Postal Reform for the Digital Age

June 3, 2013

WASHINGTON - (June 3, 2013) The U.S. Postal Service (USPS) is in crisis, after losing almost $30 billion in the last three years and exhausting its $15 billion federal borrowing authority. Tinkering around the edges won't save USPS. Fundamental changes to the postal model itself are required.
 
"Postal Reform for the Digital Age," a new report by the Information Technology and Innovation Foundation (ITIF), seeks to address the challenges the USPS faces by recommending a new paradigm for the mail system where the Postal Service evolves into predominately a "final mile" mail delivery service, with private competitors assuming responsibility for other aspects of the production chain, including collection, processing, and transport.
"As the Internet has transformed how we communicate, from E-cards to electronic bill payment to document transfer, the traditional postal model is outmoded," notes Robert Atkinson, President of ITIF and author of the report. "Continued digital migration will mean continued financial challenges for USPS unless Congress drives systemic reforms that allow the Postal Service to focus on what it does best, delivering the mail, with all other services opened up to competition."
To accomplish this transformation, Congress should require the USPS to work with the Postal Regulatory Commission, which sets mail rates, to establish a delivery price for final route sort and delivery, including for first class mail. Congress should also give USPS greater authority to close facilities including post offices, reduce delivery days, and lay off workers.
Under this new system, private companies, such as Fed Ex or UPS would be able to bid for transportation and sorting contracts and regional centers, while drop off locations in places like pharmacies would replace underutilized Post Offices.  
"Some advocates have argued that the Postal Service can be saved by allowing USPS to get into new lines of business or by providing government subsidies, while others have argued the entire system should be privatized. Neither of these is in the best interests of taxpayers," Atkinson adds. "We should ensure that all citizens have access to mail delivery, something the USPS does best, but also recognize that in the digital era the Postal Service as it now exists needs to be systemically transformed."

WASHINGTON - (June 3, 2013) The U.S. Postal Service (USPS) is in crisis, after losing almost $30 billion in the last three years and exhausting its $15 billion federal borrowing authority. Tinkering around the edges won't save USPS. Fundamental changes to the postal model itself are required. "Postal Reform for the Digital Age," a new report by the Information Technology and Innovation Foundation (ITIF), seeks to address the challenges the USPS faces by recommending a new paradigm for the mail system where the Postal Service evolves into predominately a "final mile" mail delivery service, with private competitors assuming responsibility for other aspects of the production chain, including collection, processing, and transport.

"As the Internet has transformed how we communicate, from E-cards to electronic bill payment to document transfer, the traditional postal model is outmoded," notes Robert Atkinson, President of ITIF and author of the report. "Continued digital migration will mean continued financial challenges for USPS unless Congress drives systemic reforms that allow the Postal Service to focus on what it does best, delivering the mail, with all other services opened up to competition."

To accomplish this transformation, Congress should require the USPS to work with the Postal Regulatory Commission, which sets mail rates, to establish a delivery price for final route sort and delivery, including for first class mail. Congress should also give USPS greater authority to close facilities including post offices, reduce delivery days, and lay off workers.

Under this new system, private companies, such as Fed Ex or UPS would be able to bid for transportation and sorting contracts and regional centers, while drop off locations in places like pharmacies would replace underutilized Post Offices.  
"Some advocates have argued that the Postal Service can be saved by allowing USPS to get into new lines of business or by providing government subsidies, while others have argued the entire system should be privatized. Neither of these is in the best interests of taxpayers," Atkinson adds. "We should ensure that all citizens have access to mail delivery, something the USPS does best, but also recognize that in the digital era the Postal Service as it now exists needs to be systemically transformed."

Read the report.

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The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at www.itif.org.