Coalition warns against U.S. Postal Service privatization

Last year, a task force led by U.S. Treasury Secretary Steven Mnuchin proposed wide-ranging reforms of USPS, which included possible privatization. However, any sweeping operational changes to the quasi-governmental agency would require an act of Congress. Brennan’s successor, however, could begin laying the groundwork for those changes, which come as FedEx Corp. [NYSE: FDX], Amazon.com Inc. [NASDAQ: AMZN] and UPS Inc. [NYSE: UPS] “eat up a larger portion of delivery in the U.S.,” Fortune magazine pointed out in a recent article on the potential for privatization at the agency.

Those three companies, among others, have long relied on USPS to deliver parcels to residences and businesses once the parcels are inducted into the postal network. USPS, which is required by law to serve every U.S. address, has historically offered the delivery service, known as “Parcel Select,” at cheap prices.

The combination of “universal service” at low rates has proved compelling for businesses that have been forced to offer free shipping to their e-commerce customers. In the past few years, though, FedEx, Amazon, and UPS have reengineered their networks to handle more last-mile deliveries. In their view, it made little sense to fund their networks and pay USPS at the same time when they could make last-mile deliveries work on their own. 

FedEx, for example, has shifted millions of shipments formerly tendered to USPS and plans to self-handle all of those parcels by the end of 2020.

In her final conference call as postmaster general in November to discuss USPS’ financial results, Brennan did not address the potential for privatization, noting instead that the agency’s current “value proposition” would appeal to new and current customers.