Treasury Report Recommends Post Office Raise Rates On Amazon Parcels

Peter Pereira  Standard Times via AP

Trump has repeatedly accused Amazon of taking advantage of its delivery partnership with the US Postal Service, with taxpayers shouldering the costs.

The Postal Service lost nearly $4 billion in fiscal 2018, which ended on September 30, even as package deliveries rose.

The report found that the Postal Service is not correctly assessing the costs it incurs in delivering packages for companies like Amazon, but it did not make a finding that it was losing money in its dealings with Amazon.

A new report out of Washington on the U.S. Postal Service could be bad news for Amazon.com, Inc. But Amazon and its CEO, Jeff Bezos, have been frequent targets of Trump's attacks, with the president widely seen as targeting the company because Bezos owns The Washington Post, which has reported critically on the president.

Amazon is one of the USPS' biggest single customers, prompting the agency to offer specialized services.

"None of our findings or recommendations relate to any one company", a senior administration official said December 4.

Amazon shares closed down 5.8 percent at $1,669.94, while eBay fell 3.1 percent to $29.26, amid a broad stock market selloff on Tuesday.

Congress sets the formula used by the USPS to price packaging delivery, but that formula hasn't been adjusted since 2006.

The report recommends handing the postal service the ability to redefine the meaning of the so-called "universal service obligation", which is a mission statement laying out the scope of the organization's services. Most of the report's recommendations, if implemented, would hurt business and individuals alike.

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In regard to charging more for non-essential postal services, officials who briefed reporters said person-to-person mail and person-to-person packages would be considered essential postal services and would be exempt from the higher rates that would be levied on non-essential mail.

Brennan said then that Congress needed to give the Postal Service more flexibility to increase prices so it can return to profitability. "The USPS should have the authority to charge market-based prices for both mail and package items that are not deemed 'essential services, '" the task force said in its summary.

If prices jumped 10 percent, that would increase annual costs for Amazon by at least $1 billion, he said.

Gordon Glazer, senior consultant for San Diego-based parcel consultancy Shipware LLC, noted that there appears to be a disconnect relating to the Task Force report indicating that the USPS must pursue new cost-cutting strategies that will enable it to meet the changing realities of its business model.

The Postal Service should also restructure $43 billion in pre-funding payments that it owes the Postal Service Retiree Health Benefits Fund, the task force said.

Cowen estimated that the Postal Service delivered about 59 percent of Amazon's US packages in 2017, and package delivery could account for 50 percent of postal service revenue by 2023. Our union will continue to strongly advocate for a robust public Postal Service and the rights of the hundreds of thousands of dedicated public servants that move the mail every day.

Amazon uses the Postal Service to complete what's called the "last mile" of delivery.

Treasury Secretary Steven Mnuchin said the report "contains achievable recommendations".

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