So where are the market forces that make USPS become more efficient and allow it to be competent?

Isn't it fundamental proposition of the Republican party - "Small government"

I am genuinely curious, who put a gun to USPS head and asked it to lose money on every package delivered?

They could have increased their prices. But that would mean losing business from Amazon, which, in a "small government" system go to more efficient and competitive players.