Trump panel proposes postal reforms that could raise Amazon shipping costs

Marco Green
December 7, 2018

The Postal Service lost nearly $4 billion in fiscal 2018, which ended on September 30, even as package deliveries rose.

The task force created by Mr. Trump to investigate the Postal Service's finances did conclude that the mail system is losing money. But Amazon and its CEO, Jeff Bezos, have been frequent targets of Trump's attacks, with the president widely seen as targeting the company because Bezos owns The Washington Post, which has reported critically on the president.

The rates the Postal Service charges Amazon and other bulk customers are not made public.

"None of our findings or recommendations relate to any one company", a senior administration official said December 4.

Amazon shares dropped about 1% on the late-afternoon news to close at $1,668.40, losing almost 6% for the day amid a broader market downturn.

The Package Coalition, which includes Amazon and other online and catalog shippers, warned against any move to raise prices to deliver their packages.

U.S. Postal Service postmaster general Patrick Donahoe weighs in on budget woes. Most of the report's recommendations, if implemented, would hurt business and individuals alike. Trump 2020 advisory board member Harlan Z. Hill said, adding that any sale would have to abide by the Constitutional mandate that the government guarantee mail delivery.

The task force recommended that the Postal Service have the authority to charge market-based rates for anything that is not deemed an essential service, like delivery of prescription drugs.

Topics studied by the Task Force, according to the report, included: the expansion and pricing of the package delivery market and the USPS's role in competitive markets; the decline in mail volume and its implications for USPS self-financing and the USPS monopoly over letter delivery and mailboxes; the definition of the "universal service obligation" in light of changes in technology e-commerce marketing practices, and customer needs; the USPS's role in the USA economy and in rural areas, communities, and small towns; and the state of the USPS business model, workforce, operations, costs, and pricing.

If prices jumped 10 percent, that would increase annual costs for Amazon by at least $1 billion, he said.

That recommendation could raise costs for Amazon and other major businesses that are now using the Postal Service to supplement their delivery operations.

The Postal Service should also restructure $43 billion in pre-funding payments that it owes the Postal Service Retiree Health Benefits Fund, the task force said. Customers of the "Amazon Prime" subscription service ordered more than two billion products with one day or faster delivery times in the past year, the company said Monday.

Mark Dimondstein, president of the American Postal Workers Union, charged that numerous recommendations in the report were based on "myth and misinformation" and that instead of improving mail services "would deliver higher prices and less service to the public".

The American Postal Workers Union warned against any effort to cut services.

Amazon uses the Postal Service to complete what's called the "last mile" of delivery.

Both Amazon and Treasury Department did not immediately respond to requests for comment from ABC News.

Other reports by Click Lancashire

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