(Bloomberg) -- President Donald Trump has frequently assailed the pricing agreement between Amazon.com Inc. and the U.S. Postal Service. Yet the deal has repeatedly been described as a money-maker for the beleaguered agency.
Trump -- who faces accusations from Democrats that funding cuts and operational changes at the post office are meant to stop mailed votes for Democratic challenger Joe Biden from being counted -- claimed in an interview with Fox News on Monday that Amazon is “maybe the biggest problem with the post office” because of the losses that the service takes on package deliveries.
And in Yuma, Arizona, on Tuesday, he said Amazon should pay higher prices for shipping packages to cover the Postal Service’s costs. “Amazon is going to pay for the post office,” Trump said. “It’s part of their model. They think the post office is stupid.”
The USPS has been losing billions of dollars a year for more than a decade as people use email and other online services to correspond, in addition to its onerous pension obligations. But its commercial package delivery service, which includes agreements with companies such as Amazon, FedEx Corp. and United Parcel Service Inc., is lucrative, the post office and lawmakers have said.
Terms of the Postal Service’s delivery deal with Amazon are confidential, however USPS has repeatedly said it doesn’t lose money on the agreement. In addition, the post office must cover its costs in its commercial package delivery business under the law. Amazon regularly uses the postal service to complete what’s called the “last mile” of delivery.
In fact, shipping and packages have been the only growth segment for the Postal Service and jumped more than 50% to $8.3 billion in revenue in the third quarter, which ended June 30, according to fiscal 2020 results released Aug. 7. Every other service category fell in both revenue and volume, in part because of the coronavirus pandemic. The pandemic drove up costs, including for personal protective equipment and paid sick leave, contributing to a net loss of $2.2 billion in the period, roughly in line with the year before.
Trump claimed in the Fox interview, without showing evidence, that the Postal Service loses about $3 per package with Amazon. He had previously claimed the loss was $1.50.
“They take a lot of this mail into areas where they could never go because the postal system is massive,” he said. Amazon is dropping “packages into the post office by the thousands.”
Spokespeople for USPS and Amazon didn’t comment on Trump’s allegations. They have previously called the deal a success.
Back in 2018, when Trump repeatedly blamed the deal for the post office’s woes, two top Democratic lawmakers who said they reviewed the deal with Amazon, declared that retailers shipping packages represented a rare bright spot for the Postal Service.
The agreement with Amazon and other retailers has been “one of the few areas of growth in Postal Service revenues, experiencing double-digit increases in recent years and accounting for nearly 30% of its operating revenue in fiscal year 2017,” according to a letter led by the late Representative Elijah Cummings of Maryland in June 2018. Cummings and fellow Democrat Gerald Connolly of Virginia called Trump’s charges related to the post office “inaccurate” and said the Amazon deal is comparable to other last-mile arrangements.
Trump has long aimed insults at Amazon and its chief executive officer, Jeff Bezos, who owns the Washington Post, which has closely covered his administration’s foibles.
The issue has resurfaced as Trump-appointed Postmaster General Louis DeJoy initiated service cutbacks and and the service warned 46 states that it might not be able to deliver their ballots on time for the November election. But amid a growing outcry over the changes, DeJoy announced Tuesday that he would suspend them until after the election.
DeJoy is scheduled to testify before a Senate panel on Friday and a House panel on Monday.
Even as the ongoing Covid-19 pandemic prompts states to step-up mail-in voting procedures, Trump, who’s trailing Biden in polls, has claimed without evidence that it routinely leads to massive fraud, raising concerns about attempted voter suppression.
Speaker Nancy Pelosi is calling the House back from the summer recess to try to address the cuts.
(Updates with Trump comment, DeJoy announcement, starting in third paragraph)
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2020 Bloomberg L.P.