In March, President Trump sent out a tweet that accused online retail giant Amazon of paying little to no taxes to both local and state governments. He accused Amazon of using the United States Postal Service (USPS) to deliver its goods at a huge loss to the United States, adding that Amazon is putting thousands of small retailers out of business.
These concerns are not new. Trump has lambasted the company long before he became president. However, the feud between the president and Amazon has reached a new level of tension. Amazon’s stocks plummeted in the wake of the president’s tweets. And, President Trump does not seem to be ready to end his criticism anytime soon.
Critics of President Trump say that he is “obsessed” with the company because its CEO Jeff Bezos is connected with the Washington Post, which has criticized the president harshly on several occasions. However, this doesn’t mean Trump is wrong about the company. The deal that the company has that the United States Postal Service is a bad one for America and its taxpayers.
While it is true that the Postal Service as some serious financial problems and Amazon does help to offset some of those costs, the USPS does get the bad end of the deal when it comes to package delivery.
Amazon struck a deal with the USPS for the postal service to handle portions of its package deliveries. Amazon pre-sorts and prepares packages for delivery while the post office deliveries the packages to their final location.
As fewer and fewer Americans are sending letters, and more people are sending packages, it is evident that the USPS must focus on that aspect of its business to stay afloat in the future.
The USPS had to spend $200 million several years ago to furnish carriers with Internet-connected handheld scanners. These are needed for real-time package tracking. They also spent $5 billion to purchase new delivery vehicles. These costs were undertaken to directly serve the needs of Amazon and other package delivery needs.
The Postal Service improperly allocates its costs for package delivery, which resulted in a great deal for Amazon — but a poor one for the USPS. It is estimated that the USPS undercharges Amazon for delivery of packages by nearly $1.50 for each package.
The U.S. Postal Service has lost more than $65 million since 2007. It is expected to lose about $6 million more in 2018. The increase in parcel volume has coincided almost perfectly with the USPS’s deterioration in finances, according to CitiGroup, which analyzes the Postal Service finances.
The Postal Service is responsible for more than two-thirds of Amazon’s deliveries. Yet, it allocates just over 5.5 percent of its total costs to package delivery. This cost will only rise as technology increases and delivery schedules become more demanding as people expect next day and even same deliveries.
The postal service has run up more than $15 billion in credit since 2006, and has not paid any of its pension cost since 2011. The employees and taxpayers are on the hook for the sizable losses that are being incurred by the post office.
The Postal Service needs to add at least $1.46 to the price of its delivery charges. While President Trump’s critics may argue that he is attacking Amazon because of some personal vendetta, one cannot ignore the fact that Amazon has dealt a devastating financial blow to the Postal Service.
Trump just signed a surprise executive order to audit the United States Postal Service’s finances, which is appropriate given the fact that the USPS is so deep in the red.
A special task force was created by the president to look at the Postal Service’s finances, operation, pricing and delivery. It will also deeply examine the service’s business model.
It’s hard to argue that the Postal Service does need reform, and it seems that President Trump has taken a step in the right direction in spite of what critics say.
~ Conservative Zone