Who Would Pay the Greatest Value for Postal Privatization?
– by Sarah Anderson
Institute for Coverage Research as featured at Save the Publish Workplace (Steve Hutkins)
Throughout his first time period, President Trump appointed a process power on the way forward for the Postal Service that included the Treasury Secretary and the Administrators of the Workplace of Administration and Price range and the Workplace of Personnel Administration. In June 2018, OMB really helpful postal privatization in a report on total authorities restructuring. In December 2018, the duty power issued its report, calling for privatization of extensive swaths of the Postal Service, decreasing supply days, closing submit workplaces, ending collective bargaining for postal workers, and drastically rising costs on package deal service and the mail.
The privatization push misplaced momentum, nonetheless, as Individuals throughout the political spectrum voiced sturdy help for the company and its public mission. The important position of USPS grew to become even clearer in the course of the pandemic, when postal workers successfully managed unprecedented ranges of mail-in election ballots and deliveries of significant items, from treatment to cleansing merchandise and meals. USPS has additionally delivered greater than 900 million Covid check kits, serving to the nation emerge from the depths of the general public well being disaster.
Lately, Congress has handed two payments to assist stabilize USPS funds — Covid aid funding in 2020 and the repeal in 2022 of a burdensome requirement to pre-fund postal worker retirement well being advantages. Each payments handed with sturdy bipartisan help.
However, instantly after his re-election in November 2024, President Trump started as soon as once more to advertise the thought of privatization. As of late February, the Washington Publish reported that he intends to problem an govt order to disband the Postal Board of Governors and place USPS beneath the management of the Division of Commerce – presumably as a primary step in direction of privatizing all or elements of the company.
Billionaire Elon Musk, who has exerted monumental affect over the Trump administration, advised an viewers of Wall Avenue bankers on March 6 that he additionally favors USPS privatization. The Wells Fargo fairness analysis group just lately produced a report laying out a step-by-step path in direction of this objective. The report explicitly states that this motion “would be positive” for personal carriers FedEx and UPS.
In what the Wells Fargo group describes because the “required five steps” to privatization, step 4 includes rising USPS parcel supply charges by about 30 p.c to 140 p.c to “generate economic parcel profits on a standalone basis.” In different phrases, the hog would must be fattened up earlier than the slaughter. The group’s step 5: “Federal government would raise proceeds from buyer(s) or investors in return for the divestiture of some or all of the USPS.”
Non-public companies already impose space surcharges on huge swaths of the nation
Supply autos usually jockey for house on crowded streets as a number of corporations ship packages to the identical U.S. households. Of the foremost carriers, solely the U.S. Postal Service has had a dedication to offering common service with out geographic space surcharges.
For packages not in flat charge packing containers, USPS supply fees are based mostly on weight and the distance between the origin and vacation spot factors — not on the recipient’s tackle. In September 2024, USPS did introduce new charges for deliveries to sure rural ZIP codes. However these charges solely apply when the shipper makes use of the discounted service provider charges negotiated by on-line retailers like eBay and Etsy or purchases postage by way of delivery software program corporations like ShipStation and EasyShip. The differentiated charges don’t apply when a buyer offers instantly with USPS.
This report analyzes the way more substantial array of surcharges that FedEx and UPS add to their marketed base retail charges for parcel clients utilizing their very own packaging (reasonably than flat charge packing containers). Amazon has dramatically expanded its personal supply community, even surpassing FedEx and UPS in parcel quantity in 2023. Nevertheless, the e-commerce large’s supply prices are sometimes folded into the value of bought items.
Based on our evaluation of data on UPS and FedEx websites, these companies cost space surcharges for deliveries to roughly 62 p.c, or greater than 25,000 of the nation’s 42,000 ZIP codes. The Institute for Coverage Research calculates that these surcharge areas are dwelling to roughly 102 million folks, or roughly 31 p.c of the U.S. inhabitants.
Predictably, the personal carriers impose the costliest surcharges on shipments to Alaska and Hawaii. The very best charges on deliveries within the 48 contiguous states are “remote surcharges” that apply to about 8 p.c of ZIP codes protecting mountain communities, ranchlands, and different far-flung areas the place 3.8 million folks stay. One other 35 p.c of ZIP codes, rural areas with a mixed inhabitants of 35 million, face “extended area surcharges.” The bottom location-based charges, merely known as “delivery area surcharges,” apply to a different 19 p.c of ZIP codes, largely in suburban areas and small cities, with a mixed inhabitants of 19 million.
Sources: FedEx and UPS. Surcharges cited right here and in examples under replicate revealed retail charges for 2025 (excluding any promotional reductions) for patrons utilizing their very own packaging (reasonably than flat charge packing containers). Giant quantity shippers generally negotiate discounted charges.
Supply: Institute for Coverage Research evaluation of knowledge from UPS, FedEx, and U.S. Census Bureau.
Suburban space surcharges
Most of the communities topic to supply space surcharges aren’t what most individuals would contemplate distant. For instance, the personal corporations usually slap space surcharges on deliveries to ZIP codes simply outdoors main cities, comparable to those under.
Non-public corporations pile extra charges on prime of supply space surcharges
The desk under compares value estimates for FedEx, UPS, and USPS to ship a three-pound parcel (the load of a pair books or a pair of footwear) utilizing a buyer’s personal packaging or a carrier-produced medium-size field from Chicago to 5 residential addresses representing totally different space surcharges.
Because the desk reveals, the personal firms are already charging considerably increased commonplace retail charges than USPS for deliveries to every of the surcharge areas. Along with space surcharges, the personal carriers additionally impose further fees for gasoline (based mostly on distance) and residential supply (reflecting the upper prices for corporations that, not like USPS, aren’t already visiting houses day by day). The Postal Service applies none of these surcharges.
Notice: All charges are for deliveries with an anticipated supply time of three days, apart from Hawaii and Alaska. For all three carriers, we used revealed retail charges as of March 13, 2025 for a 3-pound parcel utilizing buyer’s personal packaging or a medium-size, carrier-produced field. FedEx, commonplace charges are for Specific Saver (3-day) supply, besides Hawaii and Alaska charges are labeled “2-day delivery” however lack assured supply dates. For UPS, charges are 3-day Choose besides Hawaii and Alaska charges are UPS Floor, with anticipated supply to Hawaii in a single week and no specified supply time to Alaska. For USPS, charges are for Precedence Mail and a medium-size flat charge field. We assumed buyer drop-off at a FedEx or UPS service location. As famous under, USPS doesn’t cost to select up packages throughout common service routes.
On flat charge deliveries, the for-profit carriers are providing charges which are akin to USPS. The Postal Service was the primary to supply this service, introducing flat charge packing containers in 2004, adopted by the launch of FedEx’s “One Rate” service in 2013 and the UPS “Simple Rate” program in 2019. Many small e-commerce retailers recognize the delivery value predictability that flat charge pricing supplies. Nevertheless, these flat charges include numerous restrictions on measurement and weight and should not at all times be essentially the most economical choice.
In contrast to FedEx and UPS, USPS doesn’t cost further for Saturday supply. The common service obligation of USPS features a dedication to deliveries six days every week to each U.S. tackle. The Postal Service Reform Act of 2022 codified this dedication in regulation.
In contrast to for-profit carriers, USPS gives free package deal pick-up companies
USPS mail carriers decide up packages of lower than 70 kilos which are prepared for supply from residences at no cost throughout their common supply routes. Since they’re visiting residences day by day anyway, this provides little further value for the general public service. In contrast, because the desk under signifies, FedEx and UPS cost substantial costs to select up parcels prepared for cargo from houses and workplaces.
Notice: Based mostly on pick-up service from a farm 4 miles outdoors a small central Minnesota city (zip code 55355). USPS gives free pick-up service throughout carriers’ common mail supply routes. If a buyer must schedule a pick-up, USPS fees a charge.
Free decide up is a very necessary service for patrons who can’t simply journey to a submit workplace or a UPS or FedEx retailer or drop off location as a result of they don’t have a way of transport or for bodily causes. That is a technique USPS makes it a bit simpler for aged Individuals and people with disabilities to remain in their very own houses and preserve connections with the skin world. USPS additionally gives a “Carrier Alert” service, which permits folks with particular must register to have an emblem positioned on their doorways, indicating that letter carriers ought to report any indicators of misery to native social service companies.
Rural areas could be hit hardest by privatization
Whereas folks residing in rural areas account for less than 16 p.c of the U.S. inhabitants, rural areas account for 88 p.c of the realm served by the Postal Service and 57 p.c of submit workplaces. On prime of elevated package deal supply charges, rural communities would additionally probably face the shuttering of many of those rural submit workplaces and the associated lack of postal jobs that pay first rate wages with advantages. If USPS loses the package deal income it at present makes use of to cowl the price of first-class mail, our common mail supply service may be in jeopardy.
- Many rural residents get medication and different necessities by way of the mail
Throughout the nation, an estimated 20 p.c of all Individuals over 40 who’re prescribed treatment for a persistent situation get their prescriptions solely by way of the Postal Service. A fair better share of the agricultural inhabitants depends on mail order prescriptions since so many pharmacies in rural communities have shut down. Veterans, greater than one-quarter of whom stay in rural communities, obtain 84 p.c of their prescriptions by way of the mail. Except for some medicines that require refrigeration, USPS handles almost all of those deliveries to veterans. Below the Covid-19 pandemic, USPS delivered medication, meals, and different necessities to a a lot bigger swath of the U.S. inhabitants. Even in regular instances, Alaskan villages, Maine islands, and different hard-to-reach areas depend on USPS for meals and different very important items.
- Rural residents with out broadband rely extra on USPS for invoice paying and different first-class mail wants
As just lately as June 2023, greater than 14 p.c of rural households lacked entry to broadband, in line with the FCC. This implies that rural residents are extra probably than different Individuals to pay their payments by the mail. Total in the US, 14 p.c of utilities payments and 27 p.c of presidency taxes and costs have been paid for with checks as of 2022. USPS additionally permits sending of greeting playing cards and different first-class mail not dealt with by UPS or FedEx.
- Rural voters profit considerably from “vote by mail.”
Throughout the 2024 normal election, the Postal Service delivered greater than 99 million ballots to or from voters. Rural voters rely notably closely on the mail-in choice, partly as a result of bodily polling websites are sometimes lengthy distances from their houses. Nationwide, half of rural county polling websites serve an space better than 62 sq. miles, in comparison with simply 2 sq. miles for city websites. Vote by mail is especially necessary for seniors, who made up 20 p.c of rural residents ages 65 or older in 2022, in comparison with simply 16 p.c of city residents.
Privatization overseas has led to increased costs, decreased service, and layoffs
Between 2000 and 2015, plenty of governments totally or partially privatized their state-run postal companies, with various levels of regulation. Whereas the huge measurement of the US territory and economic system makes worldwide comparisons tough, these international locations’ experiences present cautionary tales. A brand new Brookings examine finds that within the European Union, international locations with partially or totally privatized postal techniques had increased worth will increase between 2012 to 2021 than international locations which have stored their techniques public.
The UK’s Royal Mail, as an illustration, was totally privatized between 2013 and 2015. British clients have seen service requirements fall and costs rise, with UK stamp prices greater than doubling within the final decade. At the moment, a firstclass stamp within the UK prices £1.65, or $2.15. In the US, you possibly can nonetheless ship a letter from Miami to Anchorage for simply $0.73. In Denmark, the personal company that operates the nationwide postal system just lately introduced that it’ll finish letter supply altogether, leaving it as much as the free market to fill the void.
Some privatized techniques have additionally decreased the frequency of mail and package deal deliveries, notably to distant areas. In Italy, as an illustration, the personal company that runs the postal system delivers to rural areas solely on alternate days.
Privatization has additionally had dangerous results on postal workers. In Belgium, for instance, the personal company that runs the postal system has been steadily changing civil servant supply workers with lower-paid “auxiliary” workers.
Regardless of prevalent misinformation, USPS is just not a burden on taxpayers
Postal privatization advocates usually declare the U.S. Postal Service can provide decrease supply charges than personal firms solely as a result of this public entity doesn’t pay taxes on earnings and depends on taxpayer subsidies. In actuality, aside from emergency Covid funding in 2020, USPS has operated as a self-funded company for the reason that 1970 Postal Reorganization Act.
Many different governments present funding to cowl the price of common service obligations, however this isn’t the case in the US. The Postal Regulatory Fee reviews that this value for USPS, together with all of the deliveries and companies and free or discounted charges the company wouldn’t in any other case present, amounted to $6.1 billion in 2023.
The company is meant to obtain public funds to cowl the price of free mailing privileges for the blind and abroad voters, however these prices haven’t been totally reimbursed. USPS at present receives simply 0.1 p.c of its whole income from Congressional appropriations.
Conclusion
If the U.S. Postal Service is privatized, our nation’s time-honored dedication to common postal pricing and supply might be in jeopardy. Freed of the constraint of public competitors, personal carriers would cost as a lot as they may get away with and deliveries to sure areas of the nation might now not be out there. The estimated 102 million Individuals residing in locations the personal corporations already cost further charges – and people wishing to speak and commerce with them – would pay the largest worth.
Companies, from on-line retail outlets to producers delivery elements to clients in want, may face sharply increased delivery prices, resulting in increased costs for his or her clients or decrease income for his or her companies. Small companies could be hit particularly arduous, since they don’t have the clout to barter the identical degree of delivery reductions as massive firms.
Postal privatization would additionally destroy a significant and really democratic public service. This in depth, centuries-old community helped construct up America’s democracy and economic system by spreading data and items to each nook of the nation. Over its 250-year historical past, USPS has frequently reinvented itself in response to adjustments in know-how and the evolving wants of our society.
Fairly than promoting this public treasure off to the very best bidder, we must always discover alternatives for strengthening the Postal Service to ship even higher companies to the American public within the twenty first Century. Along with the rising package deal supply market, many choices can be found for producing new income, from expanded monetary companies to putting in displays on supply autos for gathering information on public security and environmental dangers.
With its in depth and useful human assets and infrastructure, USPS has a powerful basis on which to proceed offering a significant public service for all Individuals for generations to come back.
