Donald Trump is again attacking the online retailer Amazon, calling its business deal with the US Postal Service to deliver packages a money losing agreement that hurts US taxpayers. Federal regulators, however, have found the contract with Amazon to be profitable.
In tweets on Saturday, Mr Trump said “the US Post Office will lose $1.50 (£1) on average for each package it delivers for Amazon. That amounts to billions of dollars”.
He added: “If the PO ‘increased its parcel rates, Amazon’s shipping costs would rise by $2.6 Billion’. This post office scam must stop. Amazon must pay real costs (and taxes) now!”
Amazon has been a consistent recipient of Mr Trump’s ire. He is sore because its founder, Jeff Bezos, owns The Washington Post, which Mr Trump has labelled as “fake news” after the newspaper reported unfavourable developments during his campaign and presidency.
A spokesman for the US Postal Service declined to comment.
Amazon lives and dies by shipping and an increase in the rates it pays could certainly do some damage. Amazon sends packages via the post office, FedEx, UPS and other services.
But while the post office has lost money for 11 years, package delivery – which has been a bright spot for the service – is not the reason.
Boosted by e-commerce, the US Postal Service has enjoyed double-digit increases in revenue from delivering packages, but that has not been enough to offset pension and health care costs, as well as declines in first-class letters and marketing mail. Together, letters and marketing mail make up more than two-thirds of postal revenue.
In arguing that the US Postal Service is losing money on delivering packages for Amazon, Mr Trump appears to be citing some Wall Street analyses that argue the US Postal Service’s formula for calculating its costs is outdated. A 2017 analysis by Citigroup did conclude that the US Postal Service was charging below market rates as a whole on parcels. Still, federal regulators have reviewed the Amazon contract with the company each year and determined it to be profitable.
An independent agency, the US Postal Service does not use taxpayer money for its operations.
The post office does not break down what is driving its growth, but online ordering from retailers, particularly Amazon, has revolutionised the way goods are bought and delivered. The US Postal Service reached new highs this year in holiday package delivery, with more than 850 million US parcels delivered from Thanksgiving to New Year’s Eve, according to figures compiled by industry tracker ShipMatrix.
Amazon has taken some steps towards becoming more self-reliant in shipping. Last year, it announced it would build a worldwide air cargo hub in Kentucky, about 13 miles south-west of Cincinnati.