President Trump’s argument that the U.S. Postal Service should charge higher prices to deliver Amazon products would actually cost the independent agency business, according to a new report released on Monday.
The president has repeatedly expressed frustration with the Postal Service amid a grudge against Jeff Bezos, Amazon’s chief executive officer and owner of the Washington Post — a perennial target in the president’s crusade against often unflattering news his administration says is false. Instead, it’s Trump’s claim that the postal service loses money on each package it ships from Amazon that is mistaken, according to a report from the Information Technology and Innovation Foundation.
“Some, including President Trump, assert that USPS is subsidizing packages and unfairly competing with private package shippers,” the group said in a report released on Monday. “The facts show that USPS is competing fairly.”
The White House established a task force in April to evaluate the Postal Service’s operations and finances, and Trump has reportedly pressed the U.S. Postmaster General to double the rate the agency charges Amazon to ship parcels. Such a move could cripple an organization already suffering from reduced revenue from, among other things, declining first-class mail deliveries, the foundation said. Its report estimated that package shipments from businesses like Amazon actually generate up to 30 percent of the service’s overall income.
“If it were not for parcel delivery, USPS deficits would be much higher,” the group wrote. “Mandating increased package prices would lead to overall lower productivity in the U.S. package industry, while at the same time having negative impacts on equity and opportunity, particularly in rural communities.”
An agency spokesman did not immediately respond to request for comment.
Increased prices might push companies to competitors like FedEx in urban areas, the foundation said, as well as reduce deliveries to low- and middle-income households who couldn’t afford the higher prices.
“There would be less rural e-commerce consumption and less e-commerce production and fewer related jobs in rural areas,” the report said.
And because the Postal Service has both a package-delivery service and a monopoly over daily mail, calls from critics to price the two differently could be akin to “mandating Verizon or Comcast to each lay two wires to each home,” one for video and one for data, the report suggested.
The group instead argues that the Postal Service could mitigate losses by, among other things, allowing competitors to enter into the daily mail business.
The agency “needs to focus on cost-cutting on the market dominant side, which should include opening up more of the non-last mile network to competition, labor reforms, and better management of real estate,” the foundation wrote. “But seeking to increase package rates is a solution in search of a problem.”
