Table of Contents

Handbook of Worldwide Postal Reform

Handbook of Worldwide Postal Reform

Advances in Regulatory Economics series

Edited by Michael A. Crew, Paul R. Kleindofer and James I. Campbell Jr

The postal and delivery sector has been the subject of considerable interest in recent years. This Handbook brings together a number of contributions directed at understanding developments in the field of postal reform. The authors review the experience and plans of individual countries to provide some perspective on the problems faced in the area and the varied approaches being taken to address it. They also review key elements of policy and strategy that are important in this debate.

Chapter 8: Reform of the United States Postal Service: An Unfinished Task

Michael A. Crew and Paul R. Kleindorfer

Subjects: economics and finance, public sector economics


8. Reform of the United States Postal Service: an unfinished task Michael A. Crew† and Paul R. Kleindorfer‡ 1. INTRODUCTION: PROBLEMS FACING THE UNITED STATES POSTAL SERVICE The United States Postal Service (USPS) faces substantial long-term challenges. Its traditional markets are declining, and its ability to reduce costs is limited by its organization structure. Many other countries have experienced similar problems with their postal services. Some, like Sweden and New Zealand, have attempted to address them through ‘commercialization’, a process of restructuring that retains ownership by the government but introduces modern corporate accounting, management and labor compensation, marketing, employment, capital investment and financial practices. Germany, the Netherlands and Austria have gone beyond commercialization, privatizing their postal system. The evidence from abroad suggests that both commercialization and privatization have tended to generate economic benefits, creating more flexible and efficient postal delivery systems and thereby typically reducing prices to large mailers (Table 8.1). The United States is now a surprising outlier among advanced countries in failing to undertake significant structural reform of its postal service. The Postal Accountability and Enhancement Act of 2006 (HR 6407) (PAEA) takes very modest steps by the standards of other countries embarking on postal reform toward commercializing USPS. Whether they will be beneficial and address the problems facing USPS is far from clear. More likely, the solution to these problems is to be found in privatization for three reasons. First, although USPS accounts for roughly a third of federal civilian employment, there...

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