Postal Governors: First-Class Mail Not a Lost Cause

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First-Class mail volumes have been slumping, but there are ways to revive them, members of the U.S. Postal Service Board of Governors told a congressional committee yesterday.

Declining volumes from First Class, the postal service's most profitable mail rate, are considered a threat to the long-term financial stability of the USPS. But the postal service has begun initiatives to reverse that trend, Carolyn Gallagher and Louis Giuliano, both members of the Board of Governors, told the Senate Committee on Homeland Security and Government Affairs.

Both appeared before the committee for a hearing on their nominations for new terms as board members.

"Think about this from the customer perspective," Giuliano said. "What do they need to do their jobs? What do they need to grow their business, and how can the postal service help with that?"

The USPS should stick to its core business when considering new products to offer, they said. Innovations such as negotiated service agreements and new services that improve that core business, such as Click-N-Ship, extended office hours and Intelligent Mail, have the potential to restore volumes.

"There's an opportunity to find more ways to make the products and services the postal service provides more useful to customers," Gallagher said. "I do think that has been a strong initiative in the postal service."

Gallagher and Giuliano received recess appointments from President Bush last year. Their current terms expire at the end of 2005. Gallagher is an Austin, TX, businesswoman and was a member of Bush's postal reform commission. Giuliano is chairman and former president/CEO of ITT Industries Inc.

Also, the Senate is considering the reappointment of Tony Hammond to the Postal Rate Commission. Hammond, who has been on the PRC since 2002, said he supported measures in the postal reform bill before the Senate to increase transparency in the USPS and to peg rate increases to an index.

Gallagher and Giuliano also said they supported measures in the Senate reform bill, including a plan to use savings from USPS overpayments for retiree benefits both to reduce future rate increases and to pre-fund future retiree benefits. Giuliano said he supported the creation of service standards for the USPS but cautioned that the postal service should have the freedom to modify service to meet customer demands.

Some large mailers may want certain types of performance, and the USPS needs the flexibility to meet those standards, Giuliano said. He also said the USPS already is very open about its finances and operations.

"I think the postal service is very transparent compared to most businesses," he said. "They even publish their financial statements monthly. There's no business that I know that does that."

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