Reports indicate USPS is working with DOGE to focus on organizational improvements

Various reports published last week highlighted a letter sent to Congress by United States Postal Service (USPS) Postmaster General Louis DeJoy indicating that the USPS is eyeing cutting 10,000 employees through a voluntary retirement program, which the USPS announced in January, in the coming weeks, coupled with the USPS saying it will work with the White House’s Department of Government Efficiency (DOGE).

An Associated Press report noted that DOGE will work with the USPS to focus on “big problems” as the USPS has seen significant financial losses in recent years, adding that DOGE will also work with the USPS to identify and achieve “further efficiencies.”

The report added that in the letter USPS cited various issues it is dealing with, including mismanagement of the agency’s retirement assets and Workers’ Compensation Program, and regulatory requirements that the letter said are “restricting normal business practice.”

“DeJoy wrote in the letter that, “this is an effort aligned with our efforts, as while we have accomplished a great deal, there is much more to be done.”

This development follows two notable USPS-related events in recent weeks, including: DeJoy informing the USPS Board of Governors on February 18 that “it is time for them to begin the process of identifying his successor,” and reports that the White House intends to make major changes to the organization.

Regarding the latter, A Wall Street Journal report stated that President Trump will issue an executive order, in which members of the USPS governing board would be fired and also put the USPS under the direct control of the United States Department of Commerce. And a Washington Post report said that the board has retained outside counsel and gave “instructions to the White House if the president removed members of the board or attempt to alter the agency’s independent status.” But this development is far from a done deal, with reports citing the White House as saying that it has no plans to issue an executive order.

If the USPS were to be privatized, it could have a negative impact, particularly in rural areas, in the form of increased shipping costs, according to Helaine Rich, VP of Strategic Sales & Administration, for ePost Global.

“Many private carriers already rely on USPS for final-mile delivery in remote locations,” explained Rich. “If USPS were privatized, last-mile delivery would likely become more fragmented, with private carriers either absorbing those costs or shifting pricing models to account for them. The USPS also owns exclusive access to mailboxes, a significant advantage that could be lost under privatization, changing how deliveries are handled.”

What’s more, Rich observed that the parcel delivery market in the U.S. is already highly competitive, with major private carriers and regional delivery firms carving out cost-effective solutions in densely populated areas.

“If privatization happens, USPS would need to become more aggressive in pricing and service offerings to remain competitive, or it could be relegated to handling only residual parcel volumes, those that private carriers deem too costly,” she said. “Public-private partnerships could be a middle-ground solution, leveraging USPS infrastructure while allowing private companies to take over specific delivery segments.”

And unlike other countries that have privatized postal systems, Rich explained that the U.S. is unique, making a direct comparison difficult, as countries with smaller, more condensed populations have found privatization more feasible, while the U.S. has to contend with serving widely dispersed rural communities. In previous attempts at alternative routing strategies, USPS explored sending Priority Mail International through different channels rather than traditional postal routes, she noted.

“Any structural changes would require overcoming constitutional and legislative hurdles, making a full privatization unlikely in the near term,” she said. “However, portions of USPS operations. such as parcel delivery, could be carved out in a phased approach. Historically, USPS and private carriers like FedEx have partnered for certain services. Future models may follow a similar trajectory, where private firms handle certain deliveries while USPS retains a role in universal service obligations.”

As stated in the Federal Register, the USPS was created as an independent establishment of the executive branch by the Postal Reorganization Act, approved August 20, 1970. Even with that being the case, though, the Post report noted that taking the USPS private has been something Trump has been interested in, citing the competition it faces from UPS, FedEx, and Amazon, adding it is an idea that has generated interest for a while.

Feedback from parcel sector experts made it clear that there are a lot of moving parts when it comes to making a move of this magnitude, placing the USPS under the control of the Commerce Department and effectively end its status as an independent agency, given the size and scope of the USPS, as well as its well-documented financial challenges over the years.

“On the one hand, the USPS has lost over $100 billion since 2007,” said Rob Martinez, founder of San Diego-based parcel consultancy Shipware. “Placing the agency under the Commerce Department could enhance financial oversight and operational efficiency while streamlining decision making on prices, products, delivery standards, etc. However, it is not entirely fair to blame the USPS itself for its financial losses, as a significant portion of its deficit stems from the ill-conceived Postal Accountability and Enhancement Act (PAEA) of 2006. This law imposed an unprecedented requirement that the USPS pre-fund retiree health benefits for employees 75 years (!) into the future, something no other government agency or private company is required to do.”

Martinez stated that without this requirement, the USPS would likely have been operating at a modest profit or at least breaking even in many years.

Last month, the USPS issued fiscal first quarter earnings results, which saw some annual gains.

Operating revenue, at $22.499 billion, increased 4.1%, annually, paced by what the USPS called strategic price increases, as well as a strong political and election mailing season. Net income, at $144 million, marked a solid turnaround, compared a $2.1 billion net loss a year ago, largely driven by various strategic initiatives through the organization’s “Delivering for America” plan. Total quarterly volume, at 31.015 million pieces, rose 1.8% annually.