The U.S. Postal Service announced its second quarter financial results on Friday, a normally ho-hum moment made a lot more significant thanks to continuing criticism of USPS’s relationship with Amazon by U.S. President Donald Trump.
USPS said that its revenue for shipping and packages shot up by 9.5%, or $445 million, since the second quarter of last year. Meanwhile, letter and other mail volume dropped by 2.1%, and mail revenue was down $181 million. Overall revenue grew 1.4%, but the USPS still lost $1.3 billion in the quarter, compared to a $562 million loss this time last year, thanks to a 5.7% increase in operating expenses. USPS said rising expenses included the cost of retiree health benefits, increased labor costs for shipping packages, and higher transportation expenses.
If that all sounds complicated, it is — and that complexity has helped enable Trump’s campaign against the USPS’s partnership with Amazon. Trump has accused Amazon of benefiting from preferential USPS rates, and last month created a task force to review USPS business practices. But a former postmaster general has said that the USPS agreement with Amazon had been profitable for the Postal Service, which must offer competitive package pricing with services like UPS and FedEx, but can’t legally price package delivery below its cost.
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That supports the idea that criticism of Amazon’s USPS payments as just one front in Trump’s larger fight with Amazon’s owner, Jeff Bezos. Bezos also owns the Washington Post, which is among Trump’s favorite targets to slam as “fake news.” Some see Trump’s claims that Amazon is cheating the USPS, then, as an indirect attack on opposition media. That would be ironic, since the founding principle of universal postal service was increased freedom of information.
USPS’s biggest losses have been fueled not by Amazon, or even by the rise of ecommerce, but by the drastic decline in first-class letters and other light mail, thanks largely to the rise of e-mail. USPS has a monopoly over letter mail which is intended to compensate for requirements that it provide universal service even to remote or less populated parts of America. But first-class mail volume has plummeted by nearly half since its peak in 2000.
In a statement, Postmaster General and CEO Megan J. Brennan blamed growing losses not only on those technological changes, but also on “an inflexible, legistlatively mandated business model that limits our ability to generate sufficient revenue and imposes costs upon us that we cannot afford.”
Brennan was referring in part to a legislative mandate that USPS pre-fund retiree benefits, a requirement not shared by most private-sector companies, or even other federal employees. Lawmakers have also stopped some proposals that would have reduced USPS operating costs, including reducing deliveries from six days a week to five.
If it were a typical business, USPS could have made those needed changes years ago. That might have left Trump less able to use the Postal Service as a weapon in his broader crusade.