U.S. Postal, FedEx Discuss Alliance
By RANDOLPH E. SCHMID, AP
02:38 PM ET 09/07/00
WASHINGTON (AP) - One day that Federal Express package may
arrive with your mail carrier. The Postal Service and FedEx are discussing ways they can work
together to save time and money for both. ``We're optimistic that we can reach an agreement, some sort of
strategic alliance,'' Postmaster General William Henderson said
Thursday.
He said teams of executives from the post office and FedEx are
meeting in Washington and Memphis, Tenn., to hammer out the
details.
If all goes well, Henderson said, the two longtime rivals could
be working together by next spring. He said any deal will have to
win approval from the post office's governing board, which he plans
to brief in October.
Mail carriers would cover ``the last mile'' in residential
deliveries, Henderson explained, but would not handle FedEx's
``signature'' overnight deliveries, which primarily go from
business to business.
Because mail carriers visit each house daily they already have
an efficient system in place and using that could save FedEx time
and money, Henderson explained.
``They're interested in cutting costs on some residential
delivery and we could provide that,'' said Henderson. ``FedEx has
the most efficient air transportation network in the United States,
and we would like to take advantage of it.''
He said under the plan the post office would do residential
delivery and pickups for FedEx, which would then collect parcels at
post offices and transport them. FedEx boxes or counters might be
placed in post offices and FedEx parcels could be delivered to post
office boxes.
The two sides are also discussing the possibility of a cobranded
service, particularly on international routes.
The post office would be paid for its collection and delivery
and would also gain the increased efficiency of FedEx's large
network of aircraft, he said.
FedEx generally handles bigger parcels than the post office, but
Henderson said there had been no talk of the post office increasing
its weight limit for packages.
The idea of cooperating with each other came up during a casual
discussion between Henderson and FedEx President Frederick W.
Smith, Henderson said.
A deal would benefit both, saving money for FedEx and bringing
in added income for the postal service, which is facing red ink for
the first time in five years as the end of the fiscal year nears. Henderson said two weeks ago that his agency could have losses
of as much as $300 million this fiscal year because of a reduction
in first-class mail, higher than expected costs for gasoline and an
arbitration case that resulted in higher pay for some workers than
had been planned.
The decline in first-class mail stems primarily from billers
combining bills and sending lighter bills, reducing the per piece
cost, Henderson said. He said Internet use is not involved in the
reduction.
A one-cent rate increase - to 34 cents for first-class mail
- is now before the independent Postal Rate Commission and is thought
likely to take effect sometime in January.
Henderson noted that the Postal Service has similar cooperative
deals, on a smaller scale, with other companies, including Emery
and Airborne and any agreement with FedEx would not be exclusive.
He said postal officials had talked with United Parcel Service in
the past but nothing came of it.
