Trump orders review of Postal Service amid Amazon accusations
- by Olivia Ford
- in Money
- — Apr 13, 2018
Thanks to President Donald Trump, the investment community is now taking a closer look at Amazon's (AMZN) relationship with the United States Postal Service.
News of the task force came amid Trump's rhetorical war on Amazon, in which he has accused the e-commerce company of using the USPS to prop up its business at the expense of the taxpayer.
In the surprise move, Trump said that USPS is on "an unsustainable financial path" and "must be restructured to prevent a taxpayer-funded bailout".
It said the Postal Service had lost 65 billion dollars since the 2007-2009 recession.
According to one report in Reuters, Wall Street analysts estimate that Amazon pays the USPS roughly half what it would be required to pay UPS or FedEx to deliver a package. Much of that anger appears to be directed at founder Jeff Bezos, who also happens to own The Washington Post, a paper that hasn't always painted the president in flattering light.
Prime membership could get more expensive if Amazon is forced to pay the US Postal Service more to deliver packages.
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Nevertheless, the order requested the taskforce to appraise "the the USPS expansion and pricing of the package shipping market and & rsquo; s part in markets", one of other troubles.
The executive order comes as some perceive Amazon as a big benefactor for the Postal Service, bringing it more business at a time when letter deliveries are slumping. Trump created a similar commission a year ago to support his claims of wide-spread voter fraud in the 2016 presidential election - a claim thoroughly debunked by election experts from both parties.
Citigroup previous year found that Postal Service prices would have to go up by $1.41 per package - about 40% - to reflect the true cost of delivery. Additionally, Postal Service corporate partnerships are reviewed annually by the Postal Regulatory Commission, an oversight agency.
In response to an op-ed that appeared in the Wall Street Journal past year, USPS Chief Financial Officer Joseph Corbett wrote that it is "inaccurate" to say that the Postal Service delivers packages "below cost".
However, Amazon's contract is reportedly profitable for the service, and its package delivery business has seen double-digit increases in revenue. "THEY LOSE A FORTUNE", he wrote in a tweet earlier this month. "The PRC has also noted that competitive products help fund the infrastructure of the Postal Service".
