I’ll be the first to admit that I probably obsess over the goings on at the United States Post Office (USPS) more than is healthy, but it’s an issue which affects pretty much everyone at one level or another. That’s why I was particularly interested in Allahpundit’s recent article about one Trump tweet accusing Amazon of getting an easy ride (literally as well as figuratively) from the USPS when it comes to package delivery. If they’re getting their packages delivered dirt cheap at a time when the Post Office is still recording net losses every year, why don’t they charge a bit more? (Though to be fair, the losses posted by the USPS in recent years are smaller than they were over the previous decade and they even showed a small profit once.)
As with so many things in government circles, the real explanation might be more complicated than first meets the eye. Alison Griswold of Quartz published an article last week which sheds a bit of light on the subject. As it turns out, while Amazon is getting a pretty good deal out of the USPS for package delivery, it’s really nothing jaw-dropping in terms of savings. And on top of that, package delivery is one of only two areas where the Post Office is actually making money (the other is international mail) and it accounts for much of the revenue they’re showing these days. (Government Executive)
Trump loves to attack Amazon and its founder and CEO, Jeff Bezos, who also owns the Washington Post. Yet Amazon and the broader e-commerce sector aren’t what’s ailing the USPS. They just might be keeping it afloat.
Shipping and packages were a rare bright spot for USPS in 2017, one of two sub-categories of mail for which revenue increased, rather than declined. (The other was international mail.) The service shipped 11 billion pounds worth of packages, or 5.7 billion pieces, in the 2017 fiscal year, generating $19.5 billion in revenue.
That was 12% more revenue than packages made in the previous year, and $500 million more than even USPS expected, “due to e-commerce growth and the successful implementation of various marketing and sales campaigns,” it said in its annual report.
Revenue from shipping and packages is also on track to overtake sales from first-class mail (and it’s certainly not Amazon’s fault that no one sends letters anymore):
I’m not saying that this information precludes the Post Office from charging a little more, but there are two things to keep in mind here. First, the USPS requires the permission of Congress to raise their rates, so if they’re not charging enough you can take it up with your elected officials. But second, even if they did charge more for packages, that could open up the door for UPS or FedEx to swoop in, offer a slightly better deal and steal Amazon’s business. Believe me, either one of them would love to land an exclusive contract for all of the boxes that Bezos’ company sends all over the country.
So the real loser in terms of Post Office profitability is first class envelope delivery. But they can’t stop delivering letters (at least the few actual letters which are still mailed these days) and they can’t charge more for them either unless Congress chooses to raise the price of stamps again. So it seems that the real culprit here isn’t Amazon at all, and as the author speculates, Bezos may be one of the primary drivers keeping the USPS at least close to profitability these days.