Technology Chips Away At Post Office Business

THOUGH the postal service may not be a dinosaur yet, ``there's certainly Jurassic potential,'' says Arthur Sackler, managing director of the Mailers Council in Washington. Over the past decade, fax services and electronic mail have ``taken off'' as an alternative to old-fashioned first-class mail.

These services, often faster and cheaper, are nibbling away at the United States Postal Service's (USPS) business. A postal increase scheduled for early next year may provide another impetus for businesses to reevaluate information delivery.

The postal service's market share of first-class mailings, such as bank statements, legal documents, and other correspondence, has fallen below 60 percent, says Robert Reisner, vice president of technology applications at the USPS. ``In the last six years, we've noticed a decrease in the volume and revenue of business-to-business transactions,'' he says. ``In the business market, you can see the volume [of mail] changing because of electronic services.'' Analysts predict postal service market share to drop even further.

Most large-scale mailers support a postal increase, which at 10 percent for most classes of mail is two points below the rate of inflation. But ``any increase will push [mailers] toward other competition,'' Mr. Sackler says. Businesses may consider other services, combine mailings, or send fewer pieces of mail.

The 10.3 percent increase will raise the cost of mailing a first-class letter from 29 cents to 32 cents. The average consumer, the USPS says, sends 20 to 25 letters a month and will now be spending an additional 75 cents each month. But the new rates could cost large business mailers hundreds of millions of dollars.

Two and a half years ago when account executive Jim Bankoff began working at Ruder Finn Inc., an international public relations firm, the company was in the process of switching to the fax machine as a tool to send major mailings. ``In this business, [electronic media] is becoming more and more consistently used,'' Mr. Bankoff says. ``We can send thousands of faxes at one time,'' reaching a wide audience within five minutes.

Next to using the telephone, the fax machine is most widely used means of communication, Bankoff says. ``It's generally cheaper, and you get a confirmation [of successful transmission].'' Even interoffice communication is usually done by fax and electronic mail, he says.

Despite the decrease in business-to-business mail, overall USPS volume grew nearly 3 percent last year, largely because an increasing number of Americans set up new households, Reisner says. Some businesses continue to rely on traditional mail service, especially for advertising and catalog mailings. First- and third-class advertising mail is offsetting the decline in business-to-business first-class mail, Reisner says.

L.L. Bean, the Freeport, Maine-based clothing manufacturer, mails more than 130 million third-class catalogs a year at a cost of ``tens of millions'' of dollars. But the company says it supports the rate hike. ``The post office is committed to creating efficiency,'' says company spokeswoman Catharine Hartnett.