Tags: Trump Administration | trump | amazon | postal service | rates

Trump Blasts Money-Losing Postal Service: Low Rates 'Making Amazon Richer'

Image: Trump Blasts Money-Losing Postal Service: Low Rates 'Making Amazon Richer'
(Reuters)

By    |   Friday, 29 Dec 2017 09:05 AM

President Donald Trump on Friday targeted online retailer Amazon in a call for the country's postal service to raise prices of shipments in order to recoup costs.

"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? Should be charging MUCH MORE!" Trump wrote in a post on Twitter.

The post office has lost money for 11 straight years, mostly because of pension and health care costs. While online shopping has led to growth in its package-delivery business, that hasn't offset declines in first-class mail.

Federal regulators moved recently to allow bigger jumps to stamp prices beyond the rate of inflation, which could eventually increase companies' shipping rates.

Trump has regularly criticized Amazon from his Twitter account and targeted Chief Executive Officer Jeff Bezos, who also owns the Washington Post newspaper and is currently the world’s richest man with an estimated net worth of $100 billion. In August, Trump accused the company of causing “great damage to tax paying retailers,” even though the internet giant began collecting sales tax on products it sells directly in April.

As with prior missives targeting the company, Trump’s message appeared to concern investors. Amazon stock was positive in premarket trading on Friday and then fell as much as 0.6 percent after Trump’s post to Twitter. It was down 0.35 percent shortly before 9 a.m.

Amazon regularly uses the U.S. 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.

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 USPS $2 per package, which is about half what it would pay UPS and FedEx.

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 last decade.

Amazon has been experimenting with a new delivery service of its own that is expected to see a broader roll-out in the coming year. Under the program, Amazon would oversee the pickup of packages from warehouses of third-party merchants and the delivery to home addresses.

This report contains material from Reuters, Bloomberg, and The Associated Press.

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President Donald Trump on Friday targeted online retailer Amazon in a call for the country's postal service to raise prices of shipments in order to recoup costs.Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and...
trump, amazon, postal service, rates
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2017-05-29
Friday, 29 Dec 2017 09:05 AM
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