Trump wants Postal Service to charge ‘much more’ for Amazon shipments

U.S. President Donald Trump departs the White House in Washington
U.S. President Donald Trump departs for holiday travel to his Mar-a-Lago estate in Florida, from the White House in Washington, U.S. December 22, 2017. REUTERS/Jonathan Ernst

December 30, 2017

By Eric M. Johnson and Makini Brice

SEATTLE/WASHINGTON (Reuters) – President Donald Trump called on the U.S. Postal Service on Friday to charge “much more” to ship packages for Amazon <AMZN.O>, picking another fight with an online retail giant he has criticized in the past.

“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 on Twitter.

The president’s tweet drew fresh attention to the fragile finances of the Postal Service at a time when tens of millions of parcels have just been shipped all over the country for the holiday season.

The U.S. Postal Service, which runs at a big loss, is an independent agency within the federal government and does not receive tax dollars for operating expenses, according to its website.

Package delivery has become an increasingly important part of its business as the Internet has led to a sharp decline in the amount of first-class letters.

The president does not determine postal rates. They are set by the Postal Regulatory Commission, an independent government agency with commissioners selected by the president from both political parties. That panel raised prices on packages by almost 2 percent in November.

Amazon was founded by Jeff Bezos, who remains the chief executive officer of the retail company and is the richest person in the world, according to Bloomberg News. Bezos also owns The Washington Post, a newspaper Trump has repeatedly railed against in his criticisms of the news media.

In tweets over the past year, Trump has said the “Amazon Washington Post” fabricated stories. He has said Amazon does not pay sales tax, which is not true, and so hurts other retailers, part of a pattern by the former businessman and reality television host of periodically turning his ire on big American companies since he took office in January.

Daniel Ives, a research analyst at GBH Insights, said Trump’s comment could be taken as a warning to the retail giant. However, he said he was not concerned for Amazon.

“We do not see any price hikes in the future. However, that is a risk that Amazon is clearly aware of and (it) is building out its distribution (system) aggressively,” he said.

Amazon has shown interest in the past in shifting into its own delivery service, including testing drones for deliveries. In 2015, the company spent $11.5 billion on shipping, 46 percent of its total operating expenses that year.

Amazon shares were down 0.86 percent to $1,175.90 by early afternoon. Overall, U.S. stock prices were down slightly on Friday.

MILLIONS OF PARCELS

Satish Jindel, president of ShipMatrix Inc, which analyzes shipping data, disputed the idea that the Postal Service charges less than United Parcel Service Inc <UPS.N> and FedEx Corp <FDX.N>, the other biggest players in the parcel delivery business in the United States.

Many customers get lower rates from UPS and FedEx than they would get from the post office for comparable services, he said.

The Postal Service delivers about 62 percent of Amazon packages, for about 3.5 to 4 million a day during the current peak year-end holiday shipping season, Jindel said. The Seattle-based company and the post office have an agreement in which mail carriers take Amazon packages on the last leg of their journeys, from post offices to customers’ doorsteps.

Amazon’s No. 2 carrier is UPS, at 21 percent, and FedEx is third, with 8 percent or so, according to Jindel.

Trump’s comment tapped into a debate over whether Postal Service pricing has kept pace with the rise of e-commerce, which has flooded the mail with small packages.Private companies like UPS have long claimed the current system unfairly undercuts their business.

Steve Gaut, a spokesman for UPS, noted that the company values its “productive relationship” with the postal service, but that it has filed with the Postal Regulatory Commission its concerns about the postal service’s methods for covering costs.

Representatives for Amazon, the White House, the U.S. Postal Service and FedEx declined comment or were not immediately available for comment on Trump’s tweet.

According to its annual report, the Postal Service lost $2.74 billion this year, and its deficit has ballooned to $61.86 billion.

While the Postal Service’s revenue for first class mail, marketing mail and periodicals is flat or declining, revenue from package delivery is up 44 percent since 2014 to $19.5 billion in the fiscal year ended Sept. 30, 2017.

But it also lost about $2 billion in revenue when a temporary surcharge expired in April 2016.

According to a Government Accountability Office report in February, the service is facing growing personnel expenses, particularly $73.4 billion in unfunded pension and benefits liabilities. The Postal Service has not announced any plans to cut costs.

By law, the Postal Service has to set prices for package delivery to cover the costs attributable to that service. But the postal service allocates only 5.5 percent of its total costs to its business of shipping packages even though that line of business is 28 percent of its total revenue.

(Additional reporting by Laharee Chatterjee in Bengaluru, India; Writing by Patricia Zengerle; Editing by Damon Darlin, Frances Kerry and David Gregorio)

  • Savatage64 (Always Deplorable)

    Worst mail ever!

  • TexanForever

    The US Postal service has “lost” several important packages addressed to me which the sender listed as delivered according to shipping number. They weren’t stolen from my mailbox. One, a Priority Mail package was lost and, after months of USPS “investigation,” agreed to pay the insurance, which was only a fraction of the true value. THEN, It was another seven months and many inquiries of the local Postmaster before I actually received the insurance check from the govt.

    I now send as much as I can by private shipping companies. For me the USPS has degenerated to that of a 3rd world nation, perhaps like Kenya or Pakistan. Albania does a better job.
    .

    • Savatage64 (Always Deplorable)

      I doubt your last statement is even remotely true, but said out of disgust. I get it… I see the incompetence as I am in a position to “see” the mail processing, but powerless to change the incompetence IN that processing.
      I wish those of us that do give a damn, that do our jobs the best we are able, and that take pride in the career we have chosen, could improve the reputation of the USPS… But we are in the minority and no matter how hard we want the best for our customers, which does include myself, we are grossly outnumbered and poo-poohed at every turn.
      For your experience I apologize for the reprehensible service you have gotten. Trust me… We all aren’t there just for a paycheck.

      • TexanForever

        All of my experiences relating to the postal services are as I described them. As with many other defective branches of government, the rank and file (like you) are competent honest people just wanting to do a good job. That goes also for the FBI and CIA. A few high-profile top people ruin it for everyone else.

        By the way, did you know that the Postmaster General of the old Republic of Texas was Gail Borden, the one who later invented condensed canned milk and founded the current Borden Milk Corporation? He also headed the Customs Service of the Republic of Texas at Galveston.
        .

  • Mr. Maga

    just stop bailing them out. problem solved.

    • Savatage64 (Always Deplorable)

      You missed the part where it said, “… U.S. Postal Service…does not receive tax dollars for operating expenses.”
      There are no bailouts like obama gave the automotive industry… But thanks for the misinformation anyways.

      • Mr. Maga

        What would you call defaulting on a $15BILLION loan? it sure isn’t getting that money from a bank. It’s getting it from the US Government. aka – the American Taxpayer.

      • Mr. Maga

        I appreciate you quoting the text in question. Why do you suppose that they added the “for operating expenses.”??? Because it’s the retirement benefits that are drowning their budget. Not their operating expenses. Rest assured, they are in need of US taxpayer money to keep from going bankrupt.

  • Think 2 Moves Ahead

    The Fox story similar to this was poorly written and tried to say Amazon does not own the Washington Post. A simple search of who owns the Washington Post was easy to get correct information. Kudos to OAN for better information. Another interesting search is post office losses by year. 2006 was the last year they did not lose billions.

    • zonypony

      Thanks to Congress for passing the Postal Accountability and Enhancement Act of 2006.
      Otherwise USPS would be in the black.

      • Savatage64 (Always Deplorable)

        I’m guessing there is sarcasm there… So thumbs up.

  • kevin conen

    Throw a Trump at it. It would make money in 3 weeks and run better than ever in 6.

  • In 2015, the company spent $11.5 billion on shipping….
    That’s bull. Amazon CUSTOMERS spent that $11.5 billion.

    Free shipping is never Free.

  • Dell Wilber

    The USPS is a prime example of what happens when Affirmative Action hires run the show…

    • Savatage64 (Always Deplorable)

      AMEN! I see it firsthand as an employee. Most upper echelon posts at individual sites are affirmative action individuals. Terrible terrible management. The worst.

  • Lenny Woodson

    The USPS is the most incompetent bunch of morons and buffoons. It’s laughable. Let Private Enterprise handle the task.

    • Want to pay $4.50 to have a letter delivered?

      • conquest915

        Who writes letters anymore with the internet? So yeah, privatize it.

        • littlepeaks

          I don’t but I do send Christmas Cards, other stuff, and once in a while pay bills by first-class mail. I think we ought to see if we can learn anything from other countries’ postal services.

    • Savatage64 (Always Deplorable)

      Agree partly on your statement. Basically, the workers that handle the mail… Yeah, buffoons and morons.
      Maintenance people that keep the machines repaired because of those morons and buffoons… Most are Top-notch smart folks.
      Truth!

  • shafawn

    Would absolutely LOVE the prices for goods from local shop owners to lower so we don’t have to deal with Amazon or wal-mart anymore.

  • Robert Adams

    Tracked shipments from Amazon are sometimes marked as shipped by UPS, yet USPS makes the final delivery. In rural areas, UPS may deliver right to the doorstep, USPS only to a PO box. Very deceptive and contrary to the Prime promise.

  • Bill Smith 999935

    The post office is practically obsolete.

    • The USPS minimum fee is 50 cents.

      UPS and FedX minimum is $4.50.

      • Mr. Maga

        that’s not true. there are plenty of fees smaller than that for large-scale deliveries such as newspapers, fliers, and bulk-shipments.

  • Mark Hayward

    Good idea raise the rates so Amazon only uses FedEx or UPS that will show them.

    • HarryObrian

      And of course pass the cost onto the middle class just like his tax rates for the rich.

      • youareok100

        Interesting Snow Flake. You must be a welfare fraud living in your mamas basement. I am far from rich and I get a nice cut. But of course you lazy bum living off the sweat of honest folk just moan.

        • HarryObrian

          Not the case there assumpto… I’m one of the middle class that gets screwed by the cap on property tax to the tune of 12 grand.

          • youareok100

            It’s. More of a case of your local and State authorities are screwing you and others with high taxes. They are the ones that are the problem. Over taxed liberal states and localities need to get back to reality

          • HarryObrian

            That screwing you mention is as you say but it is still the liberal US government controlled de-education system that is wasting the lion’s share of property tax dollars. 20 years ago my home state was #2 in the nation for quality of education, today it is in the 42nd position and the cost has risen exponentially. No teacher should be hired for having a ‘teaching certificate’ and no college should be accredited for having a ‘teaching program’. All teachers should have a competent 4 year college degree in an applicable field.

      • Lenny Woodson

        I’m middle class for sure and I’ll be pocketing about 2200 additional dollars next year. Thanks to The Donald. I work for a company owned by one you call ‘the rich’ and I just received a $1000 bonus; compliments of The Donald and his tax reductions.

        • HarryObrian

          So you’re happy with your taxable 45 bucks a week while your boss nets $1000 a week on average? Wow, low ambition huh?

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