What's Trump's Problem with Amazon?
Community
Amazon has been a God-send for many of us in rural areas who don't live within a practical drive to brick and mortar retailers. Their service is easy, quick, and reliable. Their prices are usually the cheapest available, and their selection of products is second to none. Not to mention, the value of their stock has been great for many portfolios.
Why is Trump trying to ruin all of that? His claim of a USPS scam is unsupported, and his claim of tax evasion is false, according to the sources I've read. Is this just an ego thing between Trump and Bezos?
Matt
I seriously don’t get the USPS deal that Amazon has worked out. My wife ordered me a back pillow (because later mentioned GSP played Houdini and got out of his kennel while we were gone and took out his frustration). Pillow came in a box that is big enough for my 12 year old and German Shorthaired Pointer to sit in...at the same time...and it was free shipping. Then I just mailed out a package to a friend in VA (I’m in MI) and the box was 22”x11”x5.5” and was custom made to reduce the size. Cost me $28.80 on the slowest way to get there. Something just don’t seem right with what is going on.
Amazon had a contract with usps, however usps only delivers the last step. Amazon moves the package around the country via its network of locations.
Usps then takes it locally. Trump is claiming usps is losing money. If usps is losing money it's their fault. Isn't usps independently run?
USPS has been seriously undercharging Amazon for handling their deliveries.
But that's the fault of the USPS, not Amazon.
“Is this just an ego thing between Trump and Bezos?“
Yes. Remember Bezos owns the WaPo.
From the article:
"Because Amazon ships so many packages though the post office, it pays a lower rate than most customers. But Amazon doesn't get a special rate — it pays the rate that the post office charges other bulk shippers."
Phil,
In that case, the USPS is undercharging the other bulk shippers as well.
bezos owns the washington post. that is what is going on.
The post office would’ve gone under ifnot for Amazon. Amazon packages are making a lot of money for the USPS and staving off the pressure for privatization or big job cuts.
A time line for you;
•2013: USPS, Amazon sign partnership
•Deal requires agreement to be profitable for USPS
•Deal requires USPS to make Amazon deliveries on Sundays
•USPS annual revenue has increased by $2.3B since 2013
•2017: USPS made $19B in revenue from packages and shipping
2017: USPS made $19B in revenue from packages and shipping.
And they STILL lost $5B last year.
Again, USPS's problems aren't because of Amazon. Trump's just using that as an excuse to push his personal vendetta against Bezos and the WP.
Matt
Maybe you should do a little more digging before exposing yourself for ignorance you are known for.
"Maybe you should do a little more digging before exposing yourself for ignorance you are known for."
The only person on this thread who classifies as ignorant, other than the two resident lefties, is YOU!
I see you are still playing the feeble minded fool, but thanks for the free rent anyways....
Boy atheist. All the PROOF about USPS, but can't come up with that GUN LAW that will keep our students safer. You agree with the protesting, but you seem to not know what you are backing, with the protest. Well, how about that law atheist???? 8^)))))
Not one thing that atheist posted is relevant.
Not ONE!
Hey, moron, 'REVENUE' has little to do with Profitability! If it costs the USPS more to meet the terms of their contract with Amazon than the Revenue that contract brings in, they LOSE money.
Never took ECON 101, did you?
http://fortune.com/2017/07/16/amazon-postal-service-subsidy/
I remember reading this article years ago and if this analyst is right then the USPS is giving Amazon a subsidized delivery service that the taxpayers are paying for.
Mint,
Great post and it destroys every single one of Sybil's uneducated and false claims.
But then he doesn't know $h!t from Shinola when it comes to economics or business, so no surprise there.
It seems the USPS is getting hammered by mandated retiree bennie costs and healthcare costs (so much for Obamacare!). The below is part of a larger Market Watch fact check of Trump's claims. It is a little misleading in that it shifts focus from Amazon to the retirees/healthcare costs. Most every business has to cover it's liabilities. The bottom line is what taxpayers have to cover which the Market Watch fact check seems to bypass. That is what the Citigroup analysis is doing. IMO.....Trump's hidden goal maybe to renegotiate the Amazon contract to the benefit of taxpayers just like he did with Boeing and the AF-1 cost.
https://www.cbsnews.com/news/amazon-contract-usps-fact-checking-trump-tweets-amazon-post-office-03-31-2018/
""There is little to these claims. While the postal service is struggling, it's not because of Amazon. In fact, package delivery is one of the few lines of business that's growing.
The postal service has lost money for 11 straight years, mostly because of pension and health care costs. In 2017, the service lost $800 million on $69.7 billion operating revenue. Under a 2006 law, it must pre-fund 75 years' worth of retiree health benefits. Neither the government nor private companies are required to do that. (It has defaulted on those payments periodically, with the last one made in 2015).
A widely cited Citigroup analysis from last year holds that the "true" cost of shipping packages for the Postal Service is about 50 percent higher than what it currently charges. "It is as if every Amazon box comes with a dollar or two stapled to the packing slip -- a gift card from Uncle Sam," read the ensuing editorials.
But Citi arrived at that figure by re-allocating the Post Office's benefits costs -- not the costs specific to package delivery.
The 2006 law also mandated that each line of business within the postal service cover its attributable costs. In other words, for the postal service to lose money on package delivery would be against the law. ""
The Citigroup Analysis:
https://ir.citi.com/XInLvxkr5F%2FJvyPr1NMl%2FPcIgrn%2BXqplW8cqbv2ImZxLKrWAiRT%2BcFMjQe6C%2BuQT9n1mvCnznGU%3D
USPS is making the routes and delivering mail regardless if it has an Amazon box in the vehicle or not. In many if not most ways, their costs are fairly fixed. Only if they had to add more workers directly due to more Amazon shipping would it add much more to fixed costs.
My guess is like many public sector jobs, the retirement/healthcare costs are among their highest costs and getting higher.
I see USPS trucks in my neighborhood very early in the morning and on Sundays in a regular basis. Those are not regular USPS services. Those are Amazon delivery services.
Their financial problems arise from the fact they grossly overpay their frequently grossly incompetent union employees and are clearly incapable of accurately calculating the costs of their services as well.
Like my article states, fixed costs should be allocated across revenue share and in the case of amazon's parcels they are not. Like Kyle states early morning delivery and Sunday delivery throws out the claim that the packages are being delivered with the normal route. In my suburban neighborhood they are not even though we get mail delivery six days a week. If they did then I could understand amazon's discounted delivery prices and since they are not this leads me to believe this is adding to even more gas, wages, overtime and pension costs for the USPS with Amazon getting a nice break and the taxpayers picking up the bill. I'm sure amazon lobbyists and the postal unions just love this arrangement.
jl - "It seems the USPS is getting hammered by mandated retiree bennie costs and healthcare costs (so much for Obamacare!)."
Did the USPS retirees use Obamacare?
USPS hands are probably ties with what they can charge Amazon. I would have to get with some of our contracting folks, but Federal regulations create a lot of red tape for negotiating this high of a $$$ values. There may be some clause in there that states they can only charge X amount. Most likely this has to do with bulk services fees that have been previously decided. That said it is highly unlikely that any contract would be approved if it was not beneficial to the USPS. However, that doesn't mean that USPS didn't charge them enough.
USPS is self funded. They make their money off of sales (stamps, postal services, boxes, and etc). This was great when USPS was pretty much the only mail delivery service in town. However, privately owned companies such as Amazon, UPS, FedEx, DHL, and etch have begun to dominate the package shipping market. This hurts USPS because their volume is now lower which means they don't have the sales to fund their expenditures (trucks, wages, pensions, contractors, material, and etc).
I don't know the whole history of this, but I do understand how outdated pricing will negatively impact USPS' bottom line.
On paper, given Amazon is huge, couldnt they just say: Well USPS, you are not meeting what we want price wise, so we will go bother DHL/UPS/FedEx etc until we find one willing to play (or we will make our own service up and do it ourselves)?
Regardless - I'm glad to know I'm not the only one to pick on the boxes. We ordered some maple syrup taps earlier this winter that were about a 1 foot by 4" and 8" package, and they came in a box that my six year olds could fit in (one at a time... but still)!
Probably cheaper to purchase. Buy X box sizes vs every possible size, get em in larger order sizes to pay less and just use what you have.
"Probably cheaper to purchase. Buy X box sizes vs every possible size, get em in larger order sizes to pay less and just use what you have. "
It's not for my company and in shipping they will kill you with the dimensional weight charge which is a weight that is based on the box size as opposed to the box actual weight. But maybe that is another subsidy that amazon is getting from the post office in that they are not being charged for dimensional weight on the large box size. I know the USPS doesn't charge for Dims until you hit a certain size though.
Amazon should not be punished for any fair-market deal they have with a shipping company.
Matt
I think Trump just wants to tax the internet....
UPS/fedex delivers as much or more of our Amazon Prime "free shipping" as does USPS. When we order most times we have no idea who is the shipper. All our orders are air as well, UPS/fedex don't do ground to HI. (ground is "surface" surface is by sea and can be anywhere from 2 to 6 weeks, depending) Amazon has contracts with them as well. They have no "subsidies". I'm sure their contracts are mutual agreements.
95% of all I order is Prime. We probably average $400 to $500 a month through Amazon. Everything from sandpaper for floor sanders through popcorn packets for our poppers. Picked up a great deal a year or two ago on a 3D printer..... free shipping. We love em. But no doubt, they are literally changing the way the world works......
And Trump's little tiff with Bezos just cost Investors 2.36% on Amazon stock, today.
So glad Trump has working class Americans in his best interests. Dumbass.
Matt
"And Trump's little tiff with Bezos just cost Investors 2.36% on Amazon stock, today. "
Only if you were stupid enough to sell...
I've never had a package delivered from amazon that was delivered by the USPS. UPS or FEDEX.
More about the amount of small businesses loss to Amazon than anything...
I also love the USPS flat rate priority boxes. Box is free, pick them up at the post office....... flat rate to anywhere depending on the size of the box, as long as weight us under 70 lbs I believe. You could ship a box of nails or a box of flowers for same amount.
Just sent a hydraulic motor back to the midwest, was nearly 40 lb, but I made a wooden frame fitted to it and it just fit in the flat rate box, was under $20 if I remember. The folks shipping one to us only shipped UPS and it was nearly $100 shipping here.
USPS I can pay for it online, print out the mailing label and the carrier picks it up when they come by with the mail. No lines at the post office. Pretty cool.....
I love amazon. I am suspicious of their business model. I have ordered a $15 item on prime and had it delivered by a special truck on sunday. There is no way that makes money for them.
Amazon's net income grew 147% in the 4th quarter of 2017 compared to the same quarter in 2016. I'd say their business model is fine.
Their stock is shedding another 1% this morning. Thanks Trump.
Matt
Slade's 3 extremely informative contributions to this thread.
1."Maybe you should do a little more digging before exposing yourself for ignorance you are known for."
2. "I see you are still playing the feeble minded fool, but thanks for the free rent anyways...."
3. "Keeping America Great"
Matt
And you yet you continue to wallow in your ignorance in your Closet Democrat anti-trump stained mind as if it was of any importance, and no I will not do your home work for you.. But please keep wallowing.
I'm reading that USPS's package deliveries are the only profitable portion of their business. The loses are from declining first class mail revenues, high labor costs, and benefit packages. None of that is Amazon's fault.
https://www.vox.com/2017/12/29/16830128/amazon-trump-twitter-postal-service-feud
I'd say USPS needs Amazon more than vice versa. If Trump regulates that USPS charges higher delivery rates, Amazon will simply use a different service, or expand on their own. Then we'll really see USPS hemorrhage money.
Matt
What your are reading is wrong and if you even did the tiniest bet of research on anything other than anti-trump or protect stocks at the expense of all sites you could enlighten yourself. But keep wallowing down the path you have chosen.
"What your are reading is wrong...."
Prove it.
Or, keep hiding behind your shallow "I'm not doing your homework for you" claim. I don't really care.
Matt
Mint's Link
It's not just amazon getting a big subsidy but Chinese companies are getting an even bigger subsidy.
It seems to me that taxpayers either "subsidize" cheap deliveries, or they pay for regulated higher delivery costs directly to the shipping companies. Either way we pay for it.
As I said, if you want to see USPS fail more miserably than they already have over the last few decades, force Amazon to take their business elsewhere.
Matt
"As I said, if you want to see USPS fail more miserably than they already have over the last few decades, force Amazon to take their business elsewhere. "
The way the post office is run this might be just a cash flow increase while they lose money and defer the costs for pension and benefits. If drivers are getting ot for working on sunday or extra hours I'm not sure the po is making money.
