In spite of Trump's attacks, Amazon's Post Office shipping rates don't look set to rise

By

Robin Driver

Published
Apr 6, 2018

Following US President Donald Trump’s repeated attacks on Amazon’s treatment of the US Post Office (USPS), analysts from Piper Jaffray Companies have stated that they do not believe the online retailer will face higher rates.

In a note published on Tuesday, Piper Jaffray claimed that it is “unlikely that the Post Office will materially raise rates for Amazon deliveries, given Amazon would likely shift to alternative shipping options (perhaps both internal and external)”.
 
Indeed, Amazon reported that its shipping costs in 2017 totaled $21.7 billion and are likely to increase as the retailer expands its service offering, stoking rumors that the company may be looking to develop its own shipping service.

In this context, it would certainly seem to be in the USPS’ interests to maintain rates at an attractive level for Amazon, especially seeing as, even if the aforementioned rumors prove to be unfounded, the e-commerce retailer could easily shift the bulk of its shipping to another carrier. As a recent MarketWatch.com article pointed out, citing a UBS note published in March highlighting that “large e-commerce companies have potential to evolve their strategies and move business among the three network companies (UPS, FedEx, USPS)”.
 
Furthermore, the USPS, which is struggling with mounting pension and healthcare costs, and suffering due to a decrease in first-class and marketing mail, has actually seen double-digit growth in its revenue from package deliveries. It therefore seems unlikely that the entity would be willing to potentially jeapordize a lucrative line of business by raising its rates.
 
Trump initiated a series of tweets directly attacking Amazon’s relationship with the US Post Office last Saturday, when he posted that “the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon”.
 
His most recent post on the subject states, “I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne [sic.] by the American Taxpayer.”
 
The USPS functions as an independent agency and does not receive funding from taxes.
 
Trump has aired a variety of criticisms of Amazon on Twitter since an article published on news website Axios on Wednesday, March 28 claimed that the president “hates” the online retailer and is planning to “go after” the company, a report which provoked a 7.4% dip in the e-commerce giant’s shares at the time.
 
Trump’s latest attack on Amazon took the form of a condemnation of the Washington Post on Thursday, which the president described as the online retailer’s “chief lobbyist”, an accusation he previously alluded to in a Twitter post on Saturday, March 31.
 
The newspaper, which is privately owned by Amazon CEO Jeff Bezos, is a recurrent target of the president’s ire, along with the New York Times and CNN, whose content he often labels as “fake news”.
 
After Trump initially mentioned the paper on Saturday, The Washington Post’s Chief Editor Martin Baron refuted the accusation that the paper is a lobbyist for Amazon, telling the New York Times on Tuesday, “There isn’t anybody here who is paid by Amazon.”