The US Postal Service's Business Model Is Outdated. Is It Time To Wind It Down Or Privatize It?

from the please-mail-me-a-buggy-whip dept

Just recently, we discussed whether or not ceasing Saturday delivery was a good idea for the USPS. John Potter, the US Postmaster General, recently said that the postal service's business model is as outdated as the newspaper industry's. Potter said:

"Twenty years ago we would laugh at the notion that a newspaper would ever embrace the idea that maybe the channel of the future is electronic and that you may have to change your business model,"

Sure, similarities between the industries definitely exist. Craigslist is a much cheaper and more efficient marketplace for local goods than the classifieds section in the newspaper ever was, and email is a much cheaper and more efficient means of communication than snail mail. That said, whereas for the newspaper industry, delivering a daily, physical newspaper to households may actually be an endangered business, the business itself of delivering physical items to households is still very much in demand. After all, with so much shopping happening online nowadays, someone still has to deliver the goods (until replicators, a la Star Trek, are perfected). In fact, for over a decade now, we've been talking about this opportunity to optimize the "last mile," and as of yet, nobody has really even come close to solving this problem.

That said, the USPS is a government institution, and even though it does not take any tax funding to run, an attempt to attack this opportunity may best be mounted by the private sector (like UPS and FedEx), especially when you consider the USPS's projected $238 billion shortfall for the upcoming decade. So, since it's not a private business, the best solution for the USPS may be to simply accept its diminishing role in the daily lives of Americans, and focus on continuing to run as efficiently as possible for as long as it remains useful. That said, the other solution may be to remove the government-mandated monopoly and privatize the USPS, and then let that private entity decide whether or not to invest in the business. Either way, it seems silly to ask taxpayers to invest anything further in the USPS since so many alternatives exist already. We should definitely all be appreciative of the part that the Postal Service has played in the foundation of our country, but what else can be done?

Filed Under: endangered business, online shopping, usps
Companies: fedex, ups, usps