Cheap Amazon shipping leaves the Postal Service ‘dumber and poorer,’ Trump says | The Washington Post


Spokesmen for the Postal Service and Amazon didn’t immediately respond to requests for comment Friday. In July, Amazon told Fortune magazine that the Postal Regulatory Commission, which oversees the Postal Service, “has consistently found that Amazon’s contracts with the USPS are profitable.”

Amazon defended its program in July after Josh Sandbulte, a hedge fund manager with a stake in FedEx, wrote a Wall Street Journal op-ed asserting that the Postal Service effectively subsidizes Amazon, losing an average of $1.46 for each shipment it delivers. The op-ed cut against a view that rising volumes of e-commerce shipping might lift the Postal Service’s long-struggling finances.

Sandbulte largely based his op-ed on an April report from analysts at Citigroup arguing that the Postal Service’s employee benefits were acting as a drag on the USPS’s profitability.

“We contend that the USPS does not act as a rational price-setter in the parcel market,” the report said. “Remedying this could be the key to the organization regaining operating solvency. . . . To this day, price still does not cover all-in costs.”

The report said the average cost of parcel shipments might jump from $3.51 to $4.97 if the USPS appropriately priced the service. It also said that since the Postal Service pricing provides strong downward pressure on competitors UPS and FedEx, those companies also probably would increase prices.

The Postal Service recorded a net loss of $5.6 billion in 2016, which it blamed on employee health-care costs.

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Cheap Amazon shipping leaves the Postal Service ‘dumber and poorer,’ Trump says – The Washington Post.

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