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Last MileLegal issuesNews

Coalition warns against U.S. Postal Service privatization

An alliance of consumer advocates, postal workers and community groups is pushing back against efforts by the Trump administration to overhaul the U.S. Postal Service (USPS) by eliminating the agency’s service requirements or by privatizing it.

Calling itself the “Grand Alliance to Save Our Public Postal Service,” the coalition on Jan. 6 plans to demand the USPS Board of Governors appoint a postmaster general who will “maintain a public postal service.” At a demonstration in Washington, D.C., the group will present the board with a petition with 350,000 signatures.

USPS announced in October that current Postmaster General and CEO Megan J. Brennan will retire Jan. 31.

“The postmaster general has wide powers to shape the mission of USPS and there is a real risk that Brennan’s successor could hand over parts of the service to private, profit-making corporations and prepare it for a wholesale sell-off,” the coalition’s petition states. “The people will rightly expect a new postmaster general who will uphold the Postal Service’s public mission and will work to preserve and enhance our national treasure.”

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.

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John Gallagher, Washington Correspondent

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.

9 Comments

  1. Privatization of USPS would put hundreds of thousands of workers without a job which would be devastating for the workers and the economy. It would also risk the sanctity if the mail. Postal hires are screened for the job to include drug tests, driving record checks , etc. unlike the recent amazon thieves. Postal hires value their jobs because of the good salary and many benefits and are less likely to jeopardize Their jobs. Don’t privatize the postal service!

    1. This has nothing to do with who controls the post office, this is about the postal union and their benefits, the benefits and retirement policies that are bankrupting this constitutionally created entity. Follow the money.

      1. The Postal Service’s problem was created by an Act of Congress. Namely, the Postal Accountability and Enhancement Act of 2006.

        Passed by a Republican-led Congress and signed into law by President George W. Bush, the PAEA gave the Postal Service new accounting and funding rules for its retiree pension and health benefits. Up until 2006, the USPS funded those obligations on a pay-as-you-go-basis, pulling out of its pension fund and adding to it as retirees’ costs came in. But the PAEA required the Postal Service to calculate all of its likely pension costs over the next 75 years, and then sock away enough money between 2007 and 2016 to cover most of them.

        Do a little research before you shoot your mouth off Mike!

          1. Once again, educate yourself!! 90% of USPS losses since 2007 are from pre funding. Not pensions. You are the one whos dense. Are you not bright enough to do the research that Jim requested you do.

      2. The payment for future retiree health benefits is causing the financial burden on the Postal Service. The Postal Service is the only company public or private that has to fund their retirees in this way. The Postal Service will make money if this is fixed. By law it is supposed to break even!

  2. Anyone that wants to know what privatizing the post office would be like from a customer view point take your package to UPS, Fedex and USPS and compare the price difference. It can vary on size, weight, and distance but more times than not the price difference is amazing how much you spend at UPS or Fedex in comparison to the post office.

  3. Agreeing with Jim and David, the pre-funding of future USPS retirees health benefits mandated by Congress is not required of any other company, private or public. Postal reform is needed, but privatization is not the answer. With privatization, customers in remote rural communities where a private company will cut delivery in order to save costs can kiss goodbye their secure, daily mail service. Because USPS is mandated by law to deliver to every occupied address and PO Box, they lose money delivering to rural customers. Fill in the blank yourself but picture one example, elderly customers who do not drive needing medications delivered to them. If their local post office is closed down due to privatization, the solely profit-driven private companies will not deliver to remote customers and those customers will be forced to find alternative, more expensive ways of getting their medications. There are nearly twice as many people living in Phoenix AZ than in the entire state of Montana. What private company would choose to deliver packages literally hours between stops to remote customers? Any private business model that aims for profits would cut those deliveries before the ink dries on any privatization legislation that might pass.

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