President Donald Trump has directed a presidential task force to study the United States Postal Service and how it prices packages. Although the executive order doesn't mention Amazon by name, Trump has been firing shots at the tech giant on Twitter for months, alleging the company is ripping off USPS.
Amazon's founder, Jeff Bezos, also owns The Washington Post, which has aggressively covered the Trump administration. The special commission is expected to submit a report on its findings and recommendations within 120 days.
"The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout", the president said in an order that was released on Thursday night. All three receive comparable rates on a service that lets them drop truckloads of packages at a local post office for the last leg of delivery. "A number of factors, including the steep decline in First-Class Mail volume, coupled with legal mandates that compel the U.S.P.S.to incur substantial and inflexible costs, have resulted in a structural deficit", Trump said.
Amazon is the frequent target of Trump's ire: In the past, he has accused Amazon of harming retailers and having "a huge anti-trust problem".
President Trump has long taken issue with the U.S. Postal Service, but now he's doing something about it.
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Amazon relies on USPS for many of its last-mile deliveries and in 2013, the two struck a landmark deal to deliver packages on Sundays.
The new task force will be led by Treasury Secretary Steven Mnuchin or his designee, with help from the directors of the Office of Management and Budget and Office of Personnel Management.
The firm estimates that 40%-50% of Amazon's shipping costs in the US are associated with the USPS and, assuming a 15%-20% increase in shipping costs, there are $1-$1.8 billion in potential shipping costs Amazon may have to absorb in 2018. During its most recent fiscal year, which ended in September, the USPS reported total annual revenue of $69.7 billion, which was less than the $71.4 billion recorded in fiscal year 2016. "Although we continue to win customers and grow our package business, these gains are not sufficient to offset continuing declines in our mail business, which is our main source of revenue and contribution", Postmaster General and CEO Megan Brennan said in February. In fact, the USPS has indicated that the addition of package delivery services has been one of the few bright spots in its otherwise bleak financial performance, generating double-digit revenue increases.
The agency is also drowning in "higher than normal" costs of retiree benefits, including pensions and health care.