July 27 2006 12:37 PM

Most mailers have enough headaches dealing with staff squabbles, downsizing and budgeting, let alone ensuring their mailings are accurate, cost effective and delivered on time, that they don't get the chance to kick back and ponder the future of the U.S. Postal Service and mailing industry! But if you could, what would you imagine? Do you think people will hop on the information superhighway and request all of their mail be delivered online? Will direct marketers find the Internet delivers much higher response rates and choose e-mail over traditional mail? Will rising postage rates drive mailers to seek alternative delivery methods?


These are all valid questions, therefore we decided to seek out the opinions of those who lead the mailing industry. These are the people who will face these questions and have a direct impact on the solutions. We invited four leaders to share with us their perceptions of what will affect the U.S. Postal Service and the mailing industry and how they will react. Our leaders include the Postmaster General, the Chairman of the House Postal Service Subcommittee, an influential industry association president and a major equipment and technology provider. Their comments are not radical, though they differ in opinion. Most of their discussions center on the same topic, the Postal Service, but for many, that's the keystone of the industry's future. They acknowledge many of the same issues that threaten the future of our industry and the Postal Service, but do not necessarily agree on the solutions. So, take a look at what they have to say and decide for yourself just where we go from here.


John M. McHugh

U.S. Representative-NY

Chairman, House Postal Service Subcommittee

Over the last year, numerous newspaper headlines have blasted ominous warnings about the future of the United States Postal Service. Warnings that, quite frankly, should come as no surprise to postal industry observers. Headlines such as "E-mail Use May Force Postal Service Cuts" and "USPS Future Termed Shaky" or "Online Bill Paying Could Cut Into Postal Service Revenue" spell out the challenges facing the USPS as the communications marketplace evolves. Rather than sticking our heads in the sand and blindly holding on to the past, we should enthusiastically embrace new opportunities and make the necessary changes to our nation's postal system in order for it to survive, adapt and compete. The alternative the status quo will have a disastrous result. Huge rate increases, cuts in service, massive postal job cuts and post office closings are inevitable in the absence of reform. It is the responsibility of Congress, the postal industry and consumers to make sure that does not occur.


As Chairman of the House Government Reform Committee's Postal Service Subcommittee, I have spent the last five years developing legislation aimed at fundamentally modernizing and reforming our nation's postal system. My bill, H.R. 22 - the Postal Modernization Act, will update our postal laws for the first time since 1970. Many of today's communication technologies were not even contemplated 30 years ago. Thus, our postal laws are from an era that simply no longer exists. We need a more modern system that reflects the dynamic communications environment of today.


Throughout H.R. 22's legislative process, I have attempted to ensure all postal stakeholders and the general public have had repeated opportunities to provide input on the legislation. Most groups have dedicated time and energy to the process to help ensure our reforms strike the right balance between providing the Postal Service greater freedom to compete, while establishing rules to ensure fair competition and protect the public interest. However, the bill's most outspoken opponents have dedicated their massive resources to impeding the process and preserving the status quo. And thus, the battle has been staged. On one side are the reformers hoping to create a modern postal structure that balances the needs of the industry, postal competitors, the 850,000 postal employees and the 272 million Americans who rely on universal service and uniform rates. On the other side are competitors of the Postal Service who, for various reasons, prefer the status quo, which puts the agency's revenue and solvency at risk in just three short years.


Unfortunately, there is no Congressional crystal ball we can consult to see where this process will be a year from now. One thing we do know is that there will be a new chairman of the Postal Service subcommittee in 2001 due to Congressional rules limiting the terms of chairmen. If H.R. 22 is not adopted this year, the political landscape may make it impossible to consider such reforms next year. Which party will be in the majority in the 107th Congress? Who will be the new chairman of the subcommittee in the 107th Congress? Will the decline in First Class mail materialize sooner than expected? A narrow window of opportunity remains for the brand of reasoned, balanced change I have proposed in H.R. 22. A much more drastic approach, which  · will have negative consequences for all mailers and consumers, will be necessary if our postal laws are not changed in the immediate future.


The Postal Service is on the verge of a new era. The Postal Service of yesterday does not have the adequate structure to meet the challenges of the future. The Postal Service's recent rate increase proposal only reinforces the need for reform. Americans should expect even more postage increases as well as cuts in service under the current framework. The best way to ensure universal mail service at affordable rates is to push the adoption of H.R. 22. A key component of the bill would hold postal rates at or below the level of inflation through a "price cap" system to ensure fairness and predictability in postage rates. The price caps would create, for the first time, an incentive for the Postal Service to operate efficiently.


The time has come for postal stakeholders to step up and join this battle in earnest. Stakeholders on the side of reform must do more than monitor the process. It will take the work of everyone. The Postal Service, competitors, mailers and consumers all must send a strong message to my colleagues in Congress particularly those on the Government Reform Committee. My colleagues need to hear from the bill's supporters about what is at stake and how the legislation improves our postal system. The case for reform is overwhelming, but if we let the bill's opponents continue to mislead and cloud the issue, we will miss our window of opportunity for reform.


William J. Henderson

Postmaster General & Chief Executive Officer

U.S. Postal Service

The world is in the midst of a technological revolution the latest in a very long history of revolutions that has transformed and forever changed our world. In our 225-year history, the U. S. Postal Service has served as an agent for change in much of that time. We helped create a vast communication infrastructure in this country that made interstate commerce a possibility and universal delivery a reality. 


As the needs of our customers evolve with the latest technology, we will continue to evolve to meet those needs. Americans want their Postal Service to incorporate the protection and integrity they have come to value so strongly in hardcopy mail, with the quality, convenience and speed of electronic commerce. And we will. Whether through bits of paper or bytes of data, we will continue to fulfill our mission to "bind the nation together."


For 225 years, the Postal Service has been delivering money, merchandise and messages for the American people. We enter the new millennium knowing full well that the most significant challenges in our history await us. Private delivery carriers will aggressively try to maintain domination in their respective markets. Newly privatized and deregulated foreign posts can be expected to offer an increasing range of international services to American customers and to begin creating delivery networks right here on US soil.


We also face exponential growth in electronic communications. Well-funded and highly motivated forces in the banking, telecommunications and computer industries are building e-payment networks. As consumers grow more comfortable with logging on to pay their bills, these efforts will reach critical mass. The result could be erosion of our total revenues. We believe that nearly $17 billion is at risk. 


These factors, along with the rising costs of maintaining a national infrastructure of 38,000 facilities and a delivery network that grows by a million stops a year, mean we cannot sit still. We have to generate new growth if we are to maintain affordable prices and investments in better service.


We have a responsibility to the American people to ensure a healthy and meaningful postal system in the next century. What's at stake is not just the continuation of perhaps the most visible and personal of all federal services, but the endurance of a delivery system that touches every American, helps bridge our vast distances and differences and binds our nation together. 


The mail is an experience we all share. We look forward to getting our mail. It is a unique and powerful moment in our day. It brings information, entertainment, opportunity and basic necessities. Mail has become the gateway to the household, an unmatched channel for commerce and communication that connects families and friends, governments and citizens, businesses and customers, publishers and readers, charities and sponsors.


As we look to the next century and the turbulent change it will bring, we have to ask ourselves, "What will it take to preserve that connection for the next generation of Americans?" I believe an answer does exist and I think we can take our cue from the way this nation and its mail system managed the transition to the current century. 


As the year 1900 approached, our postal system, the Congress and the American people were grappling with a nation in transformation. The Industrial Revolution was in full swing. And the Postal Service, ever pushing the envelope of technology, was testing mail collections by automobile in Buffalo, NY. Postmaster General Charles Emory Smith ventured out on a limb to predict "the substitution of motors for the horse and wagon will possibly become universal." The real revolution, however, was taking place in rural America where our farmers demanded access to the information superhighway of free rural mail delivery. Many knowledgeable observers and some members of Congress feared a universal mail system would drain the national treasury. However, the voice of rural America prevailed. 


In the end, rural delivery not only worked for America's farmers, it stimulated the entire nation. It increased the circulation of the press and periodicals, raised farm values, prompted the creation of roads and expanded commerce. The mail-order industry blossomed, as did private parcel firms. 


Today, America and the Postal Service face a new century of opportunity and uncertainty. In many ways, the issues are far less controversial than a century ago, but the stakes are just as high America's place in the 21st Century and universal mail service for all Americans.


We must build on our strong Internet presence. Our public home page is the most heavily trafficked government site, receiving about five million hits every day. Customers use this site to find ZIP Codes, calculate rates, buy stamps, track packages and get other key postal information. We intend to use the speed and access of the Internet to offer customers information about their mail and access to our products and services. 


As online purchases soar, both businesses and consumers want prompt, reliable delivery and easy access to a carrier who can handle returns. The Postal Service is listening to the voice of America, and we are working to earn our share of the growth. We believe we can be the postal service of choice for merchandise purchased on the Internet and the inevitable returns that result.


So, despite many challenges, the Postal Service sees the 21st Century as another great opportunity to build on our legacy of service to our nation.    


Gene Del Polito


Association for Postal Commerce (PostCom)

For many years, the U.S. Postal Service enjoyed the luxury of knowing that despite advances in technology, a statutory monopoly over the carriage of letter mail was sufficient to ensure its survival. Postal officials and union leaders delighted in asserting that the Postal Service's demise had been predicted wrongly so often in the past that all such predictions should be discounted. The conventional wisdom had been that if the Postal Service managed to survive the invention of the telegraph, the telephone and other alternative media, it would survive equally well the advent of the Internet and the World Wide Web. Well, the "conventional wisdom" is wrong.


Not long ago, former Postmaster General Marvin Runyon talked about the Postal Service's challenge of losing "market share" in five of its six core business markets. Advertising mail, he said, was the only sector in which the Postal Service's franchise remained unchallenged.


Here we are, only two years and one postmaster general later, and now postal officials have dropped any pretense about the USPS' advertising mail franchise being on anything more  substantial than shaky ground. In fact, postal officials have been astonished at the meagerness of recent advertising mail growth and the shifting that has occurred of millions of advertising dollars out of the mail and into the World Wide Web.


E-mail largely has supplanted pen and paper for personal communications. "E-tailing" has enabled direct merchants to construct "retail" stores at a fraction of the cost of brick and mortar. The electronic transmission of documents is threatening even the security and viability of the overnight express giants. Only a fool would deny that something extraordinary is underway.


There still are those, however, who can't understand why this Internet phenomenon should be taken differently. They totally fail to appreciate that unlike the advent of the telegraph and the telephone, the Internet doesn't need to wait scores of years before an essential infrastructure is put into place. It already exists in the form of copper wires that connect telephones in virtually every business and home in America. In fact, the magnitude of the Internet's challenge is about to increase several fold with the deployment of high-capacity xDSL service, coaxial cable and high-capacity wireless telecommunication systems.


How well prepared is the Postal Service to deal with this latest challenge? The answer is: "not very." And much of its ill-preparedness stems from the very legislative foundation upon which it was created.


Unlike its private sector competitors, the Postal Service was never intended by Congress to be a profit-making business. It is as it always has been, an agency of the federal government charged with providing an essential public service. In fact, the USPS is prohibited from operating on a profit-making basis. The consequence is that the incentives that underlie the USPS are quite different from those that drive competitive private sector enterprises.


In the private sector, the driving forces are to minimize costs and maximize gains. In the Postal Service, these forces are not encouraged to exist, so they don't. To make matters worse, Congress choked off whatever impulse the USPS might have to operate in a business-like manner by imposing a statutory cap on the maximum compensation paid to postal executives. At a time when Germany's equivalent of a postmaster general makes over $1 million a year, when Canada Post's CEO makes more than $375,000 and the Italian PMG makes more than $400,000, the US limits total compensation provided to the CEO of its $63-billion postal enterprise to no more than $154,000 a year and no one who works for the PMG can be paid a single penny more.


Other incentives within the Postal Service are similarly misdirected. Former Postmaster General Anthony Frank once noted the contract that exists between the Postal Service and its city letter carriers is more than sufficient evidence of incentives gone awry. He noted city letter carriers that show themselves to be energetic and productive face the "reward" of being given more work. Those that have learned to dog it are rewarded with overtime. Who needs competition when you're stuck with incentives such as these? Sadly, until and unless these "incentives" are properly redirected to facilitate profitable and cost-efficient operation, maturing Internet technologies are going to eat the Postal Service's lunch.


John N.D. Moody


Pitney Bowes Mailing Systems

The crystal ball is cracked. Perhaps shattered. But one thing is certain: the paperless society so often predicted by past prognosticators is a myth. It has not happened! Here are some little known facts that tell us so: printer sales are up over 77% since 1992; 50% more filing cabinets have been sold since 1992; envelope sales have risen 12% since 1992; and let's not forget a personal favorite, domestic mail volume is up almost 18% and ad mail volume is up over 27% over the same period. But, with over 1.1 million articles written since 1996 regarding the Internet, one might easily think mail is on its way out. Not so!


What we're finding as well as many businesses and consumers is, oddly enough, nothing is as technologically advanced as ink on paper. It's user-friendly, universal, portable and almost interactive in the way it gives readers the ability to determine the pace, to go backward or forward. And that brings us to our primary points related to the future of mail: technology enhances the unique value of mail; and the new and emerging technologies are actually additive not replacing existing technologies. Let's look at some research on the "power of mail" to explain why we feel good about the future of mail.


The Gallup organization queried marketing executives at mid- to large-sized businesses in 1996 and again in 1998. These studies determined direct mail (when compared to direct sales, magazines, newspapers, television/radio and the Internet) is "the best" marketing tool for: tracking results and effectiveness; selling product directly to households or businesses; informing consumers or businesses about new products or services; educating consumers or business decision makers on complex issues; and providing return on investment. Financial executives also had rave reviews for mail when contacted by Gallup in the same periods. In 1998, 94% of financial executives stated they used mail for billing, up from 89% in the 1996 survey. Over 90% used mail to collect their receivables.


Why are U.S. businesses so hooked on mail? Perhaps, it's because US consumers love mail. Based on studies conducted throughout 1999, 77% of US adults looked forward to opening their mail; 51% checked it first. Even more interesting, 94% reported having a good relationship with a company that was established through the mail, and 761⁄2% felt mail offered the best information for making a purchasing decision.


And then there's the Internet how do e-businesses fit into this picture? In a September 1999 survey conducted by Information for Marketing, half of US companies surveyed reported e-commerce activity had actually increased their volumes of physical mail. When asked which methods they used to promote their e-commerce Web sites, these CEOs and marketing executives cited direct mail (70%) as the most frequently used communications channel compared to Internet advertising (27%) and e-mail (57%). The study also revealed direct mail was the most successful in generating orders over the Internet. Other interesting findings include: 80% of the surveyed companies stated they physically deliver the products sold on their Web sites via the Postal Service or other carriers; 37% said they used physical mail to send confirmations for e-commerce orders; and 38% invoiced customers for e-commerce orders through the mail.


Virtually any way you look at it, the future of mail looks bright. But beyond the numbers, here are some predictions regarding the future of mail.


Things are going to be different. We will be able to capture more and better data on more individuals. New technologies will continue to emerge at a dizzying pace and constantly change the face of e-commerce and direct mail.


Yet, things will be the same. These high-tech systems will need some paper-based solutions to support them from Web site promotion to order generation to order fulfillment to billing. Of note, 76% of US e-consumers reported they like to receive new product and service announcements from companies they do business with via the mail.


The age of information, driven by the data collection capabilities of the Internet, will result in an unprecedented opportunity for companies to create and consumers to receive the best possible kind of mail: mail that is directed to specific individuals and targeted to their tastes, desires and interests. That is the future of mail.


You can take a first step toward the future by creating "smarter mail." Start by targeting your mail to your audience. Make it "better" mail by having a deliverable address and an envelope that says "open me" metered mail without labels to a specific individual. Understand technology as an opportunity. Digital metering systems, PC-based postage and other Internet-enabled solutions exist today and these products and services can help you process mail more efficiently and market more effectively. Take the time and learn what's out there for you and your customers, and then, hold on for a very exciting ride in the 21st Century.