A recent study from a Washington think tank argues the U.S. Postal Service should provide only last-mile delivery of mail and open all other aspects of the mail system to competition. The report from the non-partisan Information Technology and Innovation Foundation came to a similar conclusion as an earlier proposal from a group of four mailing industry leaders who released a concept paper that also proposed a public-private partnership with the Postal Service focusing on final delivery. Those authors envisioned that this so-called hybrid model would encourage innovation and efficiency.
A panel of fellows from the National Academy of Public Administrators (NAPA), a nonprofit and non-partisan organization providing expert advice to government leaders, reviewed the earlier paper and concluded that many of the ideas represent expansions of current public-private partnerships already employed by the Postal Service, i.e., worksharing. The panel recommended further study around a host of related areas, including financial, labor-related, operational integration and regulatory issues – all of which could pose a range of new challenges.
Critics note a number of shortcomings with these hybrid model proposals. First, the papers don’t provide a full cost-benefit analysis of privatizing parts of the system. Revenue could be lost if service were reduced, which could occur with numerous service providers involved in mail transportation and processing. Further, the papers don’t indicate what would become of the Postal Service’s infrastructure of buildings and equipment.
Papers and studies proposing new business models for the Postal Service are nothing new. Think tanks and academic conferences regularly churned out suggestions for rethinking the Postal Service model, ranging from a return to an appropriated government agency to privatization. Last year, the Postal Service put forward its own business plan for returning to solvency, which it called its Plan to Profitability. Recently, the Board of Governors asked the Postal Service to accelerate many of the action items in that plan.
The Postal Service’s 5-year plan requires a number of legislative actions from Congress and does not effectively change the current governance model. That is, the Postal Service would remain a self-supporting government entity funded through its own revenues. The plan calls for some greater freedoms around offering new products, greater control of its healthcare costs, and closing facilities but it does not abandon its public service or universal service roles.
We would like to hear your thoughts. Do you think a hybrid model, like the one considered in the recent papers, has merit? Would such a model add efficiencies or would it merely shift work away from postal workers, as some have claimed? In an era of shrinking mail volume and changing communications, what business model would work best for the Postal Service? How does the Postal Service continue to support its universal service obligation under a new model?