A series of new sweeping reforms could give the US Postal Service the flexibility to raise shipping costs for certain packages in the US. The reforms have been recommended by a task force formed by the Trump administration. The changes if approved will have a massive effect on Amazon’s shipping costs and other online retailers. President Trump had ordered an evaluation of the US Postal Service’s finances earlier this year. Trump accused Amazon of not paying a fair price when it comes to posting services offered by USPS.
In addition to this, the service had been making a lot of losses. In the last reported figures, total losses amounted to $3.9 billion. This was the 12th year in a row that the service reported a loss. Trump thinks that Amazon has been taking advantage of the services offered by USPS with US taxpayers having to shoulder the cost of delivering subsidized shipping rates for online retailers. In a press conference earlier this year, Trump said that he will be exploring new ways to force Amazon to pay much more for the shipping services offered by the US Postal Service.
According to the taskforce that was formed to evaluate the finances of USPS, one of the reasons why the losses have been growing is based on the increasing preference of digital letters as opposed to traditional ones. The taskforce also noted that there are too many operational costs. It added that the pricing system for package delivery offered by the service is not structured well enough to achieve profitability. As a result, the reforms recommend that USPS must be given the flexibility it needs to change shipping prices in line with current market needs. The service is also expected to start pursuing additional cost-cutting strategies that will help reduce the operational costs incurred so far.
The US Postmaster General said that his office had received the report by the taskforce and that it’s reviewing it. The Postmaster General, however, said that the recommendations from the taskforce must be viewed in relation to existing legislative and regular reforms in the industry. Amazon is the biggest single customer for the US Postal Service. The e-commerce giant has, in fact, influenced the service to offer specialized services in line with its needs over the last few years. However, the US president has said many times that the arrangement is not suitable.
Amazon’s CEO Jeff Bezos has been a frequent target of Trump’s attacks. Some reports indicate that Trump has targeted Bezos because of his ownership of the Washington Post. The president has often felt that the media outlet has been too critical to him and his presidency. Trump hasn’t been a fan of the media and his relationship with the press has gotten worse by the day. Amazon has yet to respond to the new report by the taskforce. There’s no doubt that it will be following events closely. The e-commerce giant will also have a few things to add. Since it’s the biggest single customer for the USPS, its input on the final deliberations will be vital.