
Trump urged U.S.P.S to double package rates for Amazon: Washington Post - samaysharma
https://www.reuters.com/article/us-amazon-com-trump/trump-urged-u-s-postal-service-to-double-package-rates-for-amazon-washington-post-idUSKCN1IJ2G4
======
patrickg_zill
The fundamental annoyance I have is not only Amazon's (apparently)
preferential pricing, but the e-Packet from China pricing.

As a consumer I can see the advantage to me, but it seems wildly unfair to
Mouser / Digikey and the 1000s of much smaller businesses in the USA to have
to pay more to ship a small parcel from Denver CO to somewhere in CA, than an
e-Packet from HongKong to e.g. Plattsburgh, NY. It has to be hurting the
ability to compete of lots of US based businesses...

~~~
rgbrenner
IMO, as someone who runs a small business reliant on USPS, it's even worse
than that.

Other countries like the EU and Canada like to charge an inspection fee for
small packages (+ VAT)... it's usually a flat ~$15 (even if the package is
worth $5). What do they do during the inspection? Calculate the VAT charge of
$0.50. They don't even open the envelope.

VAT itself is bad enough... The US doesn't have VAT, and the WTO says it's
illegal to put a tariff on imports to fund the US government.. but VAT, the
WTO is ok with... which is an across the board tariff on every good shipping
into the EU/Canada/etc. Then to tack on the "inspection fee" on top...

So not only is there a difference in shipping cost, but when it arrives at the
border, their country makes it even more expensive for the customer...
discouraging them from ordering from the US in the future.

~~~
mrighele
> So not only is there a difference in shipping cost, but

> when it arrives at the border, their country makes it even

> more expensive for the customer... discouraging them from

> ordering from the US in the future.

Note that a customer living (let's say) in Europe is supposed to pay VAT on
everything regardless of the origin, so it's not like the US company is
treated differently. In fact until recently it was the other way for online
services (AWS for example) because some of them were not adding VAT, giving
them an advantage to their European counterparts.

(Edit: this of course applies to final customers, for business customers it is
a completely different matter).

------
kumarvvr
The invisible hand is now the wizened old hand of a cantankerous idiot.

~~~
prolikewhoa
It's not the invisible hand when the USPS loses $1.50 per shipment at the
benefit of Amazon while USPS -- a federal service to all Americans --
struggles to stay afloat.

~~~
Bluestrike2
The USPS doesn't lose $1.50 per Amazon parcel. Legally, they can't price at a
loss. Under the Postal Accountability and Enhancement Act of 2006 they have to
charge rates that cover their costs.[0] The number you're referring to comes
from an analysis that suggested USPS charges $1.46 below market rates. That's
not the same as saying it's a "loss" (as most people understand it--i..e, it
costs you more than you make) or even a subsidy. The USPS and the independent
Postal Regulatory Commission.

The USPS profits from these parcels. It's a smaller profit, yes, but that's
because the deal involves trading a greater profit for guaranteed, predictable
number of future parcels they'd otherwise likely not get. Such deals are
common in the shipping industry.

Far from making it harder for the USPS to stay afloat, their deal with Amazon
and e-commerce shipping in general are the main reasons why they've been able
to survive the decline in bulk mail and the onerous regulations (retirement
prefunding requirements, etc.) that have drastically impaired the USPS.

0\.
[http://about.usps.com/news/statements/080117.htm](http://about.usps.com/news/statements/080117.htm)

~~~
pravda
> onerous regulations (retirement prefunding requirements, etc.) that have
> drastically impaired the USPS.

Onerous regulations? They are just being asked to act like every other
company. If you want to offer pensions, fine, but you have to have a funded
pension plan.

~~~
Bluestrike2
Companies and government agencies generally don't prefund retirement
healthcare benefits to 100%. Rapid USPS funding requirements starting 2007
were frontloaded for the first ten years. And while there are arguments for
prefunding versus a pay-as-you-go approach with current retirees, it's a
balance between short-term liquidity and long-term benefits.[0] Per the
Postmaster General's testimony in 2017:

> Our significant financial losses are due in large part to the legally
> mandated RHB prefunding requirement. Such a requirement to prefund retiree
> health care obligations is not imposed on most other federal entities or
> private-sector businesses that offer retiree health benefits, let alone on
> an accelerated basis. The Postal Service’s funded level for RHB far exceeds
> that of civilian federal government entities, state governments, and those
> private sector companies that offer retiree health benefits at all.[1]

Changes in mailing behavior were worse than the USPS expected in 2006, and
RHBF payments became much more of a problem than was initially expected. It's
not so much that prefunding is bad per se, but that the requirements as
enacted limited the USPS's liquidity and options. The USPS IG[2] also put out
a white paper[3] on the subject that argues some of the assumptions behind the
funding requirements. You'll find a range of arguments out there from
suggesting that the only problem for the USPS is the impact of the RHBF
payment requirements to them being just a symptom of broader problems, but but
the GAO report on the subject is a pretty even-handed take on the subject.[4]

0\.
[https://fas.org/sgp/crs/misc/R43349.pdf](https://fas.org/sgp/crs/misc/R43349.pdf)

1\.
[https://about.usps.com/news/testimony/2017/pr17_pmg0207.htm](https://about.usps.com/news/testimony/2017/pr17_pmg0207.htm)

2\. [https://www.uspsoig.gov/blog/be-careful-what-you-
assume](https://www.uspsoig.gov/blog/be-careful-what-you-assume)

3\. [https://www.uspsoig.gov/sites/default/files/document-
library...](https://www.uspsoig.gov/sites/default/files/document-library-
files/2015/ft-wp-15-003_0.pdf)

4\. [https://oversight.house.gov/wp-
content/uploads/2014/03/Todis...](https://oversight.house.gov/wp-
content/uploads/2014/03/Todisco-GAO-Statement-USPS-Unfunded-
Liabilities-3-13.pdf)

~~~
pravda
>Companies and government agencies generally don't prefund retirement
healthcare benefits to 100%.

So? Shouldn't all retirement healthcare benefits be prefunded?

It makes no sense not to do so.

~~~
mmt
No sense for whom?

With private companies, it makes _great_ sense for stockholders or corporate
executives trying to extract as much current value from the company as is
legally allowed (or can get away with). Future value is of much less
consequence to them. That's exactly why they have done so historically and
continue to do so.

With government agencies, the incentive is similar, in that prefunding means
they have to public funds today. It's much more attractive to leave the
problem for future politicians, literally decades later.

However, if the USPS actually has to prefund its retirement plans, then it's
fair to say that's an onerous regulation, compared with private industry,
which doesn't, no matter how many "should"s you throw at them.

------
Fjolsvith
So Amazon will just pass the cost on to the customer, like any business would.

~~~
prolikewhoa
It already is passed on to the customer, in your taxes.

~~~
cimmanom
But also to the non-customer. I'm boycotting Amazon for a reason, but also
apparently being forced to subsidize their shipping. Not cool.

------
phoncible
Ugh. I still order things from non-prime sellers, so that would hurt.

------
JudasGoat
It might not have the effect President Trump anticipated. In my area (south
eastern MA) Amazon has switched to it's own delivery system for the "last
mile" at least. This will only accelerate this direction until the "Drones"
takeover.

------
yogeshkhetani
Can Trump have command over what USPS does with their business tactics?

------
whataretensors
Then when Amazon creates a new distribution mechanism using AI they'll be
surprised.

I like the dream of decentralized delivery agents where no central authority
can take a cut or intercede.

Edit: What the hell, it turns out amazon deliveries are government subsidized
to the tune of ~$1.5/each.

~~~
brazzledazzle
Just Amazon’s or everyone’s? The mandate to deliver to everyone everywhere
can’t be cheap. You have to wonder if they ever should have privatized them at
all since they’re in a kind of limbo.

~~~
jjeaff
Definitely not everyone. But maybe all the really big shippers. Amazon ships
for substantially less money than you can get over the counter at USPS.

~~~
Cerium
If you print the labels yourself you can access a substantial discount. USPS
is very open about the costs of retail shipping. You can get a discount on
their website, or access larger discounts through third party websites.

~~~
jjeaff
Those discounts aren't even close to what large customers like Amazon are
getting.

They are likely getting around 50 cents a pound (based on FBA inbound averages
that they charge sellers) from UPS and FEDEX, which means in cases where they
are shipping via USPS, they are getting an even lower rate.

Try printing your own label and ship a 2 lbs package an hour away for $1.

------
prolikewhoa
Will someone please think of these poor & suffering record profit breaking
Fortune 100 companies?

~~~
perl4ever
I don't think it's sufficient to say "who cares about X" where X is what the
President is attacking at the moment, because the consequences may be
unforeseen, and go beyond the specific target. His goals are also unclear,
which sows instability and uncertainty.

In this case, people reasonably suspect that part of the motivation is his
dislike for the WaPo and Bezos, and that he wants to attack Amazon due to its
association.

However, part of the process seems to be spreading non-factual information
about the USPS. It's got to be nerve-wracking for the employees, thinking that
this might be an indicator that the federal government is working on new ways
to undermine them while pretending to "help".

Then too, Bezos is not the only owner of a newspaper which has or might
criticize the President, so people are justifiably concerned about the
implications of this vendetta for a free press.

All this is separate from whether the welfare of Amazon is particularly vital
to a person.

------
cprayingmantis
I hope they do, the Amazon packages I get through USPS are often late. It’ll
force Amazon to go with the quicker alternatives.

~~~
myrandomcomment
We live in this Utopia where we can click buy and in 1-2 days we get what we
ordered. Yet no one is ever happy. I think we protest a bit much here.

~~~
trophycase
It's almost as if never needing to leave your house and getting things at the
touch of a button isn't what makes people happy...

------
sir_stier
Trump has repeatedly said without evidence that deliveries for Amazon were
costing the service money...

How about this article in the Wall Street journal and the analysis done by
Citibank?

[https://www.wsj.com/articles/why-the-post-office-gives-
amazo...](https://www.wsj.com/articles/why-the-post-office-gives-amazon-
special-delivery-1522603826?mod=trending_now_1&tesla=y)

The Washington Examiner?

[https://www.washingtonexaminer.com/for-every-amazon-
package-...](https://www.washingtonexaminer.com/for-every-amazon-package-it-
delivers-the-postal-service-loses-146)

~~~
perl4ever
Well, first of all you seem to be presenting this as coming from multiple
sources which would make it more authoritative. However, the only source is
Citibank, correct?

Without looking into it further, I tend to be immediately skeptical because
(a) the figure of $1.46 sounds inappropriately precise and (b) the Post Office
has publicly stated that they are required by law to cover their costs, and
are audited to that end.

~~~
jjeaff
To me, the innapropriately precise number doesn't mean anything except that
when you are working with estimates, you should not round your final answer
any more than necessary.

If I estimate cost A is $1 and cost B is $2, I'm going to say that my
estimated average cost is $1.50, not $2

As far as required profitability, as any non gaap accounting numbers can
attest, you can make anything look profitable if you meddle with the numbers
long enough.

~~~
perl4ever
Well, inappropriate precision just highlights the question of what the
uncertainty _is_. If it's plus or minus $5, that's different than if it's plus
or minus $0.50. That's assuming the analysis is otherwise valid.

Secondly, I don't see how " _non_ gaap accounting" is relevant when the claim
is that they are audited by an independent entity using standards which are
_not_ under their control.

Here is the link to the statement from the Post Office:
[http://about.usps.com/news/statements/080117.htm](http://about.usps.com/news/statements/080117.htm)

"By law our competitive package products, including those that we deliver for
Amazon, must cover their costs. Our regulator, the Postal Regulatory
Commission (PRC), looks carefully at this question every year and has
determined that they do."

~~~
burfog
It isn't so easy to determine if costs are covered.

Suppose you have a store that sells rutabagas and phonebooks. You buy at
wholesale prices of $1 per rutabaga and $2 per phonebook. You need a markup to
cover the cost of rent, bond payments, volcano insurance, and heating oil. You
could mark up each product by 50% or by $0.75 or whatever. You can do the same
percentage, the same per-item amount of dollars, the same amount of dollars
for the total of all items sold, or something else. If you sell rutabagas for
$1 each and phonebooks for $5 each, does that count? You didn't exactly take a
loss on the rutabagas, but on the other hand they didn't contribute toward
paying for that volcano insurance. Maybe selling the rutabagas cheaply will
bring in more customers, many of whom will buy overpriced phonebooks. If a
rutabaga sold at $0.79 causes an average of 3.14 phonebooks at $8.05 to be
sold, does that rutabaga cover costs?

~~~
perl4ever
"It isn't so easy to determine if costs are covered."

I suppose I agree that it's not easy to attribute costs, but if this is a
defense of Citibank or Trump's claims about Amazon, it seems like special
pleading. If it isn't so easy to determine if costs are covered, and if the
Post Office is not giving them any deal other major shippers don't get, and
they are audited according to some standards that people defined as
acceptable, then it seems as though people should _stop claiming_ the USPS is
subsidizing Amazon.

