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COMMENTARY: Flawed business model hurts U.S. Postal Service

Updated May 25, 2019 - 9:43 pm

Your May 14 editorial (“Past time to privatize the U.S. Postal Service”) misses the mark on the reasons for the Postal Service’s large financial losses.

The U.S. Postal Service serves every American business and address — and binds the nation together — as it has for more than 240 years. Today’s Postal Service is a self-funding entity, and we do not receive subsidies or tax revenues to support our operations. We pay for our operations entirely through the sale of postal products and services.

The comparisons made with the private delivery companies fail to mention the Postal Service’s unique role, mandated by Congress, and the fact that our role results in obligations that private parcel delivery companies do not have. Our basic function is not to make a profit, but to fulfill a public service mission of providing mailing and shipping services to all communities. This Universal Service Obligation (or USO) results in additional cost burdens that private companies do not have.

A core component of meeting our USO is paying for our nationwide infrastructure and ensuring the secure delivery of mail and packages to more than 158 million delivery points, including all American homes and businesses. Unlike others, the Postal Service can’t pick and choose when and where to deliver or deliver packages to only the most profitable addresses or with hefty surcharges.

The Postal Service’s USO extends to the delivery of packages. In fact, the Postal Service has provided package service for more than a century. In 1913, Congress authorized the Postal Service to provide parcel post as a means of ensuring that all Americans, including those in rural areas, had access to affordable package delivery. Prior to that time, the Postal Service carried only lightweight first-class mail packages. For most parcel deliveries, Americans were at the mercy of a cartel of private express companies, which either refused to serve rural communities or charged exorbitant prices.

Regarding efficiency, studies consistently show that the Postal Service is one of the most efficient posts in the world.

The editorial did get one thing right: The Postal Service is losing money. While the Postal Service continues to grow its package business and effectively compete with the private delivery companies, letter mail volume has been declining for more than a decade. The secular mail volume trends continue largely due to electronic diversion and transaction alternatives. The Postal Service competes for business in every product line, every day from the first mile to the last mile. However, a flawed business model imposed by law continues to be the root cause of our financial instability.

The good news is that our financial problems, while serious, are solvable. The Postal Service, led by the Board of Governors, is working through the details of a 10-year business plan to restore the organization to financial stability — which will include recommended legislative reforms. We continue to support legislation that gives us added flexibility that will enable us to increase revenue and reduce costs, while continuing to serve the mailing and shipping needs of all Americans. Legislative and regulatory reforms are necessary to restore the Postal Service to financial health.

The U.S. Postal Service continues to play an indispensable role as a driver of commerce and as a provider of delivery services that connects Americans to one another — reliably, affordably and securely — and to every residential and business address.

David Partenheimer is manager, public relations for the U.S. Postal Service. He writes from Washington D.C.

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