Tag: Amazon

Trump, Amazon, and USPS

May have figured out how Trump managed to lose so much money — he doesn’t know the difference between losing money, making money, and breaking even. The post office does not lose money on delivering packages. I don’t know this because I’ve got insider information on their contract with Amazon, but I do have access to the text of American legislation. The Postal Accountability and Enhancement Act disallows the Post Office from selling package delivery under its cost. Now you can debate the cost calculation – the real issue being disputed by FedEx and UPS is that the Post Office doesn’t have to include all of their delivery costs in package delivery “cost”. Why? Because they’d have carriers driving trucks all over the country even if there were on package delivery service. Of course this gives the Post Office a huge advantage in their package pricing model. And, yeah, that sucks for FedEx and UPS. But it’s sucked for FedEx and UPS for a LONG time.

The Post Office may just be breaking even on it’s Amazon contract – but as the package delivery “cost” does include some operational expenses … well, Amazon is saving American tax payers money because package delivery does include 5.5% of the fixed operating costs (I assume to cover additional cost created by package delivery service). Sure FedEx and UPS have to include 100% of their fixed operating costs in their pricing model, and if Trump wanted to talk about how providing package delivery services is unfair to private industry … that’s a discussion. But I doubt any commercial venture is going to delivery mail every day across the entire country so it’s up to the government. And providing package delivery and shipping services in urban areas (where it would be profitable for a private corporation to operate) subsidize delivery out to the cabin I stayed at in South Dakota. If the Post Office could be charging more for its services … that’s a discussion. Except do you want to pay more to ship packages and mail!?! And if we want to delve into the financial nuances of the Post Office, let’s look at their pension pre-funding requirements.

How does a guy who claims to be all about business deals think it’s bad for a corporation to use the service that provides them a cost advantage?!? Unless Trump thinks he can start tariffing the bloody post office (or, more accurately, have the legislature change the suppositions they are permitted in their pricing model) … Amazon would be outright silly to voluntarily pay more to another carrier.

And how does a guy who claims to be all about negotiating wins for American citizens think it’s a bad deal that the Post Office is making money off of Amazon instead of FedEx or UPS doing so? Say they *do* change the postal pricing model to make it “fair” to UPS/Fedex (or just outlaw package service from USPS). Our tax money is still paying for postal carriers to drive all over the country to delivery mail, Amazon Prime memberships cost more, but hey UPS is making bank. And … that’s what really matters?!?

What they’re really upset about is that the post office used to be a crap shot of getting something to “Point B” even without getting into SLA’s. You paid extra to FedEx or UPS to make sure it actually *got there*. Now the three services are equally reliable … which means government managed to provide a service as good as private industry.