This week a task force commissioned by President Trump to evaluate the United States Postal Service operations suggested a range of options for the Postal Service to become financially sound.
Treasury Secretary Steven Mnuchin said the report contains achievable recommendations and warns “The USPS is on an unsustainable financial path which poses significant financial risk to American taxpayers.”
One of options mentioned may impact small business online retailers directly as the report recommends the Postal Service develop a new pricing model based on market-based prices for mail and packages not deemed to be “essential services.”
Previously, President Trump has often lamented about USPS “subsidizing” Amazon, but the financial data actually shows that parcel delivery is the one spot of revenue growth for USPS.
The financial problems at the USPS are a combination of issues that range from fully pre-funded pensions funds (not even typical for other federal agencies) to an outdated logistics network optimized for flat mail.
As a government-owned corporation, the Postal Service operates without direct tax payer funds. However, to keep operations going, USPS has been borrowing money from the US Treasury which if it were to default would cost taxpayers money.
Few people will argue that the Postal Service needs reform. Under the current administration there is a push to “corporate responsibility,” but Congress controls much of what USPS can do.
Amazon is developing their own logistics delivery network. Therefore, even if the Postal Service where to dramatically raise prices, the giant online retailer would likely shift more deliveries to its own network to contain costs.
This option does not exist for small online businesses. Many favor using the Postal Service over UPS or FedEx as shipping rates are usually less with USPS.
What is your take on the USPS? Please use the comments section below or head over to our Facebook Group for Small Business Sellers and interact with other small business owners.