Sun, Dec 31, 2017 - Page 16 News List

Trump demands higher US postal charges for Amazon

Reuters, SEATTLE and WASHINGTON

US President Donald Trump on Friday called on the US Postal Service to charge “much more” to ship packages for Amazon.com Inc, picking another fight with an online retail giant he has criticized in the past.

“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!” Trump wrote on Twitter.

The president’s tweet drew fresh attention to the fragile finances of the Postal Service at a time when tens of millions of parcels have just been shipped all over the country for the holiday season.

The US Postal Service, which runs at a big loss, is an independent agency within the federal government and does not receive tax dollars for operating expenses, according to its Web site.

Package delivery has become an increasingly important part of its business as the Internet has led to a sharp decline in the amount of first-class letters.

The president does not determine postal rates, which are set by the Postal Regulatory Commission, an independent government agency with commissioners selected by the president from both political parties. That panel raised prices on packages by almost 2 percent last month.

Amazon was founded by Jeff Bezos, who remains the chief executive officer of the retail company and is the richest person in the world, according to Bloomberg News.

Bezos also owns the Washington Post, a newspaper Trump has repeatedly railed against in his criticisms of the news media.

In tweets over the past year, Trump has said the “Amazon Washington Post” fabricated stories.

He has said Amazon does not pay sales tax, which is not true.

GBH Insights research analyst Daniel Ives said that Trump’s comment could be taken as a warning to the retail giant. However, he said he was not concerned for Amazon.

“We do not see any price hikes in the future. However, that is a risk that Amazon is clearly aware of and [it] is building out its distribution [system] aggressively,” he said.

Amazon has shown interest in the past in shifting into its own delivery service, including testing drones for deliveries. In 2015, the company spent US$11.5 billion on shipping, 46 percent of its total operating expenses that year.

Amazon shares close down 1.4 percent on Friday.

Trump’s comment tapped into a debate over whether Postal Service pricing has kept pace with the rise of e-commerce, which has flooded the mail with small packages. According to its annual report, the Postal Service lost US$2.74 billion this year, and its deficit has ballooned to US$61.86 billion.

While the Postal Service’s revenue for first class mail, marketing mail and periodicals is flat or declining, revenue from package delivery is up 44 percent since 2014 to US$19.5 billion in the fiscal year ended Sept. 30, 2017.

However, it also lost about US$2 billion in revenue when a temporary surcharge expired in April last year.

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