(Bloomberg)—President Donald Trump said Friday the U.S. Postal Service should charge Amazon.com Inc. more to deliver packages, the latest in a series of public criticisms of the online retailer and one that sent the company’s stock lower in pre-market trading.
The post office “should be charging MUCH MORE” for package delivery, the president tweeted from his Mar-a-Lago estate in Florida, where he’s been spending the holidays.
“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?” Trump told his 45 million followers.
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!
advertisement— Donald J. Trump (@realDonaldTrump) December 29, 2017
Trump has regularly criticized Amazon, No. 1 in the Internet Retailer 2017 Top 500, from his Twitter account and targeted CEO Jeff Bezos, who also owns the Washington Post newspaper and is currently the world’s richest man with an estimated net worth of $100 billion. In August, Trump accused the company of causing “great damage to tax paying retailers,” even though the internet giant began collecting sales tax on products it sells directly in April.
As with prior missives targeting the company, Trump’s message appeared to concern investors. Amazon stock was positive in premarket trading on Friday and then fell as much as 0.6% after Trump’s post to Twitter. It was down 0.35% shortly before 9 a.m.
‘Last mile’
Amazon regularly uses the U.S. Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at some residences and businesses daily. UPS Inc. and FedEx Corp. also have agreements with the USPS to handle final mile delivery.
UPS’ SurePost program and FedEx’s comparable SmartPost program, as well as shipping programs from consolidators like Newgistics Inc., transport packages through their respective networks and then hand off parcels to the post office for final delivery. The Postal Service visits 156 million U.S. residence and business addresses six days a week and, in some cases, seven days.
In fall 2013, the USPS signed a deal with Amazon to deliver orders on Sunday in Los Angeles and New York. Amazon is the Postal Service’s largest parcel client, and the USPS has since expanded Sunday service to reach 80% of U.S. addresses. It now delivers an average of 2.3 million packages every Sunday, and Sunday service is available to all commercial customers that sign a service agreement with the Postal Service. There is a surcharge for Sunday delivery—one of only a few instances where the Postal Service charges one—but it declines to say what that surcharge is.
While full details of the agreement between Amazon and the Postal Service are unknown—the mail service is independently operated and strikes confidential deals with retailers—David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40% of Amazon’s volume the previous year. He estimated at the time that Amazon pays the USPS $2 per package, which is about half what it would pay UPS and FedEx.
The Postal Service reported a net loss of $2.1 billion in the third quarter of 2017, and has $15 billion in outstanding debt. The service has lost $62 billion over the last decade.
Amazon has been experimenting with a new delivery service of its own that is expected to see a broader roll-out in the coming year. Under the program, Amazon would oversee the pickup of packages from warehouses of third-party merchants and the delivery to home addresses.
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