• Governments have established widely different postal models — combinations of public missions, commercial freedoms, privileges, and legal statuses — designed to enable postal operators to meet their obligations and operate in a financially sustainable manner.  

• The legal status of most postal operators ranges from government-owned enterprise to private corporation. Although private corporations, many posts are still fully or partially owned by government — very few are fully privatized.

• While U.S. law grants the Postal Service more flexibility to set service standards, several aspects of the Universal Service Obligation (USO) are more constraining than many other posts, including a wider scope of universal services and a six-day delivery requirement.

• USPS faces more business restrictions than most other posts, especially when it comes to borrowing funds, managing pension obligations, and diversifying outside the core postal business. 

• About half of the sampled foreign posts were loss-making in 2023. Diversification and business agility are the main drivers of profitability.

• To restore financial sustainability, some posts seek USO reform or funding from government[, while USPS focuses on getting more business flexibilities.

• Ultimately, no postal model can ensure sustained long-term success without continuous adjustments to evolving societal and market conditions.  

In this white paper, the OIG compared postal models across a selection of 26 posts: the U.S. Postal Service and 25 foreign national postal operators. While the Postal Service operates under a unique model that combines flexibility in meeting universal service obligations (USO) with significant constraints (such as stricter pricing regulations, mandated six-day delivery, and limited diversification), many foreign posts enjoy greater commercial freedom.

The posts in our sample that operate as private entities — including the Postal Service — generally have greater commercial freedom than government-owned posts to streamline costs, optimize workforce size and composition, and manage capital investments. For example, most posts have more flexibility than the Postal Service in managing employment-based postal pension funds and determining how to diversify investments of retiree assets.

Like the Postal Service, many international posts face a challenging postal market and uncertain path to long-term financial resilience. Posts that have diversified, either within the parcel and logistics sector or in other business areas, tend to be more profitable as they can offset the declining or negative profitability of mail. Profitability, however, is not the sole indicator of a postal model’s relevance, which also hinges on the post’s contribution to a country’s economic development and social inclusion.

In response to current challenges, most postal operators seek improvements to their existing models. They streamline operations, expand into markets adjacent to postal services, and seek legislative reforms to alleviate regulatory and financial burdens. To support the USO and other public service missions, some posts — such as those in the European Union, UK, Australia, Canada — are pursuing a relaxation of their USO requirements or funding from governments. Meanwhile, USPS is focusing on gaining more business flexibilities.

The relevance of each postal model hinges on the ability of posts and governments to adjust their model to evolving societal needs and market conditions. In practice, no postal model can ensure sustained long-term success without continuous adjustments.

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 Jean-Philippe Ducasse, Aaron Anfinson, Tristan Dreisbach, William Kimball, and Priscilla Lee contributed to this report.

Read full White Paper:

Source: USPS OIG