United States Postal Service Legalized Monopoly

Especially in urban cities buzzing with the latest technology, many would agree that, “you don’t need a full-service post office every few blocks in New York, for example” (Source A). In addition, I spend every summer with my dad in Chicago, and because there is a USPS post office right around the corner of our apartment building, I have noticed from passing it every day that it is the one store on State Street that is empty 90 percent of the time. In my experience, Postmaster General John Potter is correct in wanting to “close and consolidate 154 post offices”, significantly reducing operating costs and employment. Strategy is key; by shutting down the offices with the lowest production and necessity, USPS will no longer be uselessly spending money.

There is still a need for the United States Postal Service (USPS) today then just as anytime during the history of the United States. The USPS provides valuable and equitable services to all Americans everywhere in the United States, regardless of distance from their nearest post office. “Universal Service” a key term provided in an article by the Bloomberg Business week journal, describes what the USPS provides. The cost of delivering mail in rural communities is much higher than in urban areas. The USPS chief executive officer stated “You cannot charge 46 cents to deliver a letter by snowmobile in Alaska and make it work” (Bloomberg Business, 2014). Privatization of the USPS would possibly cause regional price differences that can place many Americans in rural areas at a

The case started on January 19, 2000 when UPS served a Notice of Intent to Submit a Claim to Arbitration to the Government of Canada for a breach of certain obligations under the North American Free Trade Agreement (NAFTA) (Notice of Intent, 2000). The real conflict is between UPS and Canada Post, where UPS alleges that they participated in anti-competitive practices that are illegal. Canada Post Corporation was formed under the Canada Post Corporation Act in 1981. They have the exclusive rights of operating a postal service in Canada, having a monopoly in letter mail (Notice of Intent, 2000) Canada Post expanded into the courier business through Purolator, Priority Courier, Skypak, and Xpresspost. It dominates the Canadian market with control of almost 50% of the courier business in Canada. As Canada Post is a state enterprise under the Government of Canada, the government is thus expected to regulate and ensure that Canada Post does not conduct any unfair business practices.

If the mail monopoly were removed, then private companies would quickly gain control of the most profitable routes, leaving the postal service with universal obligations but no profits and therefore no funding with which to serve these routes. Many economists have challenged this urban to rural subsidy. In a testimony to the President’s Commission, Robert H. Cohen, an economist and the Director of Office of Rates at the USPS, demonstrated evidence that universal service does not depend on a postal monopoly. In regards to the urban to rural cross subsidy, Cohen (2003) claimed that “the proportion of unprofitable routes in the U.S. is approximately the same for urban and rural areas” (pg.2). Cohen conducted this study by examining “rural carrier routes” and created a list of these routes ordered by the number of mail boxes delivered per mile of the route (pg. 14). Since these rural routes inevitably include some urban routes as well, Cohen (2003) only looked at the bottom 60% of his list, or those routes which deliver the least amount of mail (pg.14). He found that of these routes, 53.1% are profitable and 46.9% are unprofitable earning a total profit of $175 million in 1999 (pg. 14). In comparison, 56.5% of the urban routes that he looked at were profitable and 43.5% were unprofitable earning a total profit of

In Daniel Stone’s editorial article, “Flying Like an Eagle”, he advises the USPS some guidance to boost up their profit and their usage to the community. One of his inputs on the

The Post Office Department known as the United States Postal Services (USPS) (Annual Report, 2009) today, is a dominate player in the mail delivery arena and has been existence since 1776. The Post Office was originally a governmental agency, but due to mismanagement by Congress, was reorganized in 1971 and no longer a part of the presidential cabinet; but became an independent establishment of the executive branch of the Government. To date, the USPS maintains a monopoly on the day-to-day delivery of mail but competitors do share the market on some of the other types of deliveries; shares the market on some of the other types of deliveries (i.e. express

If you ask people his/her opinion on the USPS system, many would agree that they could improve their ways, I agree with those people. The USPS was once this propitious system, but it is now very flawed. The USPS is allowing junk mail to enter our mailboxes without our permission and then leaves us no options to get out of it. Overall, the USPS system has no idea what they are doing because they are losing revenue over simple problems, with simple solutions.

Congress also imposes various obligations on the USPS, like delivering mail at uniform price throughout the nation, that only make the USPS financial situation worse. While residents see these price guarantees as a benefit, the uniform price guarantee only adds to the financial strain. Now competitors, UPS and FedEx, are providing competition on package delivery services that the USPS cannot compete with, because of Congress, creating greater revenue losses. One of very few benefits the USPS receives from its association with congress is its monopoly over first class and standard mail. With increasing technological advancements that allow Americans bypass the USPS all together makes the USPS monopoly over first class and standard mail delivery obsolete, making Congress even more of an obstacle. Other countries who have repealed the monopoly of their mail services, like New Zealand and Sweden, have shown this competition to be beneficial. The EU moved in 2008 to eliminate monopolies of mail services by 2013 in all member states. Without this monopoly in the United States, other first class and standard mail service companies would be able to participate in the market and perhaps do it more efficiently, driving the USPS towards efficiency also. Also, by privatizing the USPS it would allow the USPS to diversify and expand

To many individuals, this is traditionally seen as a bureaucratic problem; however, personally I do not believe that the problem is purely the result of public sector negligence. Like many government services, it is more likely that the answer lies in serious reform rather than complete suspension. Interestingly, I located an article about the nonprofit - National Academy of Public Administration – that suggested a kind of public/private hybrid approach to fix the USPS’s difficulties. The concept entails “farming out” much of the behind the scenes process while a federal letter carrier would still handle front-line delivery services.

There are few remaining monopolies today. Apple and Wal-Mart are both world-renowned monopolies. Another monopoly is the United States Postal Service. The United States Postal Service is a natural monopoly in the delivery of first class mail, as 1970’s legislation prevents any other firms from delivering letter mail. The reason for this was to allow one firm to specialize in mail delivery; therefore being the most efficient way to ensure the rest of the country received their mail on time. After all, receiving mail in a timely manner is critical for society to function. Imagine if everyone received their bills and letters weeks late? However, the USPS has begun to face a dilemma in recent years, in that it is seeing a sharp decline in revenue. Critics have called for several methods to help the USPS cut its losses, one of which being privatization.

Another growing idea is the privatization of USPS and the removal of its monopoly on mail delivery. It seems the ultimate goal of this would be alleviating the government’s hold on the Post Office altogether, therefore reduce any burden that it has. Perhaps it would also allow the Post Office to expand its services in order to meet the growing needs of consumers and adapt to the

In the past there was no thing as overnight express delivery for packages or freight. Then the top 3 competitors in the delivery service industry that held 85% of the market were Airborne Express (AE), United Parcel Service (UPS) and Federal Express (FedEx) and, the remaining market share was among six second-tier companies. In the past few years, the express mail businesses had grown extremely fast due to the ability to provide and fulfill overnight shipping accompanied by next-morning delivery services for both individuals and businesses customers. By 1996, this segment of the expedited shipment delivery had grown to a $16-17 billion dollar industry business in the US alone.

The USPS is at a point where it does not have the financing available to maintain its operations. One reason for the annual net losses is due to the declining rate of first-class mail. The second reason has to do with the required prepayment of $5.5 billion per year toward retirees’ healthcare costs. In order for the USPS to overcome this deficit, they will need to consider their short time frame, government restrictions and labor union backfire in considering the best alternative. One alternative would be to privatize postal services operations which would allow the USPS to change its pricing structure, yet it would potentially significantly reduce market share. A second alternative would be to undergo a system-wide

The goal of The United States Postal Service is to create “a free flow of information between citizens and their governemnt as a cornerstone of freedom, often spoke of a nation bound together by a system of postal roads and post offices.” (Longley 2013) Postal offices are forbidden to open any letters unless it is undelieverbale. The United States Postal Service (USPS) is resposible for providing postal services for the United States to all Americans no matter the geographical location. The United States Postal Service is an independent agency of the United States federal government that was

USPS should consider shifting part of its mail volume to rail. By making this change it has been estimated that USPS could save at least $100 million per year. Additionally, “because of its lesser sensitivity to fuel price increases and greater control of its own infrastructure, rail transportation has major, long-term strategic advantages over highway” (Berman, 2012).