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Carrying the Nation’s Mail - A Decent Business Opportunity?

March 18, 1988

NEW YORK (AP) _ Carrying the nation’s mail through rain and snow and sleet and hail is a task a number of big companies could handle if the U.S. Postal Service ever goes up for grabs.

Whether any of them really wants to deliver mountains of correspondence and parcels is another matter.

But some companies may begin to contemplate the issue now that a presidential commission has recommended the Postal Service’s monopoly on delivering letters should be phased out, with private companies allowed to compete for the business.

In a controversial report presented to President Reagan on Friday, the Presidential Commission on Privatization called for transferring to the private sector scores of other government programs and services, including the operation of prisons and airport control towers, in the name of efficiency.

As far as the nation’s mail is concerned, ″there’s nothing the Postal Service is doing that private enterprise couldn’t do equally as well or better,″ said Ken Sternad, a spokesman at the headquarters of United Parcel Service Inc. in Greenwich, Conn.

Sternad said United Parcel, which maintains 1,300 facilities across the country, had not made any decision about trying to get into the letter- carrying business, ″but we certainly would look at it.″

But James Coleman, director of public relations at Federal Express Corp.’s headquarters in Memphis, Tenn., said: ″We do not view ourselves as having any role to play in routine handline of bulk shipments.″

Federal Express specializes in overnight and express deliveries, a small piece of what the post office does.

Taking on the postal system would require a major build-up for any company. United Parcel, for example, has 200,000 employees who delivered 2.4 billion packages last year. The Postal Service, by comparison, has almost five times as many employees and delivered more than 100 billion pieces of mail in 1987, Sternad said.

If the government were to privatize merely the right to deliver mail, potential bidders would be limited to companies that are already in the post office-like business, said James Voytko, a first vice president at the investment firm PaineWebber Inc. who follows the transportation industry.

But other big companies in unrelated businesses also might qualify if they had a particularly extensive transportation network set up.

American Telephone & Telegraph Co., for example, operates a major, nationwide fleet of trucks.

″They go to a lot of addresses fixing phones,″ said one industry insider who asked not to be quoted by name. ″There are a lot of companies that reach a lot of people - the sky’s the limit.″

The bidding also could widen if the government decided to sell the post office’s assets, such as its trucks and properties, and transfer the work force to the new owner.

″In that case, anybody with money could buy it,″ Voytko said, although he noted that a company with experience in mail and parcel delivery probably would feel more comfortable in the expanded business.

Voytko said, however, that it was uncertain whether operating a nationwide postal service would be a good business opportunity.

″But it is good from a public policy point of view. The private sector has proved time and time again that it can deliver services better than the government,″ he said.

Already the recommendations generated sharp advance opposition from public employee and postal worker unions.

The National Association of Letter Carriers said ending the Postal Service monopoly on first- and third-class mail delivery would destroy the nation’s system of universal service. ″Rural and inner-city residents would not be served ... or would receive reduced service at exorbitant postal rates,″ the union said.

However, David Linowes, a Democrat who headed the privatization committee, said the government could require private companies to deliver mail to all areas at the same price.

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