Amazon volume not enough for Postal Service to avoid losses
The U.S. Postal Service (USPS) reported a loss for the quarter including the holidays as an increase in the number of packages delivered failed to offset declining letter volume.
The post office delivered 37 million packages Dec. 18, the most for a single day in its 240-year history. Many of the packages were delivered for Amazon (NYSE:AMZN) in the “last mile” of the delivery.
Extending a trend, the number of packages that the postal service delivered during the quarter ended Dec. 31 increased by 111 million pieces, or 7%, while mail volume declined by about 2 billion pieces, or about 5%.
The postal service reported Friday that its net loss for its first fiscal quarter was $540 million, compared with net income of $1.4 billion a year earlier. Because the quarter includes the holiday mailing season, it’s typically the postal service's strongest quarter. For the year ended Sept. 30, the postal service posted a loss of $2.7 billion.
President Donald Trump complained of the postal service’s performance in a December 2017 tweet, in which he asked: "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!”
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!— Donald J. Trump (@realDonaldTrump) December 29, 2017
A challenge for the postal service is that Congress has oversight over its costs. For example, lawmakers blocked its attempt to save money by halting Saturday delivery of first-class mail.
Postmaster General and CEO Megan J. Brennan said in a press release Friday that regulatory and legislative changes are needed in order for the postal service to survive.
"Although we continue to win customers and grow our package business, these gains are not sufficient to offset continuing declines in our mail business, which is our main source of revenue and contribution,” Brennan said. “We will continue to do everything within our control to improve operating efficiencies, manage expenses, expand our use of technology and keep mail affordable, but these actions must be combined with regulatory and legislative changes.”
As the postal service struggled with costs, The Wall Street Journal reported last week that Amazon is preparing to launch a delivery service for businesses in competition with United Parcel Service (NYSE:UPS) and FedEx (NYSE:FDX).