What’s Amazon worth to the Post Office? It could be a cool billion

Thanks to the recent revelation in the Washington Post that the President has actually pressured the Postmaster General to double prices for Amazon shipments, news reports about the deal between Amazon and the Postal Service just keep on coming.  Most of these articles point out that the details of the deal are secret — they are part of what’s called Negotiated Service Agreements — so there’s no way of knowing how much money the Postal Service might be making money or losing on the deal.

The Postal Service does, however, publish a lot of reports about its finances — many of them for the Postal Regulatory Commission, which approves the NSAs.  Based on public information, one can get a pretty good idea about how much money we’re talking about here.

According to the Washington Post, Postmaster General Megan Brennan has explained to the president on several occasions that the Post Office’s relationship with Amazon is beneficial.  As a source told Axios, “It’s been explained to him in multiple meetings that his perception is inaccurate and that the post office actually makes a ton of money from Amazon.”

A ton, indeed.  As the following back-of-the-envelope analysis will suggest, the Postal Service could be making as much as a billion dollars a year off the Amazon deal.  In order to explore the issue, we’ll look at three simple questions: How many pieces is Amazon shipping through the Postal Service?  How much revenue are the shipments generating?   And how much does it cost to deliver these Amazon parcels?

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