Proposed Postal Service reforms could hike package delivery costs

Irving Hamilton
December 7, 2018

The report recommends separating commercial services as a non-essential category, which wouldn't be subject to price caps, and mandated delivery standards that apply to essential services such as person-to-person mail. "Today's report contains achievable recommendations that fulfill the President's goal of placing the USPS on a path to sustainability, while protecting taxpayers from undue financial burdens and providing them with necessary mail services".

Commercial package delivery is not profitable enough to offset the revenue losses the Postal Service is suffering, however, as Americans mail fewer and fewer first-class letters, and the Treasury Department task force outlined several recommendations to help shore up its finances.

The American Postal Workers Union represents 200,000 employees of the United States Postal Service, and is affiliated with the AFL-CIO. Customers of the "Amazon Prime" subscription service ordered more than two billion products with one day or faster delivery times in the past year, the company said Monday. But Amazon and its CEO, Jeff Bezos, have been frequent targets of Trump's attacks, with the president widely seen as targeting the company because Bezos owns The Washington Post, which has reported critically on the president.

Such changes may result in higher prices on package deliveries for online retailers, including e-commerce giant Amazon.com Inc. Amazon did not immediately respond to a request for comment.

If the White House Task Force on the Postal Service's report was assigned a ZIP Code it would be 00000.

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Cowen estimated that the Postal Service delivered about 59 percent of Amazon's US packages in 2017, and package delivery could account for 50 percent of postal service revenue by 2023. The report didn't say how much the Postal Service should increase its prices.

The report said that between 2007 and 2018, the Postal Service had experienced net losses totaling $69 billion, with the Postal Service expected to lose tens of billions of dollars over the next decade. The Treasury Department said that the Task Force was directed to evaluate the operations and finances of the USPS and to develop recommendations for administrative and legislative reforms that will enable the USPS to create a sustainable business model.

Last month, the Postal Service reported a financial loss for the 12th straight year, citing declines in mail volume and the costs of its pension and health care obligations.

The Package Coalition, a concern comprised of shippers, including Amazon, lobbyists like the National Retail Federation, direct mailers, and consumers, said in a statement it is concerned that, by raising prices and depriving Americans of affordable delivery services, the Postal Task Force's package delivery recommendations would harm consumers, large and small businesses, and especially rural communities.

"The flawed business model imposed by law continues to be the root cause of our financial instability", Brennan said.

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