Whether through privatization or incremental reform, USPS’s parcel business is under pressure to become more efficient—and more expensive. Image: Trevor Bexon/Shutterstock.com
By: FEDweek StaffThe Postal Service Board of Governors has announced it retained executive search firm Egon Zehnder to find the next Postmaster General. The search comes amid a “directed” partnership with GSA and Elon Musk’s Department of Government Efficiency, announced by previous postmaster general Louis Dejoy just days before his resignation. Musk and President Trump have previously suggested the USPS could be privatized, leading some to view the Postmaster search as an opening to embark on that process.
What might that process look like? An analyst note from Wells Fargo lays out one such path from an investor standpoint, but while privatization could unlock real estate value and drive parcel price increases that benefit commercial carriers, political and labor obstacles remain formidable.
The February 2025 Wells Fargo paper considers splitting USPS into two entities: maintaining mail delivery as a government-run service to fulfill the universal service obligation (USO), while spinning off parcel operations as a profit-driven private entity. Wells Fargo estimates parcel prices would need to rise 30–140% for USPS to generate standalone profitability — bringing them closer to FedEx and UPS rates. The note also points to the agency’s vast real estate portfolio, potentially worth up to $88 billion, as a means to finance a transformation.
However, that vision is fiercely opposed by postal unions and has bipartisan opposition in Congress. The American Postal Workers Union argues privatization would result in service cuts, job losses, and higher costs. “Privatization – selling the Postal Service to private corporations – could happen in a few different ways,” said APWU President Mark Dimondstein. “It might mean a big sell off of the whole USPS to the private sector. It could mean splitting the network into two or three pieces – selling off the most profitable parts to corporations, while leaving the rest to fail. It could even mean contracting out most of the network.”
On March 27, the Senate passed a non-binding resolution (S. Res. 147) that “expresses the sense of the Senate” opposing USPS privatization. The resolution emphasized the Postal Service’s unique role in binding the nation together—especially in rural communities. A similar House resolution (H. Res. 70) has gained at least 194 co-sponsors, about a dozen of them Republicans.
Short of a change in the law so USPS could be privatized, reform ideas include pension investment reform (so retirement assets can be actively invested, not just limited to fixed income – which could mean higher returns as well as bank fees), shrinking the mission to mail delivery only (end to retail, parcel, and potential for banking), eliminating pensions for new employees (defined contribution plans only), weakening unions and leveraging automation and AI.
Dejoy, through his Delivering for America plan, championed many reforms and ran up against formidable challenges. On leaving, he said he welcomed help with several “intractable” challenges facing the sprawling organization, and the eventual 76th Postmaster General of the United States:
Mismanagement of self-funded retirement assets and the actuarial miscalculations of our retirement obligations; Functions that reside within OPM and Treasury and costing USPS several billion dollars per year.
Mismanagement of the Workers’ Compensation Program resulting in approximately $400 million dollars a year in excessive charges; Administered by the Department of Labor. (Unfunded mandates imposed by legislation costing billions per year.)
Burdensome regulatory requirements – “The Postal Regulatory Commission is an unnecessary agency that has inflicted over $50 billion in damage to the Postal Service by administering defective pricing models and decades old bureaucratic processes that encumber the Postal Service.”
Whether the new appointee advances DeJoy’s reform agenda, embraces more radical restructuring, or more closely hews to current law and practice remains to be seen. What’s clear is that he or she will be entering a system facing fiscal strain, evolving logistics demands, and competing visions of public service and privatization.
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