Privatize the Post Office, or Just Use Supply Chain Design?

Sigh. Nothing Has Changed Since My 1969 White House Internship

In what seems like déjà vu all over again, here we are arguing over privatizing the post office. Well, whatever the U.S. Postal Service winds up being, sound supply chain design principles should rule operations.

Not politics.

This time they should get it right. Because they didn’t in 1969 and 1970. I know. I was there.

Back then, I was a White House intern. Outdated equipment, the changing nature of transportation and increased mail volume buried post office operations. The post office was a cabinet-level department, like the Department of Commerce. A commission recommended creating an independent post office that would operate more like a business.

Reforms made the post office an independent agency under the executive branch. But the U.S. Postal Service still operates under political rules that no CEO would accept. Consequently, the agency has been bleeding money for years. And U.S. taxpayers foot the bill.

So, frankly, it doesn’t matter if the government privatizes the post office, puts it under the Commerce Department or comes up with some sort of third solution. Unless the people who run the post office are free to solve problems through an operational lens, nothing will change.

Political Rules Conflict with Post Office Operational Reality

Under the current system, no supply chain pro could operate a post office that works. Current Postmaster General Louis DeJoy, for example, is not incompetent. On the contrary, he’s a great supply chain guy.

DeJoy, who plans to leave, has improved service. He has worked to modernize a system to handle more parcels and fewer letters. In fact, according to NPR, the Postal Service made a $144 million profit in the first quarter of fiscal year 2025.

Despite that, the “company” we call the Postal Service predicts it will lose $6.9 billion in fiscal year 2025.

Why? Because political rules, not operational reality, bind DeJoy and every postmaster general before him.

Take delivery frequency. Congress has mandated that the USPS deliver mail at least once a day, six days a week, to every single address in the country. That might have made sense in the past, but in today’s world, it is a logistical nightmare.

So, if you’re on a farm five miles away from your neighbor, the postal worker has to drive way out there.

Think about the cost of gas. Consider the wear and tear on the delivery vehicle. Look at the carbon dioxide emissions. And now think about the time it takes to do this six days a week in rural Montana.

Contrast that with delivering mail to a condo or apartment building in downtown Manhattan:

1. Less gas
2. Less vehicle wear and tear
3. Fewer carbon dioxide emissions
4. Much less time

The U.S. Postal Service has to bear all four of those operational costs. No wonder it loses massive amounts of money.

No truly privatized post office would agree to those terms and operate that way. Sound supply chain design could deliver the mail much more cost-effectively.

3 Operational Changes Would Help

Three reforms would help.

First, the post office would deliver daily to urban areas and dense suburbs, where volume justifies the cost. But if you’re out in the boondocks, perhaps this county gets mail delivered Mondays and Thursdays. While this other county gets mail delivery Tuesdays and Fridays. Or, if you’re really off the grid, maybe you get mail once a week.

This simple adjustment alone would drastically reduce costs.

Second, there’s the issue of underutilized infrastructure. We could close rural post offices with little foot traffic, cutting real estate and personnel costs. Major retailers and ATMs already sell stamps, and most people receive packages from UPS, FedEx or Amazon anyway. The idea that every small crossroads needs a dedicated post office is outdated.

A third common-sense reform could integrate the U.S. Census with mail delivery.

It makes absolutely no sense to hire people every few years to trudge out into the hinterlands and ask people a bunch of questions. The government already sends people out there to deliver the mail. Have them handle the census, too. In fact, the mail delivery people probably know half the answers to the questions before they talk to their customers.

Labor costs decline. Data collection efficiency improves.

If you get out from under the political shackles, the U.S. Postal Service could minimize losses. It likely could turn a profit. That would shore up their finances, give financial security to the postal workers’ retirement system and quit draining the U.S. budget. Whether you privatize the post office or not.

Few Will Care about Less Frequent Mail Delivery

Now, are people in rural areas going to be unhappy about this? Some might.

But I don’t think most are going to care. Many of them already get packages every day from UPS, FedEx or Amazon. Those companies operate like privatized post offices for parcel delivery. And the people who get only a few packages probably moved to the boondocks because they don’t want to be bothered. They value their privacy.

I mean, our mailbox is almost 40 feet from my house. And some days we don’t even go get the mail. But we get a lot of stuff delivered directly to our door from online ordering. So, who cares?

And for those who do care, well, we all make choices in life. Each choice has its pluses and its minuses.

The air quality in rural Montana is far superior to the air quality in downtown Manhattan. If you like rural views instead of skyscrapers, you’re winning there. Some people love the concrete jungle and the nightlife. Others prefer to sit on a porch and watch the deer and elk roam by.

But a minus for rural life could be that you get your mail once, twice or three times a week. I don’t think that’s a dealbreaker for people who would rather live on the side of a mountain than in a downtown skyscraper or dense suburb.

An Aborted First Attempt at ‘Privatizing’ the Post Office

I’ve seen firsthand how we didn’t fix this mess decades ago. In 1969, I was a White House Fellow reporting to President Richard Nixon.

The postal system was a disaster, stuck using outdated equipment and still structured around railroad lines. Truck and air transport had largely replaced rail.

President Lyndon Johnson had already appointed the Kappel Commission to recommend reforms, and Nixon took up the cause. The commission’s solution? Transform the post office from a government department into an independent agency that could operate more like a business.

I spent part of my fellowship working at the post office. I pored through the four-volume Kappel Commission report to create an index that helped shape the government’s reform efforts. Like now, the aim then was to give the USPS the flexibility to run efficiently. Postmasters needed to set rates, invest in technology and make strategic operational decisions.

But politics never truly left the equation. As Ryan Ellis writes in Letters, Power Lines, and Other Dangerous Things: “Political expedience continually won out over sound business discretion and economic data.”

That was true in 1969 and 1970, and it’s still true today. Reform should have freed the Postal Service to operate like a business, using solid supply chain design. Instead, it remains bound by political constraints.

Even selecting the postmaster general became political. The Kappel Commission recommended that a Board of Governors select the postmaster general. Nixon didn’t like that. He wanted to pick the postmaster general and named a buddy of his, a construction guy out of Alabama.

A Privatized Postal Service Must Be Free to Work

The bottom line is this: It really does not matter how you rearrange an organization if you don’t pay attention to operations. Privatizing the post office won’t change anything if political rules remain. Neither will moving it under another department. Neither will making it a nonprofit or some other style of “organization.”

This time, let’s stop looking at the USPS through a political lens and start seeing it through an operational one. Then, supply chain management and supply chain design can take over.

If we do that, the Postal Service might finally be able to stand on its own without relying on taxpayer bailouts.

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