Should the Postal Service Venture Into Non-Postal Businesses?

By on May 15, 2016 in Current Events with 87 Comments

Post Office logo on the front of a building

The Postal Service continues to hemorrhage money at a rapid pace.

In 2014, it reported a net loss of $5.5 billion; in 2015, it reported a loss of $5.1 billion. And in its latest quarterly report, it posted a $2 billion net loss.

Some have suggested that the Postal Service should move into non-postal ventures such as supply chain management and banking to help shore up its finances. Others have suggested the Postal Service expand its shipping business into other areas, such as shipping alcoholic beverages.

The Tax Foundation recently released a report examining the case for the Postal Service venturing beyond its current duties. In short, the report concludes that this would not be a good idea.

Some of the reasons cited by the report for problems with these commercial ventures included:

  • Career postal workers’ compensation packages (wages and, more so, benefits) are high relative to those of comparable workers in the private sector. Those above-market costs decrease the odds that nonpostal ventures will be profitable.
  • The Postal Service is often willing to except low margins on products and services. This creates more of a problem in a competitive commercial market.
  • There is concern that non-postal ventures would distract Postal workers and managers from their core mission of handling mail.
  • A series of failed non-Postal ventures in the 1990s suggest that while postal managers are highly skilled at moving the mail, they are much less adept in non-postal areas.
  • The shortage of positions on the Postal Service’s Board of Governors highlights Washington’s inaction on filling the positions at a time when they are most needed. The report suggests that because Congress has let the Postal Service down in this area, it might do so in new, non-postal business ventures as well.
  • Politics – underscored by the above point, if the Postal Service were to venture into a successful, non-postal business, the innate desire for Congress to begin meddling with the business model and forcing the Postal Service to increase prices or reduce service levels would likely begin to hinder the profitability and viability of the business.

For more details, see the full report: The Strange Case of the Postal Service’s Disappearing Board and the Warning It Provides.

© 2016 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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