US Postal Service Needs Some Competition

Patience has understandably worn thin with the U.S. Postal Service (USPS). After America’s mail carrier lost $9.5 billion in fiscal year (FY) 2024 and announced plans to raise stamp prices five more times through 2027, it’s little wonder that President-elect Trump has contemplated selling the agency off to the highest bidder. Short of a buyout, there’s plenty the incoming administration could do to ensure increased competition and lower costs at the USPS. President Trump should loosen the screws on the onerous postal monopoly and let private providers give the agency a run for its money.

Since the appointment of Benjamin Franklin as the first Postmaster General in 1775, the federal government has taken a leading role in the collection and delivery of mail in the United States. This control has taken on various forms, as the government has repeatedly evaluated and re-evaluated how it should organize its postal infrastructure. One interesting theme has repeatedly emerged. Private posts have tried and tried again to compete with the USPS, only for the federal behemoth to take their ideas and subsume them — or use the legal system to run them out of business.

One early example was the private, New York-based City Despatch Post, which rose to prominence in the 1840s. They pioneered the stamp as a novel way for senders, rather than recipients, to pay for their mail. City Despatch Post also had the sensible idea of placing letter collection boxes in popular areas as part and parcel of early delivery routes. The Post was ultimately bought out by the government and became part of the New York Post Office. However, the innovative payment, branding, and collection methods long outlived the defunct company.

Fast forward nearly two hundred years, and mail carriers taking a page from the private sector doesn’t seem like a half-bad idea. While the USPS has maintained a monopoly on the delivery of letters weighing fewer than 12.5 ounces, nations such as Germany and the United Kingdom have exposed their posts to private competition. Deutsche Post and Royal Mail face a variety of competitors, including Evri, DPD, and even each other from across the English Channel.

These nations are undoubtedly better off for it.

Central Washington University economists Robert Carbaugh and Thomas Tenerelli compare the United States’ postal policies with those of five countries (Germany, Netherlands, Sweden, New Zealand, and Australia). Each significantly commercialized their postal sectors over a 20-year period and found plenty to write home about. Namely, “prices have not risen, productivity has increased, costs have decreased, the universal service obligation continues to be met, service quality measured by on-time delivery has not dropped, and overall customer satisfaction (though difficult to measure) seems to have increased.”

Once competitors are allowed to enter the fray, national posts such as Deutsche Post respond by innovating and improving services for consumers. When the German postal monopoly was abolished in the early 2000s, Dutch postal services provider TNT announced plans to offer end-to-end letter delivery and strove to reach a majority of German households. This private competition made a sizeable dent in the Post’s letter market share, spurring the former monopolist to roll out a service that allows mail to be scanned and emailed to recipients.

Consumers will only trust their post offices to carry out such a service if the post has a positive reputation for safeguarding consumers’ data and information. Deutsche Post has been busy shoring up its safety bona fides to prove it can handle such delicate tasks. For instance, the Post created a well-publicized “Deutsche Post Security Cup,” which rewarded researchers up to 6,000 euros for finding significant bugs in their E-Postbrief secure message service.

USPS consumers wish they could have a similarly safe and tech-friendly experience. The closest equivalent to Deutsche Post’s scan and emailing service is “Informed Delivery,” which only offers images of the outside of consumers’ incoming mail. Too bad that stalkers and identity thieves have been having a field day exploiting weaknesses in the program’s authentication system.

There is, of course, no guarantee that the USPS would get some much-needed business sense if it went the way of Deutsche Post and Royal Mail and relaxed its monopoly on mailing letters. However, international and historical experience suggests the agency could better itself by embracing competition. America’s mail carrier, the incoming administration, and Congress can work together to build a more vibrant and dynamic postal system.

READ MORE from Ross Marchand:

No, the USPS Isn’t About to Be Privatized

Crumbling Post Offices Pose Problems and Opportunities for USPS

Ross Marchand is a senior fellow for the Taxpayers Protection Alliance.

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