The post office may be losing money, but Amazon is not to blame

Reema Khrais and Sabri Ben-Achour Apr 2, 2018
HTML EMBED:
COPY
Scott Olson/Getty Images

The post office may be losing money, but Amazon is not to blame

Reema Khrais and Sabri Ben-Achour Apr 2, 2018
Scott Olson/Getty Images
HTML EMBED:
COPY

Amazon has drawn President Donald Trump’s ire for a long time. Today, he again accused the retail giant of ripping off the United States Postal Service. It’s true, USPS is losing billions, but not because of Amazon. In fact, if it weren’t for online shopping, the Postal Service’s losses would be much worse.

Mark Chardy has been delivering mail in New Jersey since his 20s. Back then, he said it was almost all first-class mail — bills, wedding invites, etc. Now, he said, the bags hurt his back.

“Some of them you can’t even lift,” he said. “They’re 50-, 70-pound boxes.”

Packages from the e-commerce world have helped the Postal Service see double-digit increases in revenue. In 2017, USPS reported more than 5.7 billion parcels, which brought in $19.5 billion, or almost 30 percent of USPS’ total annual revenue.

Despite the growth in online shopping, the Postal Service has reported a financial loss for 11 straight years, in part due to a decline in paper mail and costs for employee benefits and pensions.

“If it wasn’t for Amazon giving it all of the volume that it does, post office losses would be even greater,” said Satish Jindel, founder of the consulting firm ShipMatrix. For that reason, Jindel said Trump is wrong. He said package delivery from Amazon is a bright spot for the service.

But it’s also not that simple, according to Kevin Kosar of the R Street Institute.

“We just don’t know what [Amazon is] paying, and we certainly don’t know if it ends up being profitable for the Postal Service or not,” Kosar said.

Kosar said Trump has no evidence that Amazon is scamming the system. When the postal office works with a company, “It doesn’t just cut a deal in the back of some smoke-filled room,” Kosar said. “Instead, it’s a huge amount of paperwork, then that paperwork gets examined by the Postal Regulatory Commission to make sure that it comports with law.”

That paperwork is top secret and not even available to the public via the Freedom of Information Act, Kosar said. Because of that, Kosar said we don’t really know if Amazon — or any other retailer — is getting a sweetheart deal on shipping.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.