Declining Mail Volume Not USPS' Only Problem, Speaker Says

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NEW YORK -- The U.S. Postal Service may go through 2003 without a rate increase, but mailers should plan for one in January 2004, postal expert Gene A. Del Polito told members of the Direct Marketing Idea Exchange yesterday.


"I'm telling people it will be an average rate increase of 15 percent," said Del Polito, president of the Association for Postal Commerce, adding that rates may increase as much as 20 percent for catalogers. "A lot depends on what happens to the economy ... what happens to what's being mailed."


However, just because the USPS is projecting a $600 million profit for fiscal year 2003, Del Polito said, its problems aren't fixed. The postal service saw mail volume fall 2.7 percent in 2002, down 6 billion pieces. For FY 2003, it is projecting an increase of 1.9 percent, or 3.8 billion pieces.


"I can't figure out where the volume increase is coming from," he said.


Exacerbating the postal service's current problem: its retirement benefits. Del Polito cited last year's General Accounting Office report saying that the USPS' retirement costs will go from $8 billion last year to $16 billion by 2010.


"That's before you pay salaries, fuel, electricity," he said. "You just take $16 billion off the top."


As for reform, Del Polito outlined three options:


· Keep the postal system the way it is and pay for it with rate increases.


· Keep the system the way it is and subsidize it with tax dollars, "though no one in the administration wants to do that."


· Privatize the system.


"For seven, eight years now, we've been trying to get Congress to focus on reform, and again nothing will happen this year," he said. "There is talk that [President] Bush will appoint a presidential commission. He knows there's a problem."


Del Polito also compared salaries for the people who run several of the world's largest postal organizations. A big problem is that the postal service is a $65 billion corporation and -- by law -- it cannot pay its CEO a penny more than $167,000 a year.


"In Canada, they pay them over $400,000. In Italy, where they can't even deliver the mail across the street, they pay them over $400,000," he said. "In Germany, it's more than $1 million."


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