Is it time to privatize the USPS?

Ti’s brief, UK Mail Group demonstrates how to grow in mail sector, does indeed show how a business can grow within the mail sector. The US Postal Service (USPS) and the US government should take note. Sadly, as the US Postal Service continues to report heavy losses ( 70% of the 2012 loss — $11.1bn — was the result of  two large payments to prefund future retirees’ health benefits.)
and seek approval for reforms, the lame-duck US Congressional session is currently focused on avoiding possible tax increases and spending cuts scheduled to take effect in January 2013. At the earliest, the US Congress will not look at USPS reforms until possibly later in 2013.

The US Postal Service has put forth its reform which includes ending most Saturday mail delivery, ending the pre-payment of a $5.5bn each year into the retiree health care fund and creates its own health insurance plan for current workers separate from the Federal Employees Health Benefits Program.

US legislators have also introduced their own postal reform including one bill, which was approved by the Senate earlier this year. Under this bill, the Postal Service could utilize some $11bn in surplus pension contributions for employee buyouts and other purposes. It would not eliminate the retiree health care pre-funding requirement, but rather allow the postal service to stretch out its payments and it would make the Postal Service wait at least two years before halting Saturday delivery.

A competing bill would let the Postal Service go to five-day delivery in six months and also give a specially appointed board responsibility for putting the agency back in the black.

So, with at least three competing plans to reform the Postal Service, it is unlikely the issue will be resolved quickly in 2013 or even beyond. Unfortunately none of these plans will help to stimulate growth for the ailing Postal Service. The USPS should be allowed to create its own health insurance plan however, ending Saturday deliveries may not be a good idea. As noted in a past blog entry, Missed Opportunities as USPS reports another quarterly loss– again Saturday delivery could be a competitive advantage for the USPS, particularly for ecommerce deliveries.

As it waits for a decision from the US government, the Postal Service is cutting costs where it can such as layoffs and closing and consolidation mail processing facilities. From fiscal 2000 through the end of September, USPS employment has declined by almost one-third, from 787,000 to 528,000. This fiscal year, USPS expect it to fall to 496,000, according to official projections.

It should be noted that the USPS is a quasi-US government agency and operates independently. However, the Postmaster General is still appointed by the government and operational changes must be approved by the government. Perhaps it is time to completely privatize the US Postal Service. Obviously it is in need of a new business model such as one that focuses on its growing parcel business and becoming a viable option for this type of business. However, as it continues to be mired in bureaucratic red tape the likelihood of this occurring continues to dim.