A bombshell report in The Washington Post today details the ongoing feud between the Trump administration and the US Postal Service, and it provides insight into just how lucrative Amazon’s business is for the agency.
According to documents obtained by watchdog group American Oversight, Amazon generated $1.6 billion in profit and $3.9 billion in revenue for the USPS in fiscal year 2019, with the postal service delivering 1.54 billion packages for the e-commerce giant. That represented about 30 percent of Amazon’s total volume last year, and, according to the Post, revenue has increased this year.
President Trump has complained for at least the last two years — without citing evidence — that the USPS loses “$1.50 on average for each package” it delivers for Amazon. The president tweeted in 2018 that Amazon was using the USPS as its “Delivery Boy,” putting retailers out of business and paying little in taxes. He reportedly pressured then-Postmaster General Megan Brennan to double the rate the USPS charged Amazon and other companies.
The USPS lost $8.8 billion in fiscal year 2019, more than double its loss from 2018. But its losses are largely blamed on a 2006 requirement from Congress that the post office pre-fund pension and retiree health care costs decades into the future, not Amazon. Last year, those costs included a $320 million increase in retirement benefits expenses and a $3.5 billion increase in workers’ compensation expenses, which was not offset by the 0.7 percent increase in revenue.
Internal USPS memos uncovered in the Post’s reporting show that “unfunded government mandates” are more of a detriment to the agency’s fiscal health than any arrangement with Amazon, despite the president’s statements to the contrary. When the USPS and Amazon worked to negotiate a new contract in the spring of this year, internal memos warned that if it raised rates too high, it could lose Amazon’s business to competitors.
The president said in August he was intentionally underfunding the USPS to make voting by mail more difficult, but then appeared to shift his position a few days later, tweeting “save the post office.” He also protested the $10 billion emergency coronavirus funding the USPS received in July, though he could have gotten something out of that deal: it was granted in exchange for information about the agency’s most valuable private-sector client contracts, potentially giving him ammo to show the USPS is not fiscally responsible or that Amazon was at least partly to blame for its financial woes.
The new reporting doesn’t seem to support either argument, however; even without the huge chunk of business Amazon gave the USPS last year, the agency still wouldn’t have been able to turn a profit thanks to its business model.