Postal Service Seeks Ban on Re-Mailers : Claims Private Firms Usurping Its Power to Deliver Mail Overseas

The U.S. Postal Service is famous for bearing up under bad weather and “dark of night”--but competition from private carriers, the service says, is another story.

The Postal Service has proposed regulations that would put international re-mailers--businesses that collect mail from companies in the United States and deliver it to foreign post offices for distribution--out of business.

The Postal Service says the private re-mailers are treading on its monopoly. But the many large banks and other businesses that depend on re-mailers for fast delivery overseas of annual reports, proxy statements and financial statements are upset.

Michael J. Cavanagh, a Washington consultant to several large corporations that use re-mail services, said the proposed postal regulations “would slow the movement of business information and make American businesses less competitive.”

Millions at Stake

For the Postal Service, millions of dollars are at stake. The private carriers estimate their revenue at about $120 million, but others estimate that private mailers cost the Postal Service $300 million to $500 million a year.

The Postal Service insists that the issue is not money. “I don’t even know how much it is,” said Charles Hauley, assistant general counsel for the Postal Service, of the amount lost to the re-mailers. “As far as we’re concerned, this service isn’t legal.”

The Postal Service has held that lonely position--the Justice Department says the Postal Service is wrong--since 1979, when it adopted regulations that permit private carriage of extremely urgent mail.

Those regulations fueled the explosive growth of such giants as Federal Express and Purolator Courier, which deliver urgent mail domestically. It also led to the growth of the international re-mail business.

Although some major multinational corporations, such as the $4-billion Australian firm TNT, are in the re-mail business, most of the companies are fairly small.

More typical is International Diversified Marketing of Bloomington, Minn., a year-old firm that has six employees. IDM owner Dan Alderson says his company picks up between 20 to 25 sacks of mail daily from Minneapolis-area companies. The mail is taken to Chicago’s O’Hare International Airport, where it is put aboard airplanes for delivery to specific post offices in foreign cities.

The mailer arranges to have the postage paid at the foreign post office, and the mail is then delivered by letter carriers in the foreign city. Alderson, like most private mailers, gets a discount on postage from the foreign countries’ mail services because they deliver such large volumes of mail.

Businesses say they use private mailers because they are faster and more reliable than the Postal Service. “We’d much rather use the post office, but their service is bad,” said Laurel Kamen, American Express governmental affairs director.

Not Considered Urgent

Chase Manhattan, the nation’s third-largest commercial bank, said in comments filed with the Postal Service that it takes the Postal Service five days to deliver mail to Amsterdam but that a private mailer can do it in two days.

But Hauley said: “We have said that only extremely urgent letters can be carried privately. These letters aren’t urgent.”

Postal Service considers mail urgent if it must travel more than 50 miles and be delivered by noon the next day. “If people are willing to pay a premium for that service, we can assume the mail is urgent,” Hauley said. The premium is $3 or twice the normal first-class postage--whichever is greater. The Postal Service calls this the “cost test.”

Hauley said that only a loophole in the postal regulations, allowing many pieces of mail addressed to a foreign post office to be considered a single letter, lets international private mail meet the cost test. He said that once that loophole is closed, the re-mailers will not be in compliance because their fees are not high enough. And the new regulation, he said, will close the loophole. But the Justice Department said the issue is not that clear and that it is not certain that the Postal Service monopoly extends to international mail.