March 25, 2020 (RISC-WP-20-003)
To maintain their rural networks of post offices, some foreign posts have reduced hours, outsourced post office operations, or generated various forms of non-postal revenue.
The Postal Service is legally entitled to request a $460 million annual subsidy from Congress for retail operations but has chosen not to do so since 1982.
Many global postal operators, including the Postal Service, face difficulty covering the costs of their rural post offices. At the same time, rural post offices serve a special role for many small communities. The OIG studied how postal providers in Australia, Canada, France, Germany, Sweden, and the United Kingdom are promoting profitability within their rural retail networks while continuing to offer adequate access to rural customers.
The OIG found that the Postal Service, unlike most of its benchmark peers, does not have a Universal Service Obligation that mandates a minimum number or density of retail outlets. Some governments subsidize the high cost of maintaining these outlets. In the U.S., the Postal Service is legally entitled to request a $460 million annual subsidy from Congress for rural operations but has chosen not to do so since 1982.
Our sample posts use several strategies to reduce retail costs, the most common of which is outsourcing post office duties to private businesses. Some also leverage their nationwide presence to generate non-postal revenue, such as financial services or digital identity verification.