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Category: Cost & Pricing

Revenue and Costs in the Retail Network

April 12, 2021 (RISC-WP-21-003)

  • The Postal Service’s more than 31,000 post offices constitute the largest retail network in the U.S. by number of locations, but 42 percent do not generate enough revenue to cover costs of operation.
  • Opportunities exist for the Postal Service to increase revenue or lower costs at post offices without reducing access to postal services

The OIG analyzed revenues and costs of nearly all USPS-managed post offices in the U.S. The research found that both revenue and costs at post offices aligned closely with population density — highest in more urban areas, lowest in rural locations. However, rural post offices were more likely to have costs exceed revenue. Nationally, 42 percent of post offices did not cover their costs; in rural areas, it was 60 percent.

Opportunities exist for the Postal Service to rethink its retail network either to increase retail network funding or reduce costs, or both. For example, the Postal Service could request an already-allowable congressional subsidy of $460 million per year to defray the cost of serving rural areas. USPS could also consider increasing the number of outsourced post offices. To increase revenue, the Postal Service could expand its counter services or lease space to government agencies or private businesses to provide community services. These opportunities could ease financial challenges of the Postal Service’s retail network and deliver added value to the American public.

Joy Sanzone, Bryant Switzky, Alex Cullen, Jeff Colvin, John Althen contributed to this report.