President Donald Trump, in his crusade against tech behemoth Amazon and its CEO Jeff Bezos this week took another jab at “their Delivery Boy,” the United States Postal Service.
This isn't the first time Trump has criticized USPS for charging too little to deliver Amazon’s packages. He previously said the Postal Service's policies are making “Amazon richer” and itself “dumber and poorer.”
The Postal Service has been hemorrhaging cash for years. During its most recent fiscal year, which ended in September, the USPS reported a 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 during its first-quarter financial report, which is typically its strongest of the year, USPS saw a decline in revenue of $169 million and a net loss of $540 million.
The reality, however, is that Amazon has little to do with why USPS has been bleeding red ink.
In fact, the agency’s packages and deliveries segment was one of the few bright spots during the agency’s last fiscal year and through its fiscal first quarter. Package volume expanded by 111 million pieces, or 7%, during the first quarter, and the agency said it “continues to grow its package business.”
However, those gains are not enough to offset declines in its mail business, its “main source of revenue and contribution.” During the first quarter, that segment declined by 2 billion, or 5%. This includes cards letters and first-class mail.
The agency is also drowning in “higher than normal” costs of retiree benefits, including pensions and health care.
In other words, the changes being called for by Trump to shipping policies may actually be more damaging to Amazon than to the distressed Postal Service, which handles some 40% of the tech giant’s shipping, according to a study cited by The New York Times.
An analysis by Citigroup found that USPS does in fact charge less than what it should to ship packages, which “could make Amazon susceptible to significant USPS price increases.”
One expert told FOX Business the agency gives the tech giant a “sweetheart deal.”
However, as the Citigroup report notes, a change in prices could ultimately hurt USPS, considering Amazon could take its business elsewhere. Its sheer volume of shipments makes it an attractive customer and gives it massive bargaining power.