President Donald Trump has ordered an investigation into the business practices of the United States Postal Service (USPS), a move that is likely to indirectly affect Amazon.com Inc. (AMZN), one of his biggest corporate targets.
The president's executive order requested that a task force be set up to review the operations and finances of the USPS, which has lost more than $65 billion over the past decades. The task force will examine its business model, workforce, operations, costs and pricing, as well as recommend reforms.
“The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout,” the president said in the order, which was released Thursday night. He added: “It shall be the policy of my ddministration that the United States postal system operate under a sustainable business model to provide necessary mail services to citizens and businesses, and to compete fairly in commercial markets.” (See also: Trump Reportedly Wants to ‘Go After’ Amazon.)
President Trump previously accused Amazon of being responsible for the USPS’s downfall. On social media, he claimed that the postal service loses $1.50, on average, every time it delivers a package for Amazon. In a series of tweets, the president warned that the e-commerce giant was “costing the United States Post Office massive amounts of money for being their Delivery Boy,” a situation he said had put “many thousands of retailers out of business.” Amazon uses the Postal Service for many of its last-mile delivery services. Analysts estimate that it pays the USPS roughly half what it would be required to pay United Parcel Service Inc. (UPS) or FedEx Corp. (FDX) to deliver a package, according to Reuters.
While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars. The Failing N.Y. Times reports that “the size of the company’s lobbying staff has ballooned,” and that...
— Donald J. Trump (@realDonaldTrump) March 31, 2018
However, Amazon's contract is reportedly profitable for the service, and its package delivery business has seen double-digit increases in revenue. Amazon also qualifies for a bulk rate thanks to the high volume it delivers with the USPS. (See also: Charting Amazon Volatility Caused by Trump Tweets.)
Amazon wasn’t mentioned in the executive order, although, according to Bloomberg, one White House official admitted that the presidential order could affect the e-commerce giant, even if its goal was solely to fix the problems at the USPS. Another White House official disputed any claims that the order was in anyway directed at Amazon.
Experts outside the White House believe that President Trump’s intentions could be more sinister. One analyst told CNBC that President Trump’s public spat with Amazon makes his investigation into the Postal Service a move open to further interpretation. "Amazon has built its business model on the shoulders of the USPS and Trump is not just talking the talk but now walking the walk with this executive order as a first step, in going after this potential relationship," Daniel Ives, chief strategy officer and head of technology research at GBH Insights, said.
A person who previously worked at the Postal Regulatory Commission told Reuters that the order will likely encourage the task force to see if the USPS can charge companies such as Amazon more for parcel delivery.