By Tomasz Szymanski @

The United States Postal Service just reached an agreement to borrow $10 billion from the U.S. Treasury. The USPS is on an unsustainable track.

Declines in first-class and marketing mail volumes are pointed to as the cause. Higher e-commerce deliveries that are more expensive to process are also cited as a culprit.

The real problem here is there is no incentive to innovate or drive productivity and efficiency. Privatization via a concession with requirements for delivery set by the federal government looks like a sensible way forward.

The Wall Street Journal‘s Paul Keirnan and Paul Ziobro discuss other measures the administration is looking at to rein in the USPS:

In a statement Wednesday, Postmaster General Louis DeJoy said the Postal Service “remains on an unsustainable path” and that the Treasury loan “will delay the approaching liquidity crisis.” Details of the loan have yet to be worked out, the Treasury said.

“I look forward to continuing to work with Postmaster General DeJoy to fulfill the President’s goal of establishing a sustainable business model under which USPS can continue to provide necessary mail service for all Americans, without shifting costs to taxpayers,” Treasury Secretary Steven Mnuchin said in a statement.

Mr. DeJoy, a North Carolina businessman and Republican donor, has taken a harder look at ways the Postal Service can cut costs and operate more efficiently. Since starting the job last month, he has called for a closer scrutiny of overtime and transportation costs, even if it means that some mail is left behind before trucks leave, according to a memo earlier this month that was reviewed by The Wall Street Journal.

Mr. DeJoy earlier this week pointed to billions of dollars spent last year on overtime and other extra costs without a significant improvement in service levels.

“We will continue to focus on improving operational efficiency and pursuing other reforms in order to put the Postal Service on a trajectory for long-term financial stability,” he said in Wednesday’s statement.

Read more here.