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Postal agencies respond to mail decline

Marty Sellers used to need about a hundred postage stamps every three months. These days, he can stretch that supply to last a year.
Mail in the Digital Age
Anthony Ramirez manually types zip codes, as parcels are sorted at the United States Postal Service Leslie N. Shaw Sr. Processing and Distribution Center in Los Angeles. Because many people around the world pay bills and send mail digitally, the U.S. Postal Service and its counterparts in other countries are expanding into electronic services and tapping technology to cut costs.Damian Dovarganes / AP
/ Source: The Associated Press

Marty Sellers used to need about a hundred postage stamps every three months. These days, he can stretch that supply to last a year.

Sellers, 40, now pays most bills online and receives financial statements electronically. The owner of Sellers Photo in Huntsville, Ala., he also has cut down on mailing clients CDs, transferring images over the Internet instead.

"Even things like a birthday card, I will just send a happy birthday e-mail," he said.

Because many people around the world are like Sellers, the U.S. Postal Service and its counterparts in other countries are tapping technology to cut costs and expand into electronic services — including services designed to attract more "junk" mail.

In the United States, first-class mail volume has dropped 7 percent since 2001 — an average of 1.3 billion fewer letters, postcards and bills each year. A 15 percent boost in bulk advertising and other discounted mailings has so far offset only some of the loss in revenue.

Many postal agencies are having to serve more households because their nations' populations are growing but are getting less mail to deliver to each, said Dean Pope, general manager of business development at Canada Post.

"In order to sustain business in that formula, you have to find new services and products and find new revenue growth opportunities," he said.

One of those new services is Canada Post's Borderfree program, which allows Canadians to buy items from U.S. e-commerce partners, pay in Canadian currency and know all taxes and fees ahead of time. Borderfree takes packages from U.S. hubs through Canadian customs and delivers them in Canada.

In France, La Poste will print e-mails customers send in and deliver them to physical mailboxes with registered notes and time stamps.

Tunisia's postal service offers a pre-charged payment service for paying utility bills and buying things online.

In Italy, a new digital certification service at Poste Italiane archives loan documents for banks so that years after a transaction a party can retrieve the original document with an electronic postmark as proof of its authenticity.

Not all efforts have been successful.

For lack of demand, the U.S. Postal Service canceled a few programs it started in 1999 and 2000, including electronic bill payments — which the private sector now offers with greater success.

"If we look back to the boom days of the Internet, ... there was a surge of e-commerce-related activities in a lot of posts," said Luis Jimenez, chief industry policy officer for Pitney Bowes Inc., a mail and document-management company. "That was primarily motivated by a fear that mail would decline precipitously and they needed a new source of income.

"The realization came just a few short years after that it's very difficult to make money from e-commerce."

Now, most electronic efforts supplement traditional, physical mail. In the United States, that includes ordering stamps and packing supplies online and providing delivery confirmation electronically without mailing back a receipt.

The USPS also helps retailers like L.L. Bean Inc. generate preprinted labels to include with shipments for merchandise returns. Merchants, including eBay Inc. auction participants, also can create shipping labels and buy postage online.

Jimenez said the refocus comes as postal agencies find that mail volume isn't dropping as quickly as once feared. E-mail isn't replacing all letters and cards; partly, it's creating communication that might not have occurred otherwise. The Internet also has created new mailing opportunities from e-commerce sales, digital photo printing and DVD rentals.

And many people remain more comfortable with paper.

"I just find paper records more reliable and trustworthy," said David Hildebrand, 72. "They all push me to get electronic statements, but I can't put them in a drawer and I can't look at them when the computer doesn't work."

Hildebrand is no technophobe. The retired IBM Corp. computer programmer from San Jose, Calif., started visiting online bulletin boards and sending e-mail in the mid-1980s — back when few friends even had computers.

"We're going to use more paper, not less, for the short and medium term," said Paul Saffo, a technology forecaster in San Mateo, Calif.

That means postal agencies can benefit for several more years by cutting costs through automation and measures like installing kiosks to reduce labor-intensive window transactions. A new change-of-address system in the United States reduces costs by redirecting mail earlier in the process.

By next year, U.S. bulk mailers also will have to start using intelligent bar codes — with 31 instead of 11 digits of data, allowing for refined tracking and earlier identification of undeliverable addresses.

But ultimately, the challenge will be creating new revenue streams.

Hybrid services represent one tactic. France, Italy and the United States let people send documents electronically for printing and delivery by the post. Italy also has a reverse service, scanning physical mail into digital form — which can be great for government agencies needing to distribute items to scores of branch offices.

Other strategies could involve increasing the value of snail mail with, for example, the intelligent bar codes, which can tell U.S. mailers which mailings arrive when and help them remove bad information from their mailing lists.

"The better the quality of mailings and mailing lists they are generated from, the better the response rates these companies are going to see," said Thomas Day, the USPS senior vice president for intelligent mail and address quality.

In other words, expect more catalogs and credit-card offers in the short term, although Saffo believes environmental pressures won't make that strategy sustainable in the long run.

Elsewhere, postal services are adapting to local needs, said Paul Donohoe, the Universal Postal Union's eBusiness manager. For example, in Brazil, where e-commerce is fairly new, the postal service offers technical muscle to operate Web sites.

Postal agencies don't have forever to adapt.

"There will be a day of reckoning, but I don't know how far down the road that is," said Tony Conway, a former USPS executive who now heads the Alliance of Nonprofit Mailers. "First-class mail continues to decline. I don't see anything that suggests that trend will reverse itself."