Trump wants Postal Service to charge 'much more' for Amazon shipments

[rooster59]

Trump wants Postal Service to charge 'much more' for Amazon shipments

By Eric M. Johnson and Makini Brice

 

U.S. President Donald Trump targeted online retailer Amazon on Friday in a call for the country's postal service to raise prices of shipments in order to recoup costs. Caroline Woods reports.

 

SEATTLE/WASHINGTON (Reuters) - President Donald Trump called on the U.S. Postal Service on Friday to charge "much more" to ship packages for Amazon <AMZN.O>, picking another fight with an online retail giant he has criticized in the past.

 

"Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!" Trump wrote on Twitter.

 

The president's tweet drew fresh attention to the fragile finances of the Postal Service at a time when tens of millions of parcels have just been shipped all over the country for the holiday season.

 

The U.S. Postal Service, which runs at a big loss, is an independent agency within the federal government and does not receive tax dollars for operating expenses, according to its website.

 

Package delivery has become an increasingly important part of its business as the Internet has led to a sharp decline in the amount of first-class letters.

 

The president does not determine postal rates. They are set by the Postal Regulatory Commission, an independent government agency with commissioners selected by the president from both political parties. That panel raised prices on packages by almost 2 percent in November.

 

Amazon was founded by Jeff Bezos, who remains the chief executive officer of the retail company and is the richest person in the world, according to Bloomberg News. Bezos also owns The Washington Post, a newspaper Trump has repeatedly railed against in his criticisms of the news media.

 

In tweets over the past year, Trump has said the "Amazon Washington Post" fabricated stories. He has said Amazon does not pay sales tax, which is not true, and so hurts other retailers, part of a pattern by the former businessman and reality television host of periodically turning his ire on big American companies since he took office in January.

 

Daniel Ives, a research analyst at GBH Insights, said Trump's comment could be taken as a warning to the retail giant. However, he said he was not concerned for Amazon.

 

"We do not see any price hikes in the future. However, that is a risk that Amazon is clearly aware of and (it) is building out its distribution (system) aggressively," he said.

 

Amazon has shown interest in the past in shifting into its own delivery service, including testing drones for deliveries. In 2015, the company spent $11.5 billion on shipping, 46 percent of its total operating expenses that year.

 

Amazon shares were down 0.86 percent to $1,175.90 by early afternoon. Overall, U.S. stock prices were down slightly on Friday.

 

MILLIONS OF PARCELS

 

Satish Jindel, president of ShipMatrix Inc, which analyzes shipping data, disputed the idea that the Postal Service charges less than United Parcel Service Inc <UPS.N> and FedEx Corp <FDX.N>, the other biggest players in the parcel delivery business in the United States.

 

Many customers get lower rates from UPS and FedEx than they would get from the post office for comparable services, he said.

 

The Postal Service delivers about 62 percent of Amazon packages, for about 3.5 to 4 million a day during the current peak year-end holiday shipping season, Jindel said. The Seattle-based company and the post office have an agreement in which mail carriers take Amazon packages on the last leg of their journeys, from post offices to customers' doorsteps.

 

Amazon's No. 2 carrier is UPS, at 21 percent, and FedEx is third, with 8 percent or so, according to Jindel.

 

Trump's comment tapped into a debate over whether Postal Service pricing has kept pace with the rise of e-commerce, which has flooded the mail with small packages.Private companies like UPS have long claimed the current system unfairly undercuts their business.

 

Steve Gaut, a spokesman for UPS, noted that the company values its "productive relationship" with the postal service, but that it has filed with the Postal Regulatory Commission its concerns about the postal service's methods for covering costs.

 

Representatives for Amazon, the White House, the U.S. Postal Service and FedEx declined comment or were not immediately available for comment on Trump's tweet.

 

According to its annual report, the Postal Service lost $2.74 billion this year, and its deficit has ballooned to $61.86 billion.

 

While the Postal Service's revenue for first class mail, marketing mail and periodicals is flat or declining, revenue from package delivery is up 44 percent since 2014 to $19.5 billion in the fiscal year ended Sept. 30, 2017.

 

But it also lost about $2 billion in revenue when a temporary surcharge expired in April 2016.

 

According to a Government Accountability Office report in February, the service is facing growing personnel expenses, particularly $73.4 billion in unfunded pension and benefits liabilities. The Postal Service has not announced any plans to cut costs.

 

By law, the Postal Service has to set prices for package delivery to cover the costs attributable to that service. But the postal service allocates only 5.5 percent of its total costs to its business of shipping packages even though that line of business is 28 percent of its total revenue.

 

 

-- © Copyright Reuters 2017-12-30

[Credo]

Oh, oh.   Trump is going postal!

[tonray]

11 minutes ago, Credo said:

Oh, oh.   Trump is going postal!

Put him in a flat rate express mail box to Trumpistan.

[lannarebirth]

Probably the only American I dislike more than Trump is Bezos. Time to sic the anti competitition watchdogs on that A-hole.

[Emster23]

His bile knows no bounds. Good example of authoritarianism in action

[boomerangutang]

Mr. 6-times-bankrupt Trump gives biz advice.   

The same man who can't get loans from US banks, ....so he clandestinely gets loans from Putin Russia.

 

 

[Credo]

Such a move will greatly increase inflation.   

 

[lannarebirth]

Just now, Credo said:

Such a move will greatly increase inflation.   

 

 

Is that true?  How come?  The FED will be happy if so.

[Langsuan Man]

Just now, Credo said:

Such a move will greatly increase inflation.   

 

The 1%'s don't care about inflation, only poor peasants who work for a living do

[KKr]

now the Donald is envious of someone who figured out how to make money in an honest way.
And, in an inspired moment of soon to be great leadership, is going to raise postal rates for all the Americans, bravo, a great idea and a well thought through scheme.
maybe E-Bay shipments should be subject to Duck surcharges as well.
And Tax letters, as well as utility bills.
What about Lazada ?

Tip for DD, if you don't have it yet, what about a revenue sharing with Twitter ?

[klauskunkel]

 

when you enlarge this picture you can see a corona of spittle orbiting his head

[Credo]

25 minutes ago, lannarebirth said:

 

Is that true?  How come?  The FED will be happy if so.

Pretty much anytime you raise a basic charge for something that is used by a huge % of the population it will fuel inflation, just like a rise in gasoline prices fuels inflation.   Unless, of course, Trump is going to try and raise it ONLY on Amazon, which would be pretty much against the law.

 

If the postal system raises prices, no doubt FedEx and UPS will follow suit, and on-and-on it goes.   

 

Of course, The White House and Congress do not pay postage so never mind.   

[lannarebirth]

48 minutes ago, Credo said:

Pretty much anytime you raise a basic charge for something that is used by a huge % of the population it will fuel inflation, just like a rise in gasoline prices fuels inflation.   Unless, of course, Trump is going to try and raise it ONLY on Amazon, which would be pretty much against the law.

 

If the postal system raises prices, no doubt FedEx and UPS will follow suit, and on-and-on it goes.   

 

Of course, The White House and Congress do not pay postage so never mind.   

 

I think the point of the article is that Amazon is paying much less than exeryone else.  Maybe everyone else is paying more because Amazon is paying less than the fair rate everyone else pays. I'm not convinced charging them a fair rate would lead to inflation but if it did that would still be a better outcome than deficit spending for the sole benefit of a single company.

[lannarebirth]

1 hour ago, KKr said:

now the Donald is envious of someone who figured out how to make money in an honest way.
And, in an inspired moment of soon to be great leadership, is going to raise postal rates for all the Americans, bravo, a great idea and a well thought through scheme.
maybe E-Bay shipments should be subject to Duck surcharges as well.
And Tax letters, as well as utility bills.
What about Lazada ?

Tip for DD, if you don't have it yet, what about a revenue sharing with Twitter ?

 

In an honest way?  You don't know how many years Amazon dodged paying sales taxes to the government?  What other companies are you aware of that can fail to make a profit for 20 years and the IRS allows it? If my business fails to make a profit in 3 out of every five years the IRS deems it a "hobby" and disallows deductions associated with the business.

 

 

 

 

[Credo]

4 minutes ago, lannarebirth said:

 

I think the point of the article is that Amazon is paying much less than exeryone else.  Maybe everyone else is paying more because Amazon is paying less than the fair rate everyone else pays. I'm not convinced charging them a fair rate would lead to inflation but if it did that would still be a better outcome than deficit spending for the sole benefit of a single company.

How does Amazon pay less?   When you ship something, it is done by class and by weight.   Do you think they charge Amazon less than any other company or person sending a package?

[lannarebirth]

4 minutes ago, Credo said:

How does Amazon pay less?   When you ship something, it is done by class and by weight.   Do you think they charge Amazon less than any other company or person sending a package?

Quote

 

Trump appears to be referring to a deal that USPS has struck with Amazon, along with some other e-commerce retailers.

Bloomberg cited the Bernstein Research analyst David Vernon as estimating that the agency delivered 40% of Amazon's packages in 2014.

Amazon pays roughly half as much to have packages delivered the "last mile," or the final leg of their journey from shipping hubs to their destinations, by USPS than it would have to pay FedEx or UPS, Bloomberg reported, citing 2015 estimates from Vernon.

http://www.businessinsider.com/trump-war-on-amazon-post-office-subsidies-hq2-2017-12

 

[alanrchase]

28 minutes ago, lannarebirth said:

 

In an honest way?  You don't know how many years Amazon dodged paying sales taxes to the government?  What other companies are you aware of that can fail to make a profit for 20 years and the IRS allows it? If my business fails to make a profit in 3 out of every five years the IRS deems it a "hobby" and disallows deductions associated with the business.

 

 

 

 

 

Companies that can get away without making a profit? How about various Trump companies?

[lannarebirth]

9 minutes ago, alanrchase said:

 

Companies that can get away without making a profit? How about various Trump companies?

I don't know what profit, if any, Trump's companies make. I think it is a private enterprise so records would not be public and he doesn't seem inclined to produce them. Amazon's are public.

 

[stevenl]

44 minutes ago, lannarebirth said:

 

I think the point of the article is that Amazon is paying much less than exeryone else.  Maybe everyone else is paying more because Amazon is paying less than the fair rate everyone else pays. I'm not convinced charging them a fair rate would lead to inflation but if it did that would still be a better outcome than deficit spending for the sole benefit of a single company.

"I think the point of the article is that Amazon is paying much less than exeryone else."

 

That is said nor implied in the article.

[lannarebirth]

Just now, stevenl said:

"I think the point of the article is that Amazon is paying much less than exeryone else."

 

That is said nor implied in the article.

 

Yeah, because it is poorly written. I gave the proper context with another article. I'll repost it for you.

 

http://www.businessinsider.com/trump-war-on-amazon-post-office-subsidies-hq2-2017-12

 

 

[stevenl]

1 minute ago, lannarebirth said:

 

Yeah, because it is poorly written. I gave the proper context with another article. I'll repost it for you.

 

http://www.businessinsider.com/trump-war-on-amazon-post-office-subsidies-hq2-2017-12

 

 

Also not said or implied in your article.

 

What is said is that Amazon is paying USPS less than it would other providers, not the same as 'paying less than everyone else' and what it also says is that the USPS package delivery is making a profit.

 

So one of the biggest, maybe even the biggest, player in that market is helping somebody else make a profit, but Trump wants their rates increased? Makes no sense at all, probably due to a feud he has with Amazon.

[lannarebirth]

1 minute ago, stevenl said:

Also not said or implied in your article.

 

What is said is that Amazon is paying USPS less than it would other providers, not the same as 'paying less than everyone else' and what it also says is that the USPS package delivery is making a profit.

 

So one of the biggest, maybe even the biggest, player in that market is helping somebody else make a profit, but Trump wants their rates increased? Makes no sense at all, probably due to a feud he has with Amazon.

 

That's one way of twisting the story. Another would be that the USPS is helping somebody else make a bigger profit at the expense of other shippers who must pay full rates. It's a legitimate beef regardless of how one feels about Trump or Amazon.

[stevenl]

2 minutes ago, lannarebirth said:

 

That's one way of twisting the story. Another would be that the USPS is helping somebody else make a bigger profit at the expense of other shippers who must pay full rates. It's a legitimate beef regardless of how one feels about Trump or Amazon.

You're making up things, nowhere is it mentioned that others are paying more. As Amazon though, the biggest player, I would expect to pay less than others.

 

The only one twisting a story here is you, with claims that are not made in the articles, not even in the one you came up with yourself.

[ilostmypassword]

 

1 hour ago, lannarebirth said:

 

I think the point of the article is that Amazon is paying much less than exeryone else.  Maybe everyone else is paying more because Amazon is paying less than the fair rate everyone else pays. I'm not convinced charging them a fair rate would lead to inflation but if it did that would still be a better outcome than deficit spending for the sole benefit of a single company.

One problem is that the so called analysis from citibank that claimed the USPS loses 1.46 pm each package it delivers for Amazon was commissioned by UPS one the USPS's 2 main competitors.

[ilostmypassword]

1 hour ago, lannarebirth said:

 

In an honest way?  You don't know how many years Amazon dodged paying sales taxes to the government?  What other companies are you aware of that can fail to make a profit for 20 years and the IRS allows it? If my business fails to make a profit in 3 out of every five years the IRS deems it a "hobby" and disallows deductions associated with the business.

 

 

 

 

First off, Amazon dodged paying sales taxes the way every internet company used to dodge paying sales taxes. The feds passed a law that made that possible and then it was rescinded.  And just to clear, what Amazon dodged was collecting sales taxes. It's not like it was collecting the taxes and keeping them for itself I.

As for the hobby stipulation, the IRS would be laughed out of court if it claimed that Amazon was being run as a hobby. There's a reason for the hobby stipulation and its about tax avoidance and evasion.

[lannarebirth]

8 minutes ago, stevenl said:

You're making up things, nowhere is it mentioned that others are paying more. As Amazon though, the biggest player, I would expect to pay less than others.

 

The only one twisting a story here is you, with claims that are not made in the articles, not even in the one you came up with yourself.

Quote

 

Amazon pays roughly half as much to have packages delivered the "last mile," or the final leg of their journey from shipping hubs to their destinations, by USPS than it would have to pay FedEx or UPS, Bloomberg reported, citing 2015 estimates from Vernon.

A Citigroup analysis earlier this year found that it would cost Amazon $1.46 more to ship an average package through USPS if costs were "fairly allocated." As Amazon ships millions of packages a year, these subsidies add up quickly.

"It is as if every Amazon box comes with a dollar or two stapled to the packing slip — a gift card from Uncle Sam," Josh Sandbulte wrote in The Wall Street Journal in July. "Amazon is big enough to take full advantage of 'postal injection,' and that has tipped the scales in the internet giant's favor."

 

 

[lannarebirth]

9 minutes ago, ilostmypassword said:

 

One problem is that the so called analysis from citibank that claimed the USPS loses 1.46 pm each package it delivers for Amazon was commissioned by UPS one the USPS's 2 main competitors.

 

I'll accept your analysis if you care to provide it. Show your work if you would.

[alanrchase]

13 minutes ago, lannarebirth said:

 

That's one way of twisting the story. Another would be that the USPS is helping somebody else make a bigger profit at the expense of other shippers who must pay full rates. It's a legitimate beef regardless of how one feels about Trump or Amazon.

Any sensible company that has a high volume of business with the USPS would negotiate preferential rates. Banks will almost certainly get a discount on their charges. Trump singles out Amazon because Bezos refuses to worship him.

[ilostmypassword]

1 minute ago, lannarebirth said:

 

I'll accept your analysis if you care to provide it. Show your work if you would.

An analyst note by Citigroup from April found that prices would have to go up by $1.41 per package in 2018 — or about 40% — to reflect the true cost of delivery. (Those calculations are based on an analysis by UPS (UPS), which along with FedEx (FDX) stands to gain enormously if the Postal Service raises its prices, so they should be taken with a grain of salt.)

http://money.cnn.com/2017/12/29/news/economy/trump-amazon-postal-service/index.html

[lannarebirth]

1 minute ago, ilostmypassword said:

An analyst note by Citigroup from April found that prices would have to go up by $1.41 per package in 2018 — or about 40% — to reflect the true cost of delivery. (Those calculations are based on an analysis by UPS (UPS), which along with FedEx (FDX) stands to gain enormously if the Postal Service raises its prices, so they should be taken with a grain of salt.)

http://money.cnn.com/2017/12/29/news/economy/trump-amazon-postal-service/index.html

Amazon's competitors would stand to gain as well. Or get back to a level playing field anyway.  Hopefully the DOJ division that deals with anti-competive practices will take up the case.