry leaders that while the Postal Service is maintaining a firm handle on finances as it continues to perform at record service levels, the future of the mailing industry and the people it employs lies in the industry's continued commitment to working with Congress to modernize the Postal Service.
"We cannot ignore the fact that the Postal Service continues to operate with a fundamentally flawed business model," explained John Potter, referring to the antiquated 30-year-old law that established the Postal Service to operate a public service in a businesslike manner without taxpayer subsidy. "We operate under a model that no longer gives us the flexibility we need to meet the changing needs of our customers."
In speaking before members of the Direct Marketing Association (DMA), Potter said his short-term vision to the success of the Postal Service hinges on four key goals: reducing costs, improving service, changing the rate-making process, and enhancing products and services to grow the business.
The Postal Service is the hub in the spoke of the $900 billion mailing industry that employs nine million Americans to represent eight percent of the domestic gross national product.
According to the DMA, direct mail is still the number one direct marketing method, preferred by nearly three out of four marketers today. Last year, direct marketers spent more than $46 billion on direct mail promotion -- more than direct marketers spent on newspapers, magazines, network television and cable TV combined. The DMA predicts this year's direct mail sales to generate $625 billion in business, up $50 billion from 2001. By 2006, that will climb to $880 billion.
Reducing Costs While Improving Service
While the DMA is leveraging the mail to marketing, Potter said the men and women of the Postal Service are doing their part to reduce costs and increase productivity. He said the organization reduced career employees by 23,000 without layoffs by realigning its field management structure and reduced staffing. It also cut expenses across the board by freezing capital expenditures.
"Our employees and managers rose to the challenge," he said.
Changing the Ratemaking Process through Phased Rates
Potter said phased rates will enable customers to learn how much and when rates increase for more accurate budgeting. The Postal Service benefits by processing mail prepared with the most concise address information possible to minimize postal sorting costs.
"Today, you can plan your holiday season budget for 2003," he said. "My goal is to enable you to accurately plan your holiday mailing budgets for 2004 and 2005."
Enhance Products and Services: Negotiated Service Agreements (NSAs)
"We are not waiting for change to come to us," he said. "As one direct marketing executive put it the other day, we are trying to work within the limits of the current legislation, but we are also learning to think outside the box.
NSAs tie discounts to volume growth and benefit high-volume customers by offering flexible prices and services targeted to meet their specific needs. Potter expressed hope in the Postal Rate Commission approving a recent Capital One NSA so the option can be extended to other mailers.
"Importantly, for everyone here, we stand ready to negotiate NSAs with mailers of all classes of mail, including Standard Mail," he said.
Long-Term Solutions
Although he was optimistic for the short-term, he stressed that long-term changes are need for the Postal Service to continue to serve as an affordable conduit of commerce.
Potter said that while NSA are a good short-term solutions, he asked that leaders in the mailing industry to keep their focus on long-term solutions.
"We can not ignore the fact that the Postal Service continues to operate within a fundamentally flawed business model - a model that no longer gives us the flexibility we need to meet the changing needs of our customers," he explained.
For us to continue to provide affordable postal services in the long term and to reach every American every day, there must be change. We in the Postal Service must modernize," he said.
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Since 1775, the U.S. Postal Service has connected friends, families, neighbors and businesses by mail. It is an independent federal agency that makes deliveries to 137 million addresses every day and is the only service provider to deliver to every address in the nation. The Postal Service receives no taxpayer dollars for routine operations, but derives its operating revenues solely from the sale of postage, products and services. With annual revenues of more than $65 billion, it is the world's leading provider of mail and delivery services, offering some of the most affordable postage rates in the world. The U.S. Postal Service delivers more than 43 percent of the world's mail volume - some 207 billion letters, advertisements, periodicals and packages a year - and serves 7 million customers each day at its 38,000 retail locations nationwide.
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