Private couriers predict extended period of growth - private magazine delivery companies - Update

Postmaster General Marvin Runyon's desire to stabilize rates is welcome news to magazine publishers. But if history were to repeat itself, the private magazine delivery enterprises, such as Alternate Postal Delivery (APD) and Publishers Express (PE) could have reason to be concerned about their future.

Alternate delivery first surfaced in the late seventies as a direct reaction to fast-rising U.S. Postal Service rates, but it fizzled out by the early eighties when postal rates stabilized and publishers, concerned most with their bottom lines, went back to the USPS.

Although the idea of an imminent turnaround in the constantly churning postal rate picture seems far-fetched to most, some postal insiders are saying relief is in sight.

The Postmaster General made his presence felt shortly after he took office in July, giving executives at USPS headquarters a month to come up with ideas for drastic change, including layoffs or attrition at the executive level of the agency. "Everything is on the table for consideration," he has told top postal officials.

If Runyon can produce some kind of a rate-stabilizing miracle, the growing numbers that APD and PE have been posting for the past four years could taper off the way they did nearly a decade ago.

Although several small Couriers sprang onto the circuit in the seventies, Grand Rapids, Michigan-based APD - then known as United Delivery Systems (UDS) - was considered by most to be the only major player. (PE, jointly backed by several media conglomerates, including Time Warner and R.R. Donnelley, came into existence in 1989.) Competitive rates were essentially all UDS had going for it, and it delivered in only a handful of Midwest regions.

But the private couriers insist things will be different this time - even if postal rates do level off. APD, for instance, says that its primary selling point is that it can offer added-value arrangements - such as ridealong samples of advertisers' products. "Price is not what's going to drive our growth - it never has," says APD chairman Stan Henry. "Samples are becoming a hot way to market."

New York City - based Publishers Express, which offers added-value ride-along programs as well, nevertheless makes price its major attraction, regardless of what becomes of second-class rates. "We can offer mailers a discount," says PE CEO Jim O'Brien. "And if the Postal Service does stabilize its rates, we don't think that will impede our growth. Our added-value options will help us grow too, because publishers want to increase advertising pages through this marketing side of the business."

Publishers continue to react to both pitches. The New York Times Co.'s McCall's, for example, which has built up its circulation with APD from 30,000 of its four million monthly subscriber copies to 150,000 over the past few years, has run several ride-alongs. "Sampling enhances advertisers' messages," says McCall's vice president/marketing director Nancy Weber. "And alternate delivery helps build on our relationship with both the advertiser and the reader." Weber says a leveling off of postal rates won't necessarily take the McCall's business away from alternate delivery. "It gives us a fairly good cross section of different areas of the country, so we can target regionally, market-by-market or by an entire group," she says.

Several other smaller couriers have sprung up over the past few years, but the popular opinion for now, however, is that they - as well as PE and APD - have a very long way to go before they pose a Federal Express- or United Parcel Service-type challenge to the USPS.

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