Chris Edwards
With a bloated cost structure and falling demand for its products, the US Postal Service (USPS) is in trouble. I contend that privatizing the agency is the best way forward, and President Trump seems open to the idea. Currently, the president’s DOGE team is digging into USPS operations to find cost savings.
A recent report on foreign postal systems provides reform ideas for the president and Congress to consider. The USPS Inspector General (IG) compared the postal systems of the United States and 25 other countries. Let’s look at some report highlights.
Privatization may sound radical to US policymakers, but the IG found that of the foreign postal systems, “15 have the status of a private corporation and 10 are state-owned enterprises.” Among the former, three were fully privatized and twelve were partly privatized or structured as private corporations.
This IG figure shows that the United States is on the socialist end of international postal structures. The United States is also only one of ten postal systems with a legal monopoly over some types of mail. In other words, unlike the USPS, most postal systems are open to competition.
Congress raises USPS costs by mandating delivery six days a week. That makes little economic or environmental sense in the modern world of email, texting, and online news and banking. This next IG figure shows that most countries have less costly delivery schedules than we do.
For regular letters, Australia, Finland, Norway, and Sweden have gone to delivery three days a week or delivery on alternate days. Denmark’s postal company recently announced that it will “end all letter deliveries at the end of 2025 citing a 90% decline in letter volumes since the start of the century.”
Another way to reduce costs and benefit the environment is to close post offices and open postal counters within other retailers. USPS post office visits have fallen in half over the past 25 years, so many of its 31,048 locations should be shut down and sold to free up space for housing or other structures.
The USPS is on the left-hand unreformed side of this next IG figure. At the other end are systems such as Deutsche Post, which closed 29,000 post offices and operates counters within convenience stores and other retailers.
With USPS privatization, people may worry about the “universal service obligation.” Would a privatized USPS continue delivering to all US addresses at the same prices and frequencies as today? Maybe not, because a private firm would try to balance costs and benefits and could, for example, reduce delivery frequency.
That said, Congress could retain an expansive USO even with a privatized USPS. The IG report notes that some governments with privatized postal companies pay to cover the costs of mandated USOs. The current USO for the USPS costs $2.4 billion a year, according to the IG. It would be best to cut our excessive USO, but a compromise reform would be to privatize the USPS and then appropriate funds to cover the USO cost.
The rise of electronic communications has led to challenges for traditional postal systems in every country. But US policymakers have been sitting on their hands, while many foreign governments have restructured their systems and cut costs. For postal reformers in the administration and Congress, the new IG report suggests ways to move forward with restructuring.
More on USPS reform here, here, here, here, here, and here.
