Royal Mail Provides a Model for USPS

NEW YORK ( TheStreet) -- While in Sheffield, England recently, I decided to mail our vacation presents back home rather than hauling them on the plane. So we visited the Royal Mail.

We didn't go to a stale government office, but to a brightly lit section of a local department store, which is open during store hours, not just during mail hours. The people there were very friendly. Even the other customers were nice.

We learned the Royal Mail does a lot more than send letters.

It helps develop and produce mailers and leaflets. It cleans and maintains mailing lists. It handles business mail accounts online. You can even have the Royal Mail hold your mail while you're away, instead of having the neighbor's kids paw through it.

All this was in place long before the government decided to sell off about half of the operation, valuing it at $4-$5 billion according to the BBC (although some estimates are higher), and retaining a stake of about 40%.

The Royal Mail, it is said, is even profitable.

Meanwhile, the U.S. Postal Service is planning yet another price hike, this one to 49 cents per first-class stamp. Like previous hikes, this has to go before government regulators. The mail service said it needs the $2 billion hike because it will lose $6 billion this year. It will also want to cut the number of offices, and reduce delivery schedules.

(Although the USPS is an independent agency of the federal government, for decades it has received very little in taxpayer money. It receives $100 million a year -- less than 1% of its annual budget -- from Washington to cover free mailing privileges for the blind and overseas voters, according to Politifact.)

The contrast between my local post office and the Royal Mail offices could not be more stark. The services here are very limited, the office itself is dusty, the employees concerned mostly about their jobs and pensions.

All this changed my own mind about privatizing our postal service. Now I'm all for it.

This has nothing to do with cutting workers' wages or reducing services. Just the opposite.

A private U.S. Postal Service could dramatically expand the range of services it offers. It could sell off much of its real estate and rent offices in local department stores. It could do more than just process passport applications and sell money orders . It could become a bank or a small business' international trade office.

Federal Express ( FDX) and UPS ( UPS) could use that competition.

These two big shippers now have retail arms. FedEx bought the old Kinko's copying chain and UPS bought Mail Boxes Etc. But frankly, those offices are about as friendly as the post office. They're nothing like the Royal Mail.

Japan's postal service, which is owned by the Ministry of Finance but run more like a private company, shows how far a privatized postal service -- or a partly privatized one -- could go. Japan Post is among the country's largest bank and insurance conglomerates.

What exactly a private U.S. Postal Service could do is open to debate. We think of it as an essential government service, but its services are limited by that view that they're essential.

And FedEx and UPS might wind up better companies if the Postal Service was privatized. How much better might those two companies be if they were facing a more direct threat from a private Postal Service unbound by old-fashioned notions of what it had to do, one that could do anything its managers thought it could make money doing?

At the time of publication, the author owned no shares in companies mentioned here.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Dana Blankenhorn has been a business journalist since 1978, and a tech reporter since 1982. His specialty has been getting to the future ahead of the crowd, then leaving before success arrived. That meant covering the Internet in 1985, e-commerce in 1994, the Internet of Things in 2005, open source in 2005 and, since 2010, renewable energy. He has written for every medium from newspapers and magazines to Web sites, from books to blogs. He still seeks tomorrow from his Craftsman home in Atlanta.

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