My last blog post was in relation to President Trump attacking Amazon and the USPS for being taken advantage of. Since my last post, the POTUS has continued to go after Amazon and the Founder and CEO Jeff Bezos. The question remains and has been argued immensely on the internet is, Are the comments the President making accurate? Well, that's debatable but the consensus of the experts in the field is that he is wrong, or at a minimum partially wrong. Read the article below from CNN that talks about POTUS vs Amazon and the USPS.
Hunter Hartman is an eCommerce consultant based in Orange County, Southern California. His focus is on eCommerce companies that are shipping business-to-consumer. Through his shipping expertise he has helped hundreds of companies save money shipping small parcels and helped to integrate a more automated solution. For more information regarding eCommerce consulting please reach out to Hunter directly. Hunter also has his a secondary website, HunterHartman.net
The President has raised concerns with his notorious twitter handler regarding USPS, Amazon and the loss of revenue. He blasted the agency for not charging enough for parcel delivery.
"Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to delivery their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!" Trump shared on twitter. Amazon and the USPS haven't responded to this tweet, to no one's surprise.
Anyone that follows the POTUS, knows that his famous claim is #FakeNews about all the NEWS organizations out there. one of his biggest targets is the Washington Post, which is owned by Amazon CEO Jeff Bezos. We know these two do not get along together.
Let's try to put this into perspective. Letter volume continues to drop significantly as parcel shipping grows by double digits but the biggest issue is the pre-funding of retiree pensions which have the USPS in the red. This is a similar problem the state of California is facing, government pensions.
The volume of first-class mail handled by the USPS was 19.7 billion in 2016, down 4.8% from 2015 and less than half of the 42.3 billion items it handled in 2007; it's also down 40% from a peak in 2000, before e-mail took off. At the same time, however, parcel shipping volume is up 16% to 5.2 billion in 2016.
Regarding Amazon, the USPS has been accused in the recent past of providing the world's top eCommerce shipper with crazy-good rates and creating a division between them and other online retailers, a charge that both deny. The USPS has been making deliveries for retailers and Amazon seven days a week, a practice that is stepped up during the holidays.
The reality is, if Trump wants to fix the USPS and it's relationship with Amazon, he has the power to do so. he could push Congress to approve the Postal Reform Act, which has been discussed for a year now. Among other things, it would free up the USPS from some of the burden of the pre-funded pensions by switching some retirees to Medicare or Medicaid. Although, the critics don't think this does enough and just adds insult to injury.
Anyone that understands the work-share program, knows that volume will push down rates. Amazon has the best rates with USPS because they have the most volume with the work-share discounts. They also have regional shipments because of their warehouses across the country so they don't have as many Zone 7 and 8 inductions that UPS SurePost, FedEx SmartPost, and Newgistics have. The work-share, last-mile services UPS and FedEx have are called SurePost and SmartPost.
At the end of the day, Trump does have a point and there should be some changes that occur. Trump could get USPS to charge more for the Parcel Select last-mile services it provides to UPS, FedEx and DHL eCommerce. The only issue with this is that these carriers may then figure out a way to do the last-mile themselves, which some are doing already. this then eliminates any revenue for the USPS, making them even dumber and poorer.
There needs to be some changes, but it's not as simple as saying "USPS is the reason Amazon is rich and the USPS is getting dumber and poorer."