At $2.1 billion, packages contributed the largest revenue increase. In 2017, parcel deliveries made up $19.5 billion, or 28 percent of USPS’ annual revenue. If anything, USPS has been benefiting from Amazon and companies like it. This, coupled with the bulk nature of Amazon’s shipments to USPS warehouses, creates an economy of immense scale. Part of the reason the Postal Service can offer ultra-competitive prices is that by combining parcel and package deliveries with traditional paper mail deliveries, they aren’t adding much extra time or manpower to deliveries. But this doesn’t mean the agency is losing money. Yet one study found that USPS charges $1.46 below market rates for parcel deliveries. The Postal Regulatory Commission, USPS’ regulator, does an annual audit to make sure regulations are met. This controls USPS pricing, ensuring that they don’t charge below cost for services. The postal service is protected by the 2006 Postal Accountability and Enhancement Act. But is USPS losing in this deal, as Donald Trump suggested? The postal service then itemizes these into individual orders for home delivery.Īmazon clearly benefits from this relationship (and it should be noted that the company works with all major parcel shippers as part of its logistics strategy). The process is straightforward: Amazon sends packages in bulk to USPS distribution centers. The agency currently delivers around 40 percent of Amazon’s packages. Despite being a federal agency, the USPS is not funded by tax dollars and is allowed to act as a third-party shipper to balance its books. What’s the truth behind the USPS-Amazon dynamic?įor massive retailers like Amazon that rely on cost-cutting to make a profit, partnering with third-party logistics companies is standard. The controversy reached its zenith when Trump issued an executive order requesting an audit of USPS’ finances. The partnership between Amazon and the United States Postal Service (USPS) has been in the spotlight since March of this year, after Donald Trump took to Twitter to express his concern that the private company is eating into the federal agency’s revenue. The Truth about the USPS-Amazon Relationship
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