ZIP + 4; Some big postal users back nine-digit ZIP Code for US
When the US Postal Service announced its plans to introduce a new nine-digit ZIP Code, called ''ZIP + 4,'' the idea immediately became a punching bag.
Consumers, afraid of needing to remember four more numbers, jabbed at it. Congressmen concerned about the new ZIP Code took a swing at it, forcing a postponement until next year. And now it is rumored the General Accounting Office is aiming a knock-out punch at it by saying the plan is not ''cost effective.'' The GAO report, expected out next Wednesday, says the cost of the needed machinery - already ordered by the Postal Service - is not justified, considering the return to the Postal Service. The service has written a lengthy reply to the GAO, which will release its report once it has time to analyze the reply.
Until recently, business preferred to let consumers and the post office slug it out. Now, a small group of business postal users, led by Citibank and the American Express Company, both of which have large postal budgets, have climbed into the ring.
The group, called the New Postal Policy Council, has announced its support for the nine-digit ZIP Code. At a hastily called press conference - designed to beat the GAO report to the punch - the group last week said it favored the Postal Service's approach as a means to hold down costs.
The business group's support has a certain ring of timeliness. On Tuesday the Postal Service's board of governors approved for filing with the Postal Rate Commission a half-cent-per-piece rate reduction for people mailing 500 pieces or more and employing the ''ZIP + 4'' system. A similar proposal was withdrawn after the last session of Congress ordered a delay in the new system. The system , which is strictly voluntary, is supposed to go into effect by next October, one year after the original date planned by the Postal Service.
The Postal Policy Council, however, says its main motivation is to help the Postal Service automate its services so postal rates can be competitive with the cost of various electronic systems cropping up around the country. If the rates do not remain competitive, says Richard W. Coughenour, vice-president and director of mail services for Citibank, large users of the postal system will accelerate their move to alternative services.
Since the Postal Service is stuck with a large fixed-cost base (85 percent of its expense is labor), the remaining users will have to foot an increasing share of the bill. For operations like Citibank and American Express, this can be substantial. Citibank has a $20 million annual postal budget and American Express, $65 million. The largest private user of the postal service is American Telephone & Telegraph Company and its operating subsidiaries, with a postal budget of $175 million. AT&T said it is not a member of the policy council, since it wasn't asked to join.
In fact, membership is rather limited. So far only 13 companies have joined the council, which has been in existence less than a year. Laurel B. Kamen, director of government affairs at American Express, says the group remained small while it developed a product. Now, she indicates, it hopes to expand.
The council contends business has a big stake in ensuring that ''ZIP + 4'' becomes a reality. The Postal Service gets 56 percent of its revenues from first-class mail. Out of 110 billion pieces of mail sent through the postal system last year, 61.5 billion were first class. Of that mail, the council says, some 80 percent is business related.
Mr. Coughenour says that when the council first showed up in Washington, the postmaster general's reaction was ''Just what I need - another trade association to deal with.'' Since then, the Citibank vice-president says, relations have warmed up and the Postal Service has welcomed an ally in its battle over the ZIP codes.
A Washington spokesman for the service says the council appears to be ''a sophisticated group who understands the value of automation to us.''
Initially, some of the postal unions supported the program, since they viewed the automation as a long-term solution to keeping the post office viable by helping it to hold off defections by users. In one of its meetings with the Postal Service the council suggested the service have a film made to explain the new system and make regional visits to important users of the system. The service has made the film and has tried to muster up support for its plan.
Mr. Coughenour says that despite successful efforts by the Postal Service to increase productivity and lower its costs, he expects postal rates to continue to rise. He estimates a first-class stamp will cost 23 or 24 cents by 1984, up from the current 20 cents. But if inflation heated up again, a first-class stamp could cost a quarter. Such a rise would probably accelerate defections by users from the Post Service.
Such departures are already occurring. For example, in Ft. Lauderdale, Fla., Pierre Audet recounts how he can pay his bills by phone at a cost of 10 cents a transaction, rather than use a 20-cent stamp. Such pay-by-phone transactions are increasing.
The recession and alternative methods like this are expected to affect volume at the Postal Service. This year, it is expected to report a 5 percent increase in volume, in large part because of a surge in third-class advertising circulars. But Mr. Coughenour says he believes postal volume will grow only 1.1 percent per year through 1990, compared with the Postal Service's projection of 2.3 percent. If growth runs at the lower rate, it will ultimately mean higher rates for first-class users. Who goes to the Post Office most 1. American Telephone & Telegraph (including operating subsidiaries) 2. R. R. Donneley and Sons 3. Sears, Roebuck 4. Mailing Services Inc. 5. Reuben H. Donnelly (Elm City, Tenn.) 6. New Process Company. 7. Advo System 8. Doubleday Publishers 9. Jetson Mailing Services 10. Ambassador Leather (Tempe. Ariz.)