President Donald Trump appears to be escalating his war on Amazon. He issued an executive order Thursday that vows to review the United States Postal Service’s “expansion and pricing of the package delivery market and the USPS’s role in competitive markets” among other things.
The executive order sets up a task force to review USPS’s finances and operations and report back to the president. The goal is to create conditions for USPS to “operate under a sustainable business model,” Trump says. Although the executive order doesn’t mention Amazon by name, Trump has been firing shots at the tech giant on Twitter for months, alleging the company is ripping off USPS.
Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!
— Donald J. Trump (@realDonaldTrump) December 29, 2017
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!
— Donald J. Trump (@realDonaldTrump) April 3, 2018
Trump is right that the USPS is in financial trouble. The service reported a decrease of $1.8 billion in revenue in 2017 compared to the previous year, a drop driven largely by a decline in regular mail, like letters and postcards. But package delivery is actually a rare growth area for the service. Package volumes grew by 11.4 percent last year, according to USPS and documents show that package revenue contributed a net total of more than $7.1 billion to the agency’s bottom line during fiscal year 2017.
Amazon relies on USPS for many of its last-mile deliveries and in 2013, the two struck a landmark deal to deliver packages on Sundays. That appears to be working out for USPS, which said the growth in its package business was “a result of our successful efforts to compete in the ground shipping services and ‘last mile’ e-commerce fulfillment markets, including Sunday delivery,” in another financial report last year.
The USPS does offer discounts to companies that provide logistical support necessary for shipping packages, though details of those deals are not publicly available. Trump has repeatedly said that Amazon should be paying USPS more.
Trump’s executive order does acknowledge that “a number of factors, including the steep decline in First-Class Mail volume” contribute to USPS’s financial woes. It also notes that USPS is on the hook for costly pension liabilities and retiree healthcare obligations that can’t be funded by the service’s current revenue.
Representatives from the Treasury Department, Federal Financing Bank, Office of Management and Budget, and Office of Personnel Management will sit on the task force. The task force is instructed to submit a report on its findings within 120 days.
“The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout,” Trump said in the order.