April 5, 2018
The former head of the US Postal Service is taking on President Donald Trump’s campaign against the USPS’ Amazon deal.
“Only fools, or worse, are saying that our money losing Post Office makes money with Amazon,” Trump tweeted Monday. “THEY LOSE A FORTUNE, and this will be changed.”
Trump doubled down with another tweet on Tuesday, saying Amazon is “costing the United States Post Office massive amounts of money for being their Delivery Boy.”
However, according to Patrick Donahoe, who served as the postmaster general from 2010 to 2015, that’s simply not true.
Donahoe “unequivocally stated that the Amazon contract is profitable for the USPS” while in conversation with UBS analysts, according to a note released by the bank on Thursday.
The former postmaster general broke down the fact that the USPS’ business is split between mail — like letters and magazines — that only the government service could deliver, and “competitive products,” or packages that rivals like FedEx or UPS could deliver. Package delivery legally needs to cover operating costs and 5.5% of USPS’ fixed costs.
According to Donahoe, package products are covering “meaningfully more” than the 5.5% allocation. Last year, shipping-and-package revenue jumped by $2.1 billion, an increase of 11.8% over the previous year. According to the USPS, much of that growth was thanks to e-commerce.
SIGN UP FOR OUR POSTAL NEWS BLAST!
Get the news sent straight to your inbox. Please remember, this list sends an email every weekday, so if you are not a news junkie, then this might not be the list for you. Thanks