Donald Trump is not a fan of Amazon he's Attacked the company time and time again And he always comes back to the same two Points one Amazon isn't paying taxes and Two Amazon is ripping off the US Postal Service and now Trump is demanding an Audit of the postal systems finances He didn't say he's specifically looking Into the post offices deal with Amazon Though it does seem like he's trying to Back up his claims but is the post Office really getting the short end of The stick post office is losing billions Of dollars and the taxpayers are paying For that money because it delivers Packages for Amazon at a very below cost First it's important to note that the Post office is not funded by US tax Dollars and it's true the post office is Losing money a lot of it but it's not Necessarily because of Amazon the Situation is way more complicated than That This is the post offices 2017 revenue Report overall the USPS s revenue was Down 1.8 billion dollars from the year Before but when you look at the revenue Breakdown you can see that shipping and Packages is actually one of the few Service categories that brought in more Money than the year before Meanwhile first-class mail took a hit Pink birthday cards letters wedding Invites pretty much anything you might
Send in an envelope so it looks like the Post office is seeing more products less Penpals but the post office hasn't Always been in the red the USPS began to Lose money in the early 2000s with the Internet's rise and one of the post Offices biggest revenue drainers has Nothing to do with shipments or the Internet it's all about employee Benefits back in 2006 Congress enacted a Law that required the USPS to pre-fund Its employee health benefits for the Next 75 years and that's caused the post Office billions Amazon accounts for a decent chunk of The post offices package delivery Business but the post office may not be As essential to Amazon the retail giant Also uses UPS FedEx DHL Express and a Number of regional and specialty Retailers along with its own delivery Service called Amazon logistics and it's Reportedly developing even more ways to Break into the delivery business so Amazon seems to have plenty of other Delivery options which raises the Question does the US Postal System need Amazon more than Amazon needs them in October of 2013 Amazon struck a five-year deal with the Post office the specific terms of the Contract aren't available to the public Because the post offices deals with Private shippers are considered
Proprietary which means there's a decent Amount of information we don't know but One thing we do know is that the post Office is making a profit in 2006 Congress ruled that the USPS couldn't Set its prices lower than its costs Otherwise it would be able to unfairly Charge less than its competitors like UPS and FedEx every year an independent Agency called the Postal Regulatory Commission make sure the USPS s deals Make economic sense and year after year The PRC has approved the post offices Deal with Amazon in its 2017 annual Report the post office even said it's Shipping and packages business helped The financial picture of the Postal Service Trump is right in that Amazon Does technically receive a discount Amazon ships a lot of packages so Chances are it's utilizing a bulk Discount but that's not specific to Amazon it's available to other Businesses too though Amazon does have One thing that many other companies Don't fulfillment centers Amazon has Massive amounts of money space and Resources at its disposal so to make Things easier for the post office which Is already delivering mail to every home In the country Amazon does a lot of the Prep work on its own and hands it off to The post office at the last minute the Process is part of a last mile delivery
Service called Parcel select so there Are a lot of reasons why a special deal With Amazon makes sense but again that Doesn't mean the post office is losing Billions The idea that the post office is losing Big likely stems from this Citigroup Report it was mentioned in a widely Circulated Wall Street Journal Commentary by a shipping analyst the Analyst argument essentially says Amazon Is getting a dollar forty six subsidy on Every box shipped by the post office Which is probably where Trump is coming Up with this claim but that dollar forty Six figure has been debated and as some Critics have pointed out the Wall Street Journal commentary should be taken with A grain of salt the analyst company owns A stake in FedEx so he may seem to gain From critiquing the post office He also mischaracterizes Amazon's deal As a gift from Uncle Sam again the post Office does not receive any tax revenues The Postal Service does receive Reimbursements for some things mandated By Congress like free mail for the blind And overseas voting and it borrows money From the government to pay for its Employee health benefits but most Analysts seem to agree that the post Office isn't losing a fortune to Amazon In this case it may be more about Trump Going after Jeff Bezos in the Washington
Post than it is about the postal system But Trump does have some say in the Postal service it's technically an Establishment of the executive branch Not a government-owned corporation so It's controlled by the people Trump Appoints as of early 2018 the Postal Service Board of Governors is empty Trump nominated three candidates in October but so far nobody has actually Been appointed so if Trump really wants To influence Amazon's relationship with The post office he might actually be Able to demand a rate reset but According to some analysts that could Actually end up hurting the post office More than it helps Hey there thanks for checking out CNBC On YouTube be sure to subscribe to stay Up-to-date on all of the day's biggest Stories you can also click on any of the Videos around me to watch the latest From CNBC thanks for watching
