Postal Service reports $1.3B net loss after Trump’s Amazon criticisms

The U.S. Postal Service reported a total net loss of $1.3 billion for its fiscal second-quarter on Friday, one month after President Donald Trump ordered a review of the agency’s operations and following years of revenue decline.

These hefty losses come despite the fact that revenue from shipping and packages grew by $445 million, or 9.5%. Revenue from first-class mail and marketing mail, on the other hand, declined by $181 million.

“The continued secular decline in First Class mail, rising costs and legislative and regulatory constraints resulted in larger losses this quarter,” USPS chief financial officer Joseph Corbett said in a statement.

The agency said it had controllable losses of $656 million, compared with $12 million for the same quarter last year, due to the cost of retiree health benefits and an increase in compensation expenses.

The Postal Service has been hemorrhaging cash for years. During its most recent fiscal year, which ended in September, the USPS reported total annual revenue of $69.7 billion, which was less than the $71.4 billion recorded in fiscal year 2016. The most recent year’s losses of $2.7 billion are down from more than $5 billion in each of the prior two fiscal years. The last time USPS recorded a profit was more than a decade ago.

Even in its first-quarter financial report, which is typically its strongest of the year because the period includes the holiday mailing season, the Postal Service saw a decline in revenue of $169 million and a net loss of $540 million.

The White House said the service has lost $65 billion since the financial crisis.

Following a barrage of critical tweets fired off this year, President Donald Trump issued an executive order in April that will create a task force to study the Post Office and its business model, which Trump said needs to be restructured to prevent a “taxpayer-funded bailout.”

The president has taken aim at the Postal Service for charging what he views as too little to ship Amazon’s packages, saying those policies are making “Amazon richer” and itself “dumber and poorer.”

As many experts have noted, however, Amazon likely has little to do with why the USPS has been bleeding red ink.

The agency’s packages and deliveries segment was actually one of the few bright spots during the agency’s last fiscal year and through its fiscal second quarter. Package volume expanded by 69 million pieces, or 5%, during the second quarter, and USPS cited it as a growth segment.

Those gains, however, are not enough to offset declines in its mail business, its “main source of revenue and contribution.”

The president has suggested that raising shipping costs could help alleviate the Postal Service’s financial burden. An analysis by Citigroup found that the USPS does in fact charge less than it should to ship packages, which “could make Amazon susceptible to significant USPS price increases.” But a change in prices could ultimately hurt USPS, considering that Amazon could take its business elsewhere. Its sheer volume of shipments makes it an attractive customer and gives it massive bargaining power.

Another option that has been proposed is privatization, which is something the Trump administration has favored in other circumstances – including parts of the proposed $1.5 trillion infrastructure overhaul and even potentially the International Space Station.