Privatization of the U.S. Postal Service would have wide-ranging effects on customers, employees, businesses, and our broader economy. This report focuses primarily on one nearly certain result: a dramatic increase in parcel delivery prices.
Unlike the for-profit carriers, the Postal Service has a universal service obligation. As outlined in multiple statutes, this requires USPS to provide affordable deliveries to all Americans, regardless of where they live or work. A recent Wells Fargo analysis indicates that USPS parcel pricing was approximately 25 percent to 60 percent below FedEx and UPS prices, depending on product type, in the fourth quarter of 2024.
Without competition from this public service, for-profit firms would jack up delivery fees on as many customers as possible. Who would be hit hardest? Most likely those who live or work in ZIP codes where private carriers already impose surcharges because deliveries to these addresses are less profitable.
Our analysis finds that UPS and FedEx area surcharges now apply to retail customers sending parcels to addresses in ZIP codes where 102 million Americans live. Not surprisingly, these include addresses in Hawaii, Alaska, and rural and remote areas. But they also include many small towns and neighborhoods just outside major cities. These higher delivery rates are just a taste of what would come if the Trump administration succeeds in privatizing USPS.
