A US Postal worker delivers Amazon boxes outside of the New York Stock Exchange (NYSE) on October 11, 2018 in New York City.
Spencer Platt | Getty Images
President Donald Trump has routinely blamed Amazon for problems with the U.S. Postal Service, but new documents show the e-commerce giant remains a large and lucrative customer for the USPS.
The USPS circulated “fact-checking statements” internally that buck Trump’s criticisms of Amazon and shed new light on its relationship with the company, according to documents obtained via a Freedom of Information Act request by watchdog group American Oversight. The documents were first reported by The Washington Post.
Trump has claimed that Amazon costs the Postal Service “billions,” but the USPS said in the fact-checking statements, circulated earlier this year, that Amazon was the Postal Service’s “largest customer” in fiscal 2019, generating about $3.9 billion in revenue and $1.6 billion in profit.
The Postal Service also countered Trump’s oft-repeated argument that it needs to raise prices to make money on deliveries, the documents show. By contrast, the USPS said it had the largest price increases “in recent history” from 2018 to 2019, including a 10% price increase for its Parcel Select service, which is used by Amazon.
“USPS would see a net contribution loss with a significant share of its package business if prices were to be raised significantly,” according to the documents. “USPS competitors could take share in these instances.”
According to the documents, the agency also expressed concern in April that, if it were to raise prices, it would “cede ground” to competitors and Amazon’s growing logistics network.
“Amazon has been aggressively insourcing volume with Amazon logistics, sending two billion-plus packages in fiscal 2019, which primarily cuts into USPS’ share,” the documents state.
White House spokesman Brian Morgenstern said in a statement that the Postal Service “has been losing billions of dollars for more than a decade and is projected to lose tens of billions more in the next decade.” Morgenstern added that Trump has created a Postal Reform task force to “make recommendations for improving the financial future of the USPS.”
The documents provide a glimpse into the extent of the Postal Service’s relationship with Amazon, which became complicated months into the coronavirus outbreak.
Amazon relies on several carriers to deliver packages, such as UPS and FedEx, and is building its own network of contracted delivery partners. But the documents illustrate how Amazon continues to rely on the Postal Service.
The Postal Service delivered more than 1.5 billion Amazon packages, or roughly 30% of its total volume, in fiscal 2019, according to the documents.
The USPS delivers Amazon packages that are fulfilled by Amazon warehouses, known as Fulfillment by Amazon, and orders that are fulfilled independently by third-party merchants. “The majority of revenue and volume from Amazon” is through FBA, the Postal Service stated, according to the documents.
The Postal Service faced pressure from Amazon in April, as the pair were in the process of negotiating new pricing agreements. The USPS held a teleconference with Amazon on April 9, wherein Amazon voiced concerns about the agency’s “viability to them as continued shipping partner,” according to the documents.
“Amazon made it very clear that the USPS is alone, globally, among their partners in having this pricing uncertainty,” the documents state. “Additionally, Amazon is concerned that any stimulus from the Treasury will come with stipulations, causing concern and further risk.”
Amazon pressed the Postal Service to answer questions about its financial woes, which were exacerbated by the pandemic. Among the questions it asked were: “What does the USPS look like in the next few weeks, the next few months and the next several years?”
Amazon declined to comment on the nature of the company’s relationship with the USPS or what members of Amazon’s leadership were present during the April 9 meeting with the Postal Service.
“For more than two decades, Amazon has partnered closely with the United States Postal Service to invent and deliver for our customers, which has resulted in significant revenue for the USPS and thousands of American jobs,” Amazon spokesperson Rena Lunak said in a statement. “USPS continues to be a great partner in serving Amazon customers.”