Trump: Amazon making postal service poorer

He criticises low delivery fees paid by e-commerce giant

WASHINGTON/SEATTLE • President Donald Trump has said the US Postal Service (USPS) should charge e-commerce giant Amazon more to deliver packages, the latest in a series of public criticisms of the online retailer and its billionaire founder.

The post office "should be charging MUCH MORE" for package delivery, the President tweeted on Friday from his Mar-a-Lago estate in Florida, where he was 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?" Mr Trump told his 45 million followers.

Mr Trump regularly criticises Amazon and its chief executive officer, Mr Jeff Bezos, who also owns the Washington Post newspaper and is the world's richest man.

In August, Mr Trump accused Amazon of causing "great damage to tax paying retailers", even though the Internet giant began collecting sales tax on products it sells directly in April.

Amazon's stock had gained earlier last week, but dropped 0.86 per cent to US$1,175.90 by early Friday afternoon. Shares of United Parcel Service (UPS) and FedEx, Amazon's two other shippers, were up less than 1 per cent.

Despite the occasional anti-Amazon tweet, Mr Trump is unlikely to target Amazon with any action because the company is creating jobs by building new warehouses around the country.

The USPS delivers about 62 per cent of Amazon packages - about 3.5 million to 4 million a day during the current peak year-end holiday shipping season - said Mr Satish Jindel, president of ShipMatrix, which analyses shipping data.

Seattle-based Amazon and the USPS have an agreement in which mail carriers take Amazon packages on the last leg of their journeys, from post offices to customers' doorsteps.

Mr David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40 per cent of Amazon's volume the previous year. He estimated that Amazon at that time paid the postal service US$2 per package, which was about half what it would pay UPS or FedEx.

The USPS reported a net loss of US$2.1 billion (S$2.8 billion) in the third quarter of this year and has US$15 billion in outstanding debt. The service has lost US$62 billion over the last decade.

The losses have little to do with Amazon and more to do with its large healthcare obligations and the dwindling use of first-class mail. USPS charges some of the world's lowest stamp prices.

Mr Trump's tweet also assumes that Amazon would be forced to pay if the USPS increased its rates for packages. But Amazon has been setting up its own shipping operations in the United States and elsewhere in the world to minimise costs.

The e-commerce giant is experimenting with a new delivery service of its own that is expected to see a broader roll-out in the coming year. Under the programme, Amazon would oversee the pickup of packages from warehouses of third-party merchants and delivery to home addresses.

Despite the occasional anti-Amazon tweet, Mr Trump is unlikely to target Amazon with any action because the company is creating jobs by building new warehouses around the country.

It is also expected to generate 50,000 new positions with its second headquarters, said Mr James Cakmak, analyst at Monness Crespi Hardt & Co.

"The interests of Amazon and the administration are largely aligned - even factoring the dislocation to retail - given the positive headline potential around new job creation with fulfilment centres and HQ2," he said.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Sunday Times on December 31, 2017, with the headline 'Trump: Amazon making postal service poorer'. Print Edition | Subscribe