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Amazon delivers via USPS

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Photographs by John Deering

Arkansas Democrat-Gazette Earth Illustration

It seems like a straightforward question: Is the U.S. Postal Service making or losing money on its package delivery contract with Amazon--you know, the one President Donald Trump can't stop tweeting about? To answer it, all you need to do is start with the Postal Service's revenues from Amazon, subtract all the expenses associated with delivery the Amazon packages and voila! You either get a positive number (a profit) or a negative one (a loss). Accounting 101.

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Comments

23cal says...

Very fair and informative article.
I particularly note: "And in the end, what you would get would be a death spiral that eventually would force Congress to shut down the Postal Service and sell it off to the highest bidder."
This has been a Republican goal for a very long time. Add to that Trump's desire for vengeance against the Washington Post via attacking Jeff Bezos, and we have a very real threat to mail delivery for the common man.

Posted 15 April 2018, 7:09 a.m. Suggest removal

Delta2 says...

Any die-hard Republican Amazon shoppers who might be out there, care to comment?

Posted 15 April 2018, 7:26 a.m. Suggest removal

WGT says...

Vote.
.
The dealings with the Post Office and Amazon, Bezos and his companies dealings with the Press, and Trump,seeing a perceived slight, is a perfect opportunity for The Mendacious Loser to toss out another distraction. Vote.

Posted 15 April 2018, 8 a.m. Suggest removal

Jfish says...

I am surprised there is nobody coming on here to argue that the USPS is not a government agency, they will probably be along later. Anyway, the USPS has its problems, but it does need to survive for the good of the public and to keep the private carriers honest. For small stuff and convenience, you cannot beat the USPS, and that is very important for the elderly and poor. For fast delivery with tracking, UPS and FedEx are better in many instances.

Posted 15 April 2018, 8:19 a.m. Suggest removal

TimberTopper says...

I have only one question. Being in business as I am, I still don't really see the need for regular Saturday delivery. Many banks are closed by noon, and even though a person might rush to make a deposit, usually it doesn't post until Monday night. And of regular business mail, if you get a letter that needs a response, or something done, what good is it, as most companies are closed for the weekend. So nothing can be accomplished. So why couldn't that be changed and in doing so would cut down on the expense of the Post Office.

Posted 15 April 2018, 10:53 a.m. Suggest removal

DoubleBlind says...

If USPS cannot CLEARLY illustrate whether or not the Amazon contract is revenue positive or negative, there is a huge issue. They need to be audited or hire PWC, Deloitte or someone to audit them. If they were a publicly traded company and this were the case, their stock would tank until the CEO & CFO and most of their board were replaced. Maybe the answer is that taxpayers would be better off if Bezos DID take over the USPS.

Posted 15 April 2018, 10:55 a.m. Suggest removal

NoUserName says...

"So why couldn't that be changed and in doing so would cut down on the expense of the Post Office."
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Congress says no. As for Saturday delivery, we've sent packages for Saturday delivery before. Depends on the business.
.
"If USPS cannot CLEARLY illustrate whether or not the Amazon contract is revenue positive or negative, there is a huge issue"
.
By law, they can't lose money. In addition, they ARE regulated by the Postal Regulatory Commission, an independent agency, and the commission signed off on the deal. This whole Amazon thing is all a red herring.

Posted 15 April 2018, 12:08 p.m. Suggest removal

DoubleBlind says...

NUN - USPS has posted annual losses for over 10yrs; as high as $16B at one point. They also have pension liabilities in the hundreds of billions. How are they anything but a giant taxpayer suck? Amtrak is another example of an agency that should be privatized.

Posted 15 April 2018, 1:01 p.m. Suggest removal

JakeTidmore says...

doubleblind is truly blind. Some research shows the facts he ignores (like Trump ignored before opening his big fat mouth):
**
In fact, Amazon may be saving the post office from financial ruin.

On April 3, Trump said, "the post office is losing billions of dollars," at U.S. taxpayers' expense.

It's true that the post office is losing money. It reported a $2.7 billion net loss in 2017.

But the post office is not funded by U.S. tax dollars.

And when you look at the revenue breakdown, you can see that shipping and packages is actually one of the few categories that brought in more money than the previous year. While overall revenue fell $1.8 billion, shipping and packages saw a $2.1 billion increase in revenue. Meanwhile, first-class mail revenue was down around $1.8 billion.
And the post office was in the red long before Amazon became such an online giant. The USPS began to lose money in the early 2000s with the internet's rise. But one of the post office's 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 prefund its employee health benefits for the next 75 years. And that has cost the post office billions. In a note to clients, Baird Equity Research said that any large customer, including Amazon, would actually help the post office subsidize its pension costs.
In October 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 office's deals with private shippers are considered proprietary. That 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 makes sure the USPS' deals make economic sense. And year after year, the commission has approved the deal with Amazon. In its 2017 annual report, the USPS even said its shipping and packages business helped the "financial picture of the Postal Service."

Trump is right 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.
**
Source: Jason Urbi, CNBC Financial Analyst & Reporter
***
Bottom line: Trump is going after WaPO & its owner. This is a politically driven attack that is unworthy of ANY president, much less Donnie the Chump. His sycophants simply are regurgitating what Donnie vomits on them.

Posted 15 April 2018, 2:07 p.m. Suggest removal

RBBrittain says...

Amazon actually does more than this article gives it credit for: Instead of delivering to "one of 20 Postal Service distribution centers across the country" (probably Memphis for us), in many places where USPS does last-mile delivery for Amazon (including Arkansas) the pallets are delivered directly to your local post office Monday thru Saturday just before your carrier goes out for delivery. (Sunday deliveries are done more centrally, but in this area still from a USPS facility in Little Rock. Amazon also uses non-USPS last-mile couriers where available, including presumably in DC.) But even that isn't exclusive to Amazon; UPS, FedEx & DHL all have special subsidiaries (known as "zone-skipping consolidators" because they bypass the USPS "zone" system for packages) which pick up packages from shippers nationwide and deliver them to your post office for last-mile delivery. The only difference between them & Amazon is that Amazon is big enough to arrange for it all itself, so they can offer 2-day and even 1-day delivery this way.

Posted 16 April 2018, 8:16 a.m. Suggest removal

RBBrittain says...

I should add that JakeTidmore is absolutely right: The *SOLE* reason USPS has been losing money the last decade is the obligation to prefund health benefits 75 years in advance, imposed by a GOP Congress under George W. Bush -- something NO OTHER EMPLOYER (private OR public) is required to do. Ironically, that same law *ALSO* requires USPS to at least break even on all special contracts with shippers -- including Amazon. Not to mention Trump keeps bringing sales tax issues with Amazon, even though in 2017 Amazon started voluntarily collecting sales tax in every state that has one (including Arkansas); they don't collect on most "marketplace" purchases, but in most states that obligation belongs to the individual seller instead of Amazon.

Posted 16 April 2018, 8:25 a.m. Suggest removal

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