Proposed Postal Service reforms could hike package delivery costs


U.S. Postal Service postmaster general Patrick Donahoe weighs in on budget woes.

That recommendation could raise costs for Amazon and other major businesses that are now using the Postal Service to supplement their delivery operations.

It has been losing money for more than a decade, the task force said, partially because the loss of revenue from letters, bills and other ordinary mail in an increasingly digital economy have not been offset by increased revenue from an explosion in deliveries from online shopping.

The task force recommended that the Postal Service have the authority to charge market-based rates for anything that is not deemed an essential service, like delivery of prescription drugs.

Among its key recommendations, Tuesday's report calls for the development of a new pricing model, which eliminates across the board price caps and suggests charging "market-based prices" for both mail and package items that are not considered essential postal services. When the current law was written, it assumed package delivery would make up about 5.5 percent of Postal Service revenue, but the rise of e-commerce companies like Amazon has pushed that percentage to about 25 percent.

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Cowen & Co, in a May report, said the Postal Service and Amazon were "co-dependent", but that Amazon went elsewhere for most packages that needed to arrive quickly. "Most of the report's recommendations, if implemented, would hurt business and individuals alike", the union said in a statement.

"This was not the reason that our founders put the United States Postal Service in the Constitution", he said of the relationship with Amazon - which is owned by routine Trump foil Jeffrey Bezos. In a statement, eBay said it is a "long standing partner of the United States Postal Service" and its "small business sellers rely on USPS to reach their customers". Amazon did not immediately respond to a request for comment. The Postal Service reported a loss of $3.9 billion for its 2018 fiscal year, which ended September 30 - the 12th straight year the service has reported a financial loss.

Mark Dimondstein, president of the American Postal Workers Union, charged that numerous recommendations in the report were based on "myth and misinformation" and that instead of improving mail services "would deliver higher prices and less service to the public".

Last month, the Postal Service reported a financial loss for the 12th straight year, citing declines in mail volume and the costs of its pension and health care obligations.