President Trump blamed Amazon for the massive financial losses by the U.S. Postal Service. But the Postal Service claims that their losses are cause by market forces and governmental constraints. Their quarterly statistics are in contrast to the statements made by the president.
Trump released a tweet causing controversy in March saying that the Postal Service lost money with every package it delivered for Amazon. He also falsely asserted that The Washington Post was a lobbyist for the company.
“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars. The Failing N.Y. Times reports that “the size of the company’s lobbying staff has ballooned,” and that…” Trump tweeted.
While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars. The Failing N.Y. Times reports that “the size of the company’s lobbying staff has ballooned,” and that…
— Donald J. Trump (@realDonaldTrump) March 31, 2018
The Post is owned by founder and chief executive of Amazon, Jeffrey P. Bezos. The two organizations are completely independent of each other.
$1.3 Billion Net Loss
The Postal Service’s second-quarter results were just released on Friday. It revealed that increases in shipping and package volume were responsible for strong revenue growth. Other declines and economic pressures led to a $1.3 billion net loss in the quarter. Mail was down by 700 million pieces, or 2.1 percent, but package volume grew by some 70 million pieces, about 5 percent, the report said.
Overall, revenue grew slightly to $17.5 billion, but operating costs had also grown by 5.7 percent. The increase was driven by rising costs connected to retiree health benefits, employee compensation and transportation expenses from increased fuel rates and contractual issues.
“Despite growth in our package business, our financial results reflect systemic trends in the marketplace and the effects of an inflexible, legislatively mandated business model that limits our ability to generate sufficient revenue and imposes costs upon us that we cannot afford,” Postmaster General Megan J. Brennan said in a statement. “With continued aggressive management and greater legal authority to respond to changes in our marketplace and to control our costs, the Postal Service can return to financial sustainability.”
Under Brennan, the Postal Service has petitioned the Postal Regulatory Commission to give it the ability to raise stamp prices beyond inflation, according to the Associated Press.
“Congress and the commission need to act now,” Brennan said.
The Postal Service acknowledged that the “labor-intensive” package business has raised employee-compensation expenses by $364 million.
Amazon uses the Postal Service for about 40 percent of its shipping needs. The per package cost is about $2, and that is much lower than the rates of other major shippers. Amazon shipped more than 1.2 billion packages in the U.S. last year, according to the Wall Street Journal.
Contract with Amazing Profitable
The Wall Street Journal reported that former postmaster general Patrick Donahoe told analysts last week that the contract with Amazon had been profitable for the Postal Service.
On Friday, Postal Service Chief Financial Officer Joseph Corbett pointed to the “decline in First Class mail, rising costs and legislative and regulatory constraints,” for the quarter’s losses.
Post business writer Steve Pearlstein wrote that the complexities of the Postal Service is “a reality that is way too complicated for our president to understand.”