Saturday, May 3, 2014

R.R. Donnelley Ready To Deliver When the Postal Service Doesn't

If Congress decides to allow private delivery of newspapers and magazines on Sundays, the nation’s largest printing company is ready to step in.

“We are looking at alternative delivery methods for content, for physical content,” Thomas J. Quinlan, CEO of R.R. Donnelley, told financial analysts this week. (SeekingAlpha has the complete transcript.) “With the platform that we've built . . . with the addition of [recently acquired competitor] Consolidated Graphics, we've got the ability to be in the majority of populated cities in the United States.”

Thomas J. Quinlan
Quinlan expressed interest in the recent proposal by influential Congressman Darrell Issa, R-CA, that would “permit periodicals, newspapers and unstamped mail to be placed in mailboxes on days when the Postal Service does not provide mail delivery.” Current law gives the U.S. Postal Service a monopoly on delivery to mailboxes.

Issa’s proposal, especially if coupled with curtailment of Saturday USPS delivery, “creates an opportunity for us,” Quinlan declared.

He indicated that Donnelley’s interest is as much about keeping its publishing customers in business (and perhaps gaining a competitive advantage over other printers) as it is about actually making money on the delivery service.

“It's all about our customers and how can we reduce their overall total cost, make them more efficient,” he said. The Postal Service’s recent price hikes and reductions in service are forcing Donnelley to think that way.

Just not sustainable
“Look what USPS is doing to the mailing industry. It's just not sustainable. There's significant cost increases that they've put through. They're shifting cost to the players in the mailing industry, Quinlan said. “All these things, these are costs for the mailing industry that, quite frankly, we and other people like us have to go ahead and mitigate to our customers because our customers can't go ahead and aren't going to take the additional cost and look for people like us to, again, go ahead and mitigate those.”

“You look at Ladies' Home Journal that was announced by Meredith earlier this week [would be shutting down]. I mean, 40 to 47 percent of their cost was related to postage. It was nothing to do with electronic content.”

Issa’s proposal is no slam dunk. It’s sure to face a full-court press from postal unions and front-line employees who fear it would cost jobs and undercut the Postal Service.

USPS's position on the proposal is not as clear. The agency doesn’t want to give up the mailbox monopoly. But if it really loses money on delivering periodicals, as it claims, then perhaps it would welcome the opportunity to lose some of that business to the private sector [though methinks the alternate-delivery services would cherry-pick the most efficient periodicals mail and leave the dregs to USPS].

For a few years during the early 1990s, two alternate delivery networks that used newspaper publishers to deliver monthly magazines to driveways and front doors grew rapidly. But USPS won the magazines back – and squashed the private services -- by introducing more rate incentives for efficient Periodicals class mailers.

Related articles:


Anonymous said...

"They are shifting costs to the players in the industry"....yup , that's the way a business should be run. I rather doubt that GM, Exxon, or Walmart eat the costs rather then raise prices to the consumer.

Anonymous said...

Yep. And as long as I can decide whether to mail that letter to my mom in the pink mailbox (delivery standard 3 days, postage $1.00) or the blue mailbox with an eagle on it (delivery standard 5 days, postage $.49), the organizations' cost shifting and services offered will be balanced with their fight for existence. Oh wait, there is no pink mailbox. I wonder if that changes things.

Anonymous said...

I would like a program that keeps their crap out of my mailbox. I don't want it and I have to pay to have it taken away.

Anonymous said...

Hey if you don't want that crap in your mailbox, then take it down. All that crap keeps the prices down, there is no law saying you have to get mail, just that the postoffice has to deliver it to a mail box. No box no mail, problems solved. As for RR Donnelley, they have every right to ask thier customers to put up a separte box to recieve thier perodicals, and they could start delivery tomorrow. Bet they won't do it, all talk no action.

Anonymous said...

My issue is with the cherry picking the new competition to the Postal Service will do.

What services must be provided to customers must be set. If the Postal Service has to provide all of the expensive services to customers but the new people only have to operate in the profitable areas of course the Postal Service will loose out.

If the new competition has to pay their share of the Postal Services extra services it may be interesting to see what happens.

Also, if the US Postal Service is charging to much money it leaves me with two questions. How do mailers function in foreign countries? Aren’t mailing costs higher in almost all foreign countries and in all industrialized countries?

What has happened to the volume of mail since the last price increase? My mail volume has not gone down.

Anonymous said...

Good Luck Mr. Quinlan! Let's see how far you get with this lame brain idea this time around.
Better yet, maybe you and your Rhodes scholar ( ha ha ) friend Issa can deliver your periodicals. That would be better than going to the circus for entertainment!

Anonymous said...

Only Alice-in-Wonderland logic permits the Postal Service to decide if they will allow another delivery service to use MY privately owned mailbox.

Anonymous said...

The REAL reason the alternative delivery service ended was that they DIDNT work . Magazines in bushes , middle of the street or 3 months worth sitting at a vacant house. I was THERE . Still laugh about it . You get what you pay for .

BoSacks said...

What is with all the Anonymous reply's? Where is the strength of character to say something, mean it and let everyone know who said it.
tis a mystery.

Anonymous said...

Been tried before, fail

MHBaker said...

Yea grow a pair, put your name on it! If they do let outide companies pick and choose what they deliver you can bet there will be a ton of thefts going on. Too many people next to your mail or at your door to keep account of whos doing what and why! Oh and the prices, they will go up as well. So for all you beleeding hearts, pull your head out and think about what your saying before you say it! The Postal Service has been here longer than any other company in the shipping business, lets keep it that way!!