Postal Service needs more flexibility, private sector execs say
Top executives from package delivery, newspaper and direct-mail companies urged lawmakers to give the U.S. Postal Service more leeway to function in the marketplace during a Senate committee hearing on Thursday.
Fred Smith, chairman and chief executive officer of FedEx, told members of the Senate Governmental Affairs Committee to shut down the Postal Service or make changes that allow it to compete.
"The Postal Service must be transformed into a fundamentally more flexible and responsive organization if it is to survive and prosper in the shifting social, commercial and technological conditions presented at the start of the 21st century," Smith said.
The hearing was the sixth held by the committee, which is reviewing recommendations for overhauling the Postal Service. A final hearing is scheduled in conjunction with the House Government Reform Committee, after which Sens. Susan Collins, R-Maine, and Tom Carper, D-Del., plan to introduce reform legislation.
Among the problems facing the Postal Service are the growing reliance on electronic communications, tough competition in parcel delivery, insufficient funding for emergency management and substantial pension obligations.
While the executives who testified generally agreed the Postal Service needs greater flexibility and control over its operations, there were disagreements over what shape the reform should take-especially in terms of when and how it should be allowed to compete with the private sector.
Michael Eskew, chairman and chief executive officer of UPS, recommended the Postal Service focus on its essential services rather than competing in parcel delivery. "We believe the package business is well served by the private sector," he said.
Robert Wientzen, president and chief executive officer of the Direct Marketing Association, disagreed. "A large number of our members really do depend on the parcel delivery of the Postal Service," he said. "They find that their services are adequate and cost competitive."
Smith and Eskew both objected to the Postal Service's competitive products benefiting from the postal monopoly on first-class and standard mail. "Steps should be taken to ensure that the Postal Service does not leverage its monopoly network to compete inappropriately with private sector companies," Eskew said.
Following that point, Gary Pruitt, speaking on behalf of the Newspaper Association of America, objected to negotiated service agreements, under which the Postal Service competes with newspapers for advertising dollars. By offering low rates, the Postal Service gives clients the opportunity to send their ads directly to consumers, rather than inserting them in newspapers.
"Newspapers do not believe that the Postal Service-an agency of the federal government-should take sides in the marketplace competition between one mail customer and another," Pruitt said. The Postal Service should not use revenues from its monopoly services to subsidize direct mail, he said.