You are here
Sorting through Trump's claims about Amazon
[SEATTLE] Five times in the last week, US President Donald Trump has pointed his Twitter arrows at Amazon over what he insists is a bad deal for the US Postal Service (USPS).
Mr Trump wrote on Tuesday that the agreement, which sets what Amazon pays the Postal Service for many orders, costs American taxpayers billions of dollars.
"I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy," he wrote.
The details about the deal are not public - they are considered commercially sensitive information - but some of the available evidence suggests the opposite: that Amazon has been a boon to the Postal Service.
The Postal Service has experienced a steady decline in the amount of mail it ships as more of its customers turn away from postcards and letters in favour of email, texting and other forms of digital communication. The total pieces of mail it shipped last year was 149 billion, down from 212 billion a decade earlier.
Yet there is a bright spot - its business of package shipping, including Amazon orders, which grew to 5.7 billion packages last year from 3.3 billion in 2008. Several years ago, the Postal Service added Sunday delivery for Amazon packages.
The agency reported a net loss of US$2.7 billion on US$69.6 billion in revenue during its last fiscal year, which ended Sept 30, and faces huge retirement benefit obligations. Without Amazon's business, the financial picture at the Postal Service would most likely be bleaker, many analysts say.
"It is one thing to demand better financial performance from the USPS, but something very different, in our view, to equate the USPS financial struggles with the rise of Amazon," Colin Sebastian, an analyst at Baird, a stock research firm, wrote in a research report on Tuesday.
"If nothing else, the USPS was already generating billions of dollars in operating losses well before Amazon became a large customer."
Companies that do a lot of shipping, like Amazon, often negotiate deals with the Postal Service to pay less than an ordinary person would to send goods. It is essentially a discount for buying in bulk. But the Postal Service says all such deals it makes are profitable - and must be by law.