New US 'airlift' offers an overseas bulk-mail service
Are Us publishers and manufacturers missing the boat by not storming lucrative overseas markets by air? "Absolutely!" say early users of the US Postal Service's new International Surface Air Lift. ISAL (Pronounced eyesal) is an economy bulk air service for printed matter that applies to any type of printed material going abroad that is not letter mail.
In offering for the first time a special overseas airmail rate at far below the cost of its regular foreign airmail, the Postal Service is providing businessmen a major incentive to develop a whole new world of customers overseas.
By branching out into this new field, the Postal Service is challenging the dominant position in bulk mail flying out of America that has been enjoyed for 25 years by KLM Royal Dutch Airlines.
Some big American magazine publishers have long had large overseas readerships. But thousands of small publishers are stay-at-homes who have never dipped a toe in the huge ocean of world trade.
Yet the printed word is the very thing that opens up overseas markets with magazines, advertising, and especially promotional mail.
The Reagan administration -- like those before -- would welcome a further increase in its exports to ease the US imbalance of payments and rev up the economy
It was at the request of a few American publishers in the mid-'50s that KLM, oldest commercial airline in the world, pioneered an airlift overseas. Today it offers many services to encourage and help US businessmen to "ship out."
A KLM market development analyst says many Americans still insist: "I can't afford to seek customers abroad because postage and handling would cost me more than I can make in profits." But the real question, he insist, is: Can you afford notm to enter the foreign market?
"If US manufacturers and publishers are going to grow," he contends, "they have got to jump into the foreign market with both feet, because that's where their expanding market lies. It's waiting there for them. All they have to do is be as aggressive there as they are in our own home market."
A few other foreign airlines and postal system have offered Americans bulk air shipments for printed matter. But KLM has dominated the market. It flies printed material to Holland overnight and deposits it in the efficient Dutch postal system for delivery all over the world by air or surface. The customer pays airfreight to KLM and the Dutch postage.
Now for the first time KLM has a major American competitor -- Uncle Sam. Even though the USPS at present has no budget for advertising ISAL and has promoted it only in its publication, "Memo to Mailers," ISAL volume is advancing. Total revenues so far this year exceed $1 million, the number of customers has grown to more than 100, and volume in one month this spring reached 215,000 pounds. What the program needs most now, the USPS says, is public awareness that it exists.
ISAL customers agree that the service is "excellent" and that its prices are competitive with KLM, and in some cases cheaper. Mr. O'Connor concedes that ISAL already has taken "a nice piece of business away from KLM." Even so, its impact, he says, is still only peanuts compared with the flying Dutchmen's large overseas mail business.
Bruce Ward is associate publisher of Institutional Investor, an American magazine that has an international edition serving the world financial and business community. He is now using KLM and OCS, the courier service of Japan Air Lines, but has been planning to switch some of his overseas mail to ISAL. For his shipments to the Far East, he figures this will save him a third of his postal costs.
"I have a feeling the US Postal Service is onto something that could really be very successful," Mr. Ward says. "ISAL is coming in at an excellent time from a world marketing standpoint. To illustrate, our international magazine is only six years old, and already we are carrying almost as much paid advertising in it as we are in our domestic edition, which is 14 years old."
The way the Postal Service is saving its clients money is that ISAL mail is literally untouched by postal workers' hands. All the USPS does is to negotiate bulk mail rate contracts with airlines, book space with them for minimum weights of 750 pounds, and then let publishers and manufacturers prepare their own mailings and deliver them to the airlines. ISAL mail enters foreign postal systems as nonletter mail.
The Postal Service hopes to extend its service to weights below 750 pounds late this summer.
KLM has the reputation of being a good near-monopoly that has never taken financial advantage of its customers. Still, Uncle Sam's entrance into this field, some experts say, may help stabilize overseas air rates at a time when postal rates are rising worldwide.
In January so-called "terminal dues rates" skyrocketed by a whopping 340 percent. These "dues," imposed on all nations by vote of Universal Postal Union members, pay for the imbalance of mail going from one country to another. Since the United States sends more mail to every country than it receives, this huge increase affected all US overseas rates heavily. It even jacked up ISAL rates by 68 cents per pound.
ISAL began with a test flight from Houston to London carrying magazines put out by Gulf Publishing Company. A few days later a second test flight transported from New York to Paris some publications of another publishing giant , McGraw-Hill. Within a couple of months this new bulk air service opened to other publishers.
ISAL now serves 16 countries in Europe, Latin America, and Asia from New York , and is adding new destinations. It flies to a shorter list of countries from Chicago and Houston. Service to London only is also available from Dallas.
Elimination of many ocean passenger liners and inordinate delays in shipping service in recent years have paved the way for the airlines to cut into overseas surface mail delivery. As far back as 1969 a few American publishers asked the USPS to airlift US publications to West Germany for distribution throughout Europe.
By '72, when nothing had come of their request, "a lot of us stopped using the Postal Service and went with KLM," says Robert C. Slick, Gulf Publishing Company's director of purchasing and manager of postal affairs. At that time it took 12 weeks to ship magazines from Houston to London. KLM cut delivery time to six days.
Now that ISAL is on its way, the USPS has scheduled, effective in mid-August, two new services to improve it:
* While regular ISAL mail flies into foreign countries and is distributed within those countries, ISAL "residual service" mail will fly to one country and from there be distributed throughout Western Europe.
* "M" bags under ISAL will be another option, at a postal rate 10 percent below regular ISAL rates. "M" bags, which are already available in several other classes of mail, are shipped to one addressee in a sack weighing no less than 15 and no more than 66 pounds, but with no limit on the number of sacks to a customer.