USPS CFO responds to claims of Amazon subsidies

USPS truck on street

Following a report by Josh Sandbulte in the Wall Street Journal and picked up by other media outlets,  , on Amazon’s use of the U.S. Postal Service (USPS) for package delivery, USPS Chief Financial Officer Joseph Corbett responded with a letter clarifying and refuting some of the points of the article.

That letter has been posted to USPS’ website.

USPS noted how Sandbulte “gets some things right about the Postal Service” without mentioning which points those are. The company said that the WSJ article was “a self-serving opinion.” As the agency is waiting for passage of HR 756, also known as the Postal Reform Bill, it must abide by what the law allows; that is to “cover their [package delivery] costs,” it said.



USPS also noted the measures that the Postal Regulatory Commission has undertaken to address the question on the article’s title itself “Why The Post Office Gives Amazon Special Delivery.” Without describing this issue as an advantage or disadvantage, USPS said the charges represent “competitive pricing” that “continue to attract e-commerce customers and business partners.”

USPS noted the difficulty of producing revenue with a business model that bars it from adjusting prices to account for changes in volumes and cost. The company cited “systemic financial imbalances caused by legal and other constraints” as the reason.

USPS stated in its 2016 Postal Facts that its total number of mail pieces processed and delivered reached 154.2 billion. Salary costs for 493,381 career employees and 131,732 non-career employee cost $1.8 billion every two weeks.

The proposed bill that USPS has been waiting for is expected to increase postal rates along with health benefits and other fringe benefits for the workforce. Among the provisions stated are:

  1. Allowing USPS to increase rates based on mail categories;
  2. Allowing USPS to “phase out delivery of mail directly to business customers’ doors;
  3. Putting in place a new health benefits program that explicitly mentions dependents; and
  4. Requiring demographic data to be used in calculating retirement benefits.

Each provision highlighted the savings that the United States government will earn while implying that some of the costs might be shouldered by the buyers. The estimated net on-budget savings of $0.2 billion and an estimated net off-budget savings is $6.2 billion.