Postal: What If the USPS Disappears?
Even mailer organizations are uncertain about privatization.
"I doubt America will ever decide on full privatization," says Hamilton Davison, president of American Catalog Mailers Association. "There are too many complications. However, the relentless demand of the marketplace is forever increasing efficiency and value. Unless the Postal Service responds to this challenge, greater outsourcing, or even licensing, of its functions to third parties is a realistic alternative."
The Direct Marketing Association concurs. "I believe it will be very difficult to privatize USPS at the moment," said Peggy Hudson, EVP of government affairs for the DMA. "It is a $60-plus billion annual operation, but it is facing declining demand. That declining demand forecast makes it difficult to see USPS privatized, or at least the 'universal service USPS' that has been a staple of the U.S. for its entire history."
The 'U Word' Is Important, Too
Universal service is the everyday delivery of mail to all delivery points served by the USPS—nearly 153 million delivery points in 2013, up more than 700,000 last year alone. What constitutes "universal service" most unlikely will be different in five years' or 10 years' time, say postal watchers.
"Assuring affordable universal service should be a top priority for the USPS," says Paul Ercolino, president of U.S. Monitor, "but the Postal Service must be allowed to meet the evolving needs of the American economy and to set its prices in a way that reflects the cost structure of the delivery industry."
"I cannot imagine remote areas of the U.S. being as connected as the urban U.S. in 2025," Hudson says. "Thus, there must be some form of universal service. Moreover, with online and mobile purchasing increasing, universal product delivery will continue to be demanded by Americans."
Parcel delivery is indeed one of the bright spots in USPS business and finances, as the Postal Service continues to gain market share from private couriers, such as FedEx and UPS. As e-commerce has grown, so has the demand for affordable, reliable and efficient fulfillment.