The U.S. Postal Service forecasts a loss of $14 billion in 2012.
A paper from the Institute for Research on the Economics of Taxation – Most Foreign Postal Services are Profitable, The U.S. Postal Service Lags. Executive Summary:
The U.S. Postal Service has lost over $25 billion since fiscal year 2006, with deficits of $8.5 billion in 2010 and $5.1 billion in 2011. It forecasts a $14 billion loss in 2012.
Have postal operators in other countries struggled as much financially as the U.S. Postal Service? They have also faced the challenges of electronic diversion, which is occurring worldwide, and the last recession, which rocked much of the world.
For a broad perspective, this study uses financial data that an international postal agency, the Universal Postal Union (UPU), collects on postal operators in most countries and some territories. The study examines the period from 2007 to 2010 (the last year in the UPU data set). For comparability to the U.S. Postal Service, the emphasis is on postal operators in high-income jurisdictions.
UPU data indicate that, in each year, the majority of posts in high-income jurisdictions were profitable. Declining mail demand was stressful, though: the share of posts reporting losses increased from less than one in ten in 2007 to more than one in three in 2010. Nevertheless, few posts lost money consistently: under 20% over the period 2008-2010 and under 10% over the period 2007-2008, which suggests most foreign posts reacted quickly and effectively to financial setbacks. The good news is that posts can adjust to change and remain financially viable. Unfortunately, USPS is among the posts with consistent losses.
Further, UPU data show that, in each year, more than half the reporting posts in medium-income jurisdictions were profitable. Few spilled red ink year after year.
This study’s findings are simultaneously heartening and discouraging. Foreign evidence demonstrates that postal services can continue to deliver the mail and supply the public with postal access while remaining financially viable. The results are disturbing, however, because they emphasize that although the U.S. Postal Service is among the world’s great postal services in many respects, it is badly underperfoming most others financially. A future paper will analyze why the U.S. Postal Service has been less successful financially than all but a few foreign posts and suggest some potential remedies.
It may be time to wrap up the USPS. As a general rule, when in doubt, the private sector can do it better.
hat tip CARPE DIEM