Lecture Notes: Feasibility of Selling USPS

Introduction

• Discussion on the feasibility of selling USPS (United States Postal Service).
• Comparison with previous privatization efforts like Royal Mail in 2016.
• Mention of the planned video brought by Parcel Pending by Quadient.

Background

• USPS is a large organization covering logistics, home delivery, and retail.
• Concerns about potential separation between delivery and retail components.

Privatization Considerations

• Pros:
  • Privatization removes taxpayer burden.
• Cons:
  • Service and cost issues may arise post-privatization.
  • Risk of transferring a "problem child" from public to private hands without solving existing issues.

Financial Challenges

• USPS reported a loss of $9.5 billion in 2024.
• Need to reduce losses significantly before considering privatization.
• Comparison with Royal Mail which did not have significant losses post-separation.

Market Challenges

• USPS faces competition from UPS and FedEx in the parcel space.
• 60% of US e-commerce handled through Amazon and its logistics network.

Structural Considerations

• Separation of Services:
  • Proposal to separate post offices (cash drain) from delivery services.
  • Potential value in splitting retail and delivery businesses.

Management Challenges

• Importance of strong management in making privatization or restructuring successful.
• USPS's bureaucratic structure and strong union presence add complexity.
• Postmaster DeJoy's efforts in leading a turnaround.

Cultural and Operational Factors

• The US still has significant mail volume, unlike some European markets.
• Cultural attachment to traditional mailing methods, like checks.

Conclusion

• Any decision (privatization, separation, retention) requires a strong management team.
• Future President Trump’s role in finding capable management.
• Complex process unlikely to happen quickly.

Final Remarks

• The importance of recognizing limitations in managing such a large and complex organization.