UPS offers businesses better ways to manage mail

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By Linda Rosencrance

(IDG) -- United Parcel Service Inc. is offering new services that it said will help companies save money by better managing their U.S. mail.

Atlanta-based UPS said Thursday its new services will allow businesses to send first-class and standard mail more cheaply and efficiently through the U.S. Postal Service.

UPS said the new business unit will include Bethesda, Md.-based Mail2000 Inc., which it acquired this spring. Through Mail2000, corporations can electronically send data for large, time-sensitive monthly mailings, such as utility bills or mortgage statements, to Mail2000's headquarters, where the data is then electronically sorted.

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From there, the data is electronically sent to one of Mail2000's five regional production facilities where the bills are printed out and then inserted into the U.S. postal system close to their final destinations.

UPS said this service, which is expected to appeal to high-volume customers, can save them as much as nine cents per piece and also reduce by half the time it takes a bill to arrive at its destination.

Mail2000 will also handle flats, the postal term for mail that's larger than a letter, but usually smaller than a parcel, such as annual reports and prospectuses.

In addition, UPS said it is testing a daily mail pick-up service for small and medium-size businesses that don't typically qualify for discounts on the costs of postage.

UPS said the new services are an extension of its strategy to enable global commerce.

"While electronic forms of communication continue to grow, there's no question that physical mail is a fundamental component of the way business is conducted," said Joe Pyne, UPS's senior vice president for corporate development in a statement. "We have the daily presence in our customers' mailrooms, the electronic connectivity to our customers and the physical infrastructure to provide superior distribution services, and that's a powerful combination."

UPS also announced that it had acquired Reno, Nev.-based Global Management Services LLC, also known as Regional Mail Xpress, a company that sorts mail by ZIP code and puts the pieces into the U.S. postal system nearest their final destinations. UPS said this system will allow businesses to receive better postal rates, save from 15% to 30% in mailing costs, reduce transit time and make delivery time comparable to that of first-class mail.

However, none of UPS's services will include delivery of first-class mail, which is the exclusive business of the U.S. Postal Service, the company noted. UPS said the new business unit will operate under a "workshare" program created by the Postal Service to encourage cost savings by having private companies prepare and sort their mail.

Earlier this year, UPS's biggest rival, Memphis-based FedEx Corp., signed a $6.3 billion contract with the Postal Service to provide domestic air transportation for postal express shipments.

Donald Broughton, a transportation analyst at A.G. Edwards & Sons Inc. in St. Louis, said the UPS deal is a win-win proposition.

"The [Postal Service] will deliver the mail for companies, but it doesn't like to do the presorting because it costs them money to hire people to do the work," Broughton said. "So now, UPS can do the presorting and save money for its customers, who will be willing to pay UPS for that service," Broughton said. "[For example], if UPS saved its customer $20,000, that customer would probably be willing to pay UPS half that amount."

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United Parcel Service of America, Inc
Mail2000, Inc.

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