AIR COURIERS, POST OFFICE FACE OFF ON RATE-SETTING

AIR COURIERS, POST OFFICE FACE OFF ON RATE-SETTING

The latest skirmish between the air couriers and the U.S. Postal Service has developed over the international rate-setting process.

In recent testimony before the U.S. Postal Rate Commission, air couriers asked that the commission be given jurisdiction over international rate- making. Traditionally, the postal service has set its own international rates.The commission is an oversight body charged with approving domestic rates. In testimony before the commission last month, the Air Courier Conference of America, a trade group based in Reston, Va., argued that post office control over its own international rates was a conflict of interest.

James I. Campbell, ACCA's legal counsel, said in an interview that the ideal system would be to have an international mail system free of regulation with post offices and express companies competing with one another. Short of that, however, more oversight is needed, he said.

Although there are indications that nations are moving toward a more deregulated system, international agreements take time. Mr. Campbell said many competitive issues will be brought up at the Universal Postal Union Congress in Washington in 1989. This is a meeting of governments held every five years to agree on inter-post office rates and procedures.

The 1989 convention will be a lot of fighting, he said. Where it's going to settle down, we don't know.

One key indication of the U.S. direction was perhaps provided by a recent speech given to ACCA members in Phoenix.

John Crutcher, a commissioner of the U.S. Postal Rate Commission, told the air courier group that greater accountability over the post office and more competition from the private sector appeared to be in order on the international side.

If competition works, why make its existence depend on the good will of the former monopolist? Mr. Crutcher said.

This is reportedly the first time a postal rate commissioner has spoken publicly in favor of changes in U.S. international postal policy. It's an important signal, Mr. Campbell said.

The post office and air couriers have often been at odds over policy and the post office has been forced to selectively rescind its monopoly power on certain key issues. Air couriers, a relatively new industry, received an exemption in 1979 to handle domestic overnight packages outside the purview of the postal monopoly.

Recently, the postal service also rescinded its decision to prohibit international remail services from operating after it received strong public outcry.

The Postal Service, when it has to, suspends the operation of the monopoly as to international as well as domestic mail, Mr. Crutcher said.

But air couriers and post offices around the world have a strong interest in working together, Mr. Campbell said. These are by no means the only way of moving information around any more, he said. Both groups are now facing new technologies, such as the fax machine, or even relocated printing plants in foreign markets.

Mr. Crutcher said it's one thing to seek changes in postal policy and quite another to implement them. Every step may requirement the involvement of postal management, a part-time board of governors, the postal rate commission, Congress, major commercial mailers, non-profit organizations, postal service competitors, postal unions and the Office of Management and Budget.

A tug of war featuring all the above generally assures maintenance of the status quo, he said. Capital investments, long-range automation and worksharing efforts are slow in evolving. More fundamental changes move glacially.

Unless improved efficiency is achieved, privatization may be almost inevitable, he said.

Although postal unions are often blamed for high costs and low productivity, postal management is far often more at fault, he said. Following each major contract negotiation, management salaries rise by a percentage roughly equal to the union increases.

It is difficult to think of another system where manager's rewards are scaled not to savings achieved by tough bargaining but by savings lost, he said.