President Trump apparently had lobbied U.S. Postmaster General Megan Brennan — to double the rates it charges Amazon and other online retail partners to deliver packages to customer homes. The most recent request reportedly came four months ago, Washington Post Reported
Such a change could potentially saddle Amazon with billions of dollars of extra costs. For the last year Trump has been upset over the rates the post office gives to online retail giant Amazon.
In January Trump tweeted “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”
The exact details of any negotiation between the USPS and Amazon are not public. However, because of Amazon’s vast network of resources they are able to “tip the scales to their advantage”, as described by a Wall Street Journal commentator in July. Amazon drops off mass shipments to postal depots from their 20 or so “sort centers”. The packages are sorted by zip code and dropped off to post offices as close as possible to the package’s destination in a process that is called “last mile” delivery, TJV previously reported.
40% of Amazon’s shipping is done via the post office and on average they are paying $2 a shipment. A Citigroup analysis from last April estimated that each package should cost around $1.46 more. Citigroup estimated that a rate increase would cost Amazon $2.6 billion a year. However, Amazon has been developing their own shipping system and would not necessarily have to continue delivering via USPS in a large capacity if postal prices were increased, TJV reported.
The Washington Post reported that, Brennan has so far resisted Trump’s demand, explaining in multiple conversations occurring this year and last that these arrangements are bound by contracts and must be reviewed by a regulatory commission, the three people said. She has told the president that the Amazon relationship is beneficial for the Postal Service and gave him a set of slides that showed the variety of companies, in addition to Amazon, that also partner for deliveries.
Trump consistently has maintained that the online retailer is getting a sweetheart deal from USPS, worsening the service’s financial problems along the way. He has ordered a review of the USPS by a special task force that would recommend reforms. Trump might not be able to do anything in the near future to slow Amazon down, but the president is trying as hard as he could.