US Postal Service needs more autonomy

The U.S. Postal Service is hurt more than it is helped by its status as a government entity, the Federal Trade Commission said in a study released on Wednesday.
Federal constraints, such as restrictions on the postal service’s ability to manage its labor force and configure its network, increase its costs by an estimated USD 330 million to USD 782 million a year, the FTC found.
The FTC report recommended that Congress reduce constraints on the postal service, narrow the scope of its monopoly, and make the postal service’s competitive products division a separate corporate entity.
The service does enjoy a monopoly on the delivery of items such as personal letters, bills and advertisements.
The postal service also benefits from being exempt from certain state and local requirements such as taxes and licensing, it said. The FTC estimated the value of these implicit subsidies range from USD 39 million to USD 117 million a year for the postal service’s competitive products operations.
Overall, the FTC said the postal service’s government- related benefits and restrictions hurt the entire competitive mail industry by distorting the market.
Legal constraints cause the postal service to use more resources to create its products, but the higher costs are partially masked from consumers by the service’s legal advantages.
These distortions mean more resources are used to produce the current volume of mail products than is necessary.
The postal service, which handled 212 billion pieces of mail and earned nearly USD 75 billion in fiscal 2007, has struggled in recent years because of increased competition from commercial rivals such as FedEx Corp and United Parcel Service Inc and because of the growing use of the Internet.

The U.S. Postal Service is hurt more than it is helped by its status as a government entity, the Federal Trade Commission said in a study released on Wednesday.
Federal constraints, such as restrictions on the postal service’s ability to manage its labor force and configure its network, increase its costs by an estimated USD 330 million to USD 782 million a year, the FTC found.
The FTC report recommended that Congress reduce constraints on the postal service, narrow the scope of its monopoly, and make the postal service’s competitive products division a separate corporate entity.
The service does enjoy a monopoly on the delivery of items such as personal letters, bills and advertisements.
The postal service also benefits from being exempt from certain state and local requirements such as taxes and licensing, it said. The FTC estimated the value of these implicit subsidies range from USD 39 million to USD 117 million a year for the postal service’s competitive products operations.
Overall, the FTC said the postal service’s government- related benefits and restrictions hurt the entire competitive mail industry by distorting the market.
Legal constraints cause the postal service to use more resources to create its products, but the higher costs are partially masked from consumers by the service’s legal advantages.
These distortions mean more resources are used to produce the current volume of mail products than is necessary.
The postal service, which handled 212 billion pieces of mail and earned nearly USD 75 billion in fiscal 2007, has struggled in recent years because of increased competition from commercial rivals such as FedEx Corp and United Parcel Service Inc and because of the growing use of the Internet.