On Friday, Amazon became the new target of US President Donald Trump when he called upon the postal service of the country to recoup its costs by raising the prices of its shipments. He has already criticized the ecommerce giant in the past and is all set to pick another fight. In his tweet, the US President said that the United States Post Office was losing billions of dollars every year, but it was not charging much from Amazon and others for delivering their shipments thereby allowing the companies to get richer and it gets poorer.
Running at a big loss, the US Postal Service falls within the federal government, but is an independent agency that doesn’t receive any tax money for its operating expenses. The US delivery industry is worth $1.4 trillion and the US Post Office is a significant part of it. Some other players of the industry include Fedex Corp and United Parcel Service Inc. Jeff Bezos founded Amazon and he still holds the position of chief executive of the retail firm. He is also the owner of Washington Post, a newspaper that has also been the target of Trump’s criticism when he spoke against the news media.
In the past year, a number of tweets made by the president accused ‘Amazon Washington Post’ of fabricating stories. He has also alleged that Amazon hurts other retailers because it doesn’t pay fair taxes. Since he took office in January, it has become the pattern for the former businessman to turn his ire on large American companies periodically. According to the annual report of the US Postal Service, it suffered a total of loss of $2.74 billion this year. It had become an independent agency in 1971 and since then, its deficit has increased to $61.86 billion. Last year, it had reported a loss of $5.59 billion and its deficit had been about $55.98 billion.
According to its projections, it should have lost about $4.2 billion this year, but the loss had turned out to be lower than expected because it had reduced the compensation liability of its workers by $2.2 billion. The revenue of the postal service for marketing mail, first class mail and periodicals is declining or flat, but the revenue it gets from package delivery has seen an increase by 44 percent since 2014. The 2017 fiscal year came to an end on September 30th and its revenue from package delivery was about $19.5 billion.
In the past, Amazon has expressed its interest in developing its own delivery service. In 2015, the shipping cost for the company was around $11.5 billion, which accounted for 46 percent of its total expenses in the year. It had been reported in October that Amazon was doing some testing for launching their own delivery service in order to move its products quickly from its warehouses and to make them available for free delivery in two days. But, Amazon had said at that time that it was using the same partners as it had done for years.