Casey Vows Changes to Increase Mail Package Profits

WASHINGTON —  The new postmaster general, complaining that the U.S. Postal Service is being “nibbled to death” by private package handlers, vowed Friday to “bang them where they’re vulnerable” as part of a shift in postal operations.

Postmaster General Albert V. Casey said in an interview that he is meeting with key postal officials to “redefine the marketplace” through the introduction of new products and ways of doing business, possibly including the increased use of leased planes.

Casey, the former board chairman of American Airlines who started work at the postal service Wednesday, said no immediate postage rate increases or employee layoffs are planned. And, he added: “We don’t need to give up any services at all.”

More Technology

The 65-year-old career businessman said postal operations will use more technology such as optical scanning equipment to read mail addresses--an example of what he called employing “normal corporate practices” at the quasi-private postal service.

Casey, a native of Boston who as a young man earned extra Christmas money delivering mail in Arlington, Mass., spoke confidently about tackling the postal service’s problems in personnel, finances and marketing and asserted that “new revenue will provide new opportunities.”

But at the Basking Ridge, N.J., headquarters of Purolator Courier, one of many successful package deliverers, an official discounted the postal service’s ability to compete efficiently in the fierce package marketplace “because it’s an extension of the government.”

Michael S. Hales, Purolator’s director of operations development, said: “We’re doing a better job than the postal service ever will be able to do.” Adding that “they’re an institution--we’re a company,” he implied that Purolator is less inhibited by bureaucratic restraints on creativity and sound business practices than the postal service.

‘Tremendous Advantage’

Dan Buckley, a spokesman for United Parcel Service in Greenwich, Conn., complained that the postal service has a “tremendous advantage” because, unlike private firms, it does not have to pay taxes, Social Security or vehicle license fees.

Nevertheless, the postal service, with a $29-billion annual budget, suffered a $251-million deficit in fiscal 1985 and continues to lose ground in the number of package deliveries.

“We’re being nibbled to death on packages,” Casey said. “We must pay attention to the areas being threatened by others.”

Officials said that last year the nation’s 30,000 post offices handled 575 million pieces of fourth-class mail--which includes packages--down from 599 million the previous year.

By contrast, UPS has been increasing its package volume by about 200 million pieces a year, handling almost 2 billion pieces in 1984, the latest year for which figures are available. Similarly, Purolator deliveries grew to 87 million pieces in 1984.

Sees ‘Friendly Rivalry’

Although Casey conceded that reversing this trend is not likely to be easy, he sounded in the interview as if he relished the challenge, calling his effort “friendly rivalry.”

Among Casey’s entrenched obstacles are costs of labor and transportation: About 83 cents out of every dollar goes for personnel in the postal service, which employs 744,490 people nationwide.

Moreover, cost-effective innovations have not been instituted easily. As an example, carriers in 1967 started “cluster box” delivery to a group of mail boxes in a central location serving as many as 16 patrons. But 19 years later, only 3% of the 100 million daily deliveries are made in this fashion, largely because patrons are unwilling to sacrifice convenience and the postal service apparently is powerless to mandate such a change, even at newly built homes.

ZIP Expansion Fails

In addition, an expanded “ZIP-plus-4” system that was touted as promising swifter mail sorting has been a resounding failure.

Beginning last January, transportation costs rose because the postal service, a victim of deregulation, lost the protection of fixed rates set by the Civil Aeronautics Board. Last year the postal service paid $1.9 billion to move mail, including $711 million for air transportation.

One possibility for finding a cheaper way to fly mail is to replace expiring passenger airline contracts with agreements for space on air freight lines, said James E. Orlando, director of transportation and international services.

Orlando said freight carriers would bid for the contracts, which run out in January, 1987, and that the postal service would “put them on a fixed schedule that we set,” giving the service more control than it has with the passenger carriers.