President Donald Trump is continuing his attack against Amazon, accusing the company of scamming the US Postal Service.
“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars,” Trump tweeted Saturday morning.
“The Failing N.Y. Times reports that ‘the size of the company’s lobbying staff has ballooned,’ and that……does not include the Fake Washington Post, which is used as a ‘lobbyist’ and should so REGISTER,” the President wrote. “If the P.O. ‘increased its parcel rates, Amazon’s shipping costs would rise by $2.6 Billion.'”
He added, “This Post Office scam must stop. Amazon must pay real costs (and taxes) now.”
Is it a ‘scam’?
The Postal Service is losing money, but its package delivery service is profitable, unlike its letter delivery.
The Postal Service is required by law to cover its costs for delivering competitive products, such as packages for Amazon, and the Postal Regulatory Commission, which oversees the service, set the appropriate share of those costs at 5.5% a little more than a decade ago.
Since then, the service’s deliveries of those products have grown substantially, and the United Parcel Service argued in a submission to the commission in 2015 that a realistic appropriate share of costs for delivering packages should be about 24.6%.
A Citigroup analysis last year found that that difference would amount to about $1.46 per parcel, which might serve as the basis for Trump’s $1.50 figure. An op-ed penned in July by Josh Sandbulte in the Wall Street Journal cited that analysis in arguing the Postal Service’s estimate of costs for delivering packages should be revised. Sandbulte is co-president of Greenhaven Associates, a money management firm that owns FedEx common stock.
In response, US Postal Service executive Joseph Corbett wrote that the op-ed provided an “inaccurate and unfair account,” and that the Postal Regulatory Commission has determined each year that the service is covering its costs for package deliveries.
Corbett asserted the Postal Service’s financial insolvency is the result of its inability to overcome “systemic financial imbalances caused by legal and other constraints,” such as a price cap on revenue-producing products that doesn’t take changes in delivery volumes and costs into account.
The Postal Service’s biggest money problem is that it has billions in retirement obligations to its workers that it can’t afford.
So what does Amazon pay?
Amazon pays the US post office to deliver packages to customers’ doors, including on Sundays, and because Amazon ships so many packages though the post office, it’s charged at a lower rate than most customers, CNN has reported. But Amazon does not receive a special rate; it pays the rate that the post office charges other bulk shippers.
Neither Amazon nor the post office has disclosed the details of its agreement, but the Postal Service says the deal is mutually beneficial.
On Thursday, Trump tweeted another accusation about Amazon not paying “taxes to state & local governments” and “putting many thousands of retailers out of business.”
Amazon collects sales tax in every state that charges one and remits it to the states, which is nearly every state. Amazon also pays local property taxes on its distribution centers as well as on the Whole Foods stores it purchased last year.
Amazon maintains it helps small businesses in a tough retail climate, helping vendors reach a mass audience.
This isn’t the first time Trump has accused The Washington Post of being a lobbying arm of Amazon. While both companies are owned by Jeff Bezos, Amazon does not have a stake in The Washington Post.