Post office pricing draws Trump’s ire
Amazon not charged nearly enough by money-losing agency, he tweets
President Donald Trump said the U.S. Postal Service should charge Amazon.com Inc. more to deliver packages, the latest in a series of public criticisms of the online retailer and its billionaire founder.
The post office “should be charging MUCH MORE” for package delivery, the president tweeted Friday from his Mar-a-Lago estate in Florida, where he’s spending the holidays.
“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” Trump asked his 45 million Twitter followers.
Trump regularly criticizes Amazon and its chief executive officer, Jeff Bezos, who also owns The Washington Post and is currently the world’s richest man. In August, Trump accused Amazon of causing “great damage” to taxpaying retailers, even though in April the Internet giant began collecting sales tax on the products it sells directly.
A sudden increase in Postal Service rates would cost Amazon about $2.6 billion a year, according to an April report by Citigroup. That report predicted that United Parcel Service Inc. and FedEx Corp. would also raise rates in response to a Postal Service increase.
Amazon didn’t respond to requests for comment.
Amazon regularly uses the Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at some 150 million residences and businesses daily. It has a network of more than 20 “sort centers” where customer packages are sorted by zip code, stacked on pallets and delivered to post offices for the final leg of delivery.
While full details of the agreement between Amazon and the Postal Service are unknown — the mail service is independently operated and strikes confidential deals with retailers — David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40 percent of Amazon’s volume the previous year. He estimated at the time that Amazon pays the Postal Service $2 per package, which is about half what it would pay UPS or FedEx.
Wal-Mart has introduced several shipping options this year in its efforts to speed up deliveries as it competes with Amazon.com.
The company announced early this year that it would begin offering free two-day shipping without a membership fee on orders of more than $35. The company also revealed in June that it was testing a service in which employees at a handful of stores could earn extra money by dropping off packages at the end of their store shifts. More recently, Wal-Mart acquired Parcel Inc., and the logistics company is offering sameday delivery on orders from Walmart.com and Jet.com in New York City.
The Postal Service reported a net loss of $2.1 billion in the third quarter of 2017 and
has $15 billion in outstanding debt. The service has lost $62 billion over the past decade.
The Postal Service’s chief financial officer, Joseph Corbett, wrote in a post for PostalReporter.com in August that the service is required by law to charge retailers at least enough to cover its delivery costs.
“The reason we continue to attract e-commerce customers and business partners is because our customers see the value of our predictable service, enhanced visibility, and competitive pricing,” he wrote.
He said Congress should pass provisions of legislation introduced last year by former U.S. Rep. Jason Chaffetz, a Utah Republican, that would allow the Postal Service to raise some rates and discontinue direct delivery to business customers’ doors.
Amazon is experimenting with a new delivery service of its own that is expected to see a broader rollout in the coming year. Under the program, Amazon would oversee the pickup and delivery of packages from warehouses of third-party merchants to their customers’ home addresses.
Despite the occasional anti-Amazon tweet, Trump is unlikely to target Amazon with any action, because the company is creating jobs by building new warehouses around the country. It’s also expected to generate 50,000 new positions with its second headquarters, said James Cakmak, analyst at Monness Crespi Hardt & Co.
“The interests of Amazon and the administration are largely aligned — even factoring the dislocation to retail — given the positive headline potential around new job creation with fulfillment centers and HQ2,” he said.