By Edward Hudgins
February 23, 2025
President Trump plans to issue an executive order to transfer the U.S. Postal Service, an independent government corporation, to the Department of Commerce, and to fire the USPS Board of Governors and Postmaster General, Louis DeJoy. Trump and his associates have floated the idea of privatizing the Postal Service and this is, no doubt, a preliminary step to that goal.
Its time has come.
With the ecommerce revolution, digital communications replacing messages on paper, and most physical newspapers, magazines, books and advertisements moving into cyberspace, privatization of the inflexible, money-losing Postal Service is an idea whose time as come. But the question is how to do it without crippling ecommerce, in which USPS currently plays an important role, and in the face of likely opposition from many rural Red State Congressional Republicans and most Democrats.
There is a workable strategy: privatize the Postal Service ‘from the inside out’.
In recent years PMG DeJoy has reversed USPS practices of contracting out to private providers for various services, bringing more and more functions in-house, reducing flexibility and building a gold-plated processing and logistics network duplicative of the private sector. Worse, he has converted 190,000 non-carrier and pre-career employees into permanent, career unionized workers.
To privatize, USPS should reverse course. Except for the Postal Service’s unique nationwide “final mile” delivery service, USPS can accelerate and expand outsourcing to private providers for most other functions, including:
- Presortation;
- Transportation – long haul, intra-plant, plant to delivery unit;
- Maintenance;
- Equipment repair;
- IT/payment solutions;
- Security
An inflexible, money-losing mess.
Some background is necessary to understand why privatization is the topic-de-jour and why privatizing from the inside out is the most practical route to that goal.
Congress passed the Postal Reorganization Act of 1970, transforming the cabinet-level Post Office Department into the U.S. Postal Service as a government corporation to be overseen by a Board of Governors and Postmaster General, appointed by the President and approved by Congress. The new corporation, like the old department, has a monopoly on delivery of first- and third-class mail.
USPS was supposed to cover its expenses by charges for its services, such as by selling stamps, with rates approved by its regulators. In recent decades, USPS has failed.
Since 2007, USPS has accumulated $98 billion in deficits. This has been in spite of billions of dollars invested in new technologies meant to reduce the costs of operations. First-class mail had always been the USPS cash cow. But mail revenues dropped from $37 billion in 2006 to $25.4 billion in 2024.
This decline is due to the ecommerce, communications, and information revolution. But it has also been a bright spot for USPS. Since 2006, USPS revenues from delivering packages have risen from $2.3 billion to $32.3. Since USPS has a legal monopoly on first-class, it must charge rates for package delivery that do not compete unfairly with private providers,
notably Amazon, FedEx, and UPS, that are allowed to compete with the Postal Service; those providers also pay USPS to deliver a significant number of their packages that “last mile” from local post offices to homes and businesses, especially in rural areas.
But even with this ecommerce windfall, the Postal Service still loses money. And things are likely to get worse for USPS.
Exponential technologies in the decades to come will see the provision of healthcare, education and much more merge with ecommerce, communications, and information, transforming all these infrastructures. Any company that wants to survive must maintain maximum flexibility for the uncertain future.
The best path ahead.
While Trump has good reason for wanting to make USPS private, he needs a reasoned strategy that will work. But he faces serious barriers.
There will be numerous lawsuits over transfer the Postal Service to Commerce, dissolving the Congressional-created arrangement. There is legitmate fear that privatization could lead to reductions of services to rural areas of the country, heavily represented by Republicans and Republican leadership, who usually oppose closing even the smallest, most underused post offices in their districts. And there’s the USPS monopoly and first-class mail and requirement to deliver to every address. Would a private USPS still be under these requirements?
USPS’ total assets—including property, equipment, leases and other assets—are roughly $323 billion, but liabilities are approximately $457 billion, thus $133 billion in net liabilities
So could USPS be sold as single entity to an Elon Musk or Jeff Bezos, or even sold in an IPO? In its current condition, it would likely find no buyers.
The obvious approach, then, is the change the condition of USPS. The Postal Services’s integrated “last mile” delivery system to every address is its most value-added function, with private package deliverers utilizing it as well. So the best path to privatization would be to leave the “last mile” system in place and to reverse DeJoy’s Soviet-style centralization approach by increasing flexibility and accelerating contracting to private providers for services such as presortation; transportation; maintenance; equipment repair; IT/payment solutions; and security.
This is the best way to ensure that whatever the future brings, a bloated Postal Service will not be a drag on the economic techno-revolution to come and could even be an asset!
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Edward Hudgins, Ph.D., is founder of the Human Achievement Alliance and the editor of The Last Monopoly: Privatizing the Postal Service for the Information Age and Mail @ the Millennium: Will the Postal Service Go Private?”
