We will begin with the caveat: Jeffrey P. Bezos is both the owner of The Washington Post and the CEO of Amazon. He is also the richest person in the world at the moment, but that’s important to our story only in the tangential sense that such wealth can inspire jealousy in certain quarters.
While President Trump likes to disparage the New York Times as the “failing New York Times” (it is not failing), Trump expresses his displeasure with our coverage by referring to us as the Amazon Washington Post, for some reason. Much as he once insisted that his objection to offshore wind farms was that wind turbines killed birds (he was angry about a wind farm near his golf course in Scotland), he seems to blend his frustrations with The Post with critiques of Amazon as a business.
On Thursday morning, that frustration was manifested in the form of a tweet attacking Amazon … and the post office.
He started criticizing Amazon “long before the election” in the sense, as the Toronto Star’s Daniel Dale notes, that he began railing against Amazon in the context of our newspaper shortly after The Post was critical of his proposed ban on Muslim immigrants in December 2015. His anger about Amazon is inextricable from his political frustrations with us.
All of that aside, though, it’s worth noting that his description of Amazon’s relationship with the U.S. Postal Service is also more complicated (and less negative) than he presents.
The Post’s Brian Fung explored this issue in December, another point at which Trump criticized the relationship between the USPS and Amazon. Before we get to that, though, let’s look at how the USPS operates.
Over the past decade, the number of deliveries by the Post Office in four key categories has dropped by more than 25 percent. In 2008, the USPS delivered more than 202 billion first-class pieces, standard-mail pieces, periodicals and packages. In 2017, the total was 148 billion, with an additional 1 billion international deliveries.
The biggest decline was in number of first-class deliveries.
But notice that blue “packages” line. Relative to first-class mail, it’s growing slowly — the only category of the four to see steady growth.
If we isolate it, that growth becomes more obvious. In 2008, the Post Office delivered 3.3 billion packages. In 2017, 5.7 billion.
More important, though, the Post Office is paid a lot more for packages than for items of mail or periodicals. A first-class piece of mail earns about 44 cents per item. A package earned about $3.39 in 2017, nearly eight times as much.
As a result, packages make up much more of the USPS’s revenue stream.
As of 2017, packages were the second-largest source of revenue for the USPS, closing in on first-class mail.
The obvious complicating factor here is that it costs more to deliver packages. Packages are heavier and bulkier than items of mail, meaning they cost more in fuel costs and delivery time. That’s the heart of the debate over the relationship between Amazon and the USPS, as Fung noted in December.
Amazon told Fortune magazine that the Postal Regulatory Commission, which oversees the Postal Service, “has consistently found that Amazon’s contracts with the USPS are profitable.”
Amazon defended its program in July after Josh Sandbulte, a hedge fund manager with a stake in FedEx, wrote a Wall Street Journal op-ed asserting that the Postal Service effectively subsidizes Amazon, losing an average of $1.46 for each shipment it delivers. The op-ed cut against a view that rising volumes of e-commerce shipping might lift the Postal Service’s long-struggling finances.
Sandbulte largely based his op-ed on an April report from analysts at Citigroup arguing that the Postal Service’s employee benefits were acting as a drag on the USPS’s profitability.
Those benefits are generally cited as a core reason that the Postal Service loses money.
It’s worth noting that Sandbulte wasn’t singling out Amazon: He sees the too-low price for delivering packages as a systemic problem at the Post Office. It’s just that Amazon is such a large part of the Post Office’s business. Amazon’s statement focuses on Amazon’s contracts. Sandbulte’s argument focuses on the overall system.
Were the Post Office to charge $1.46 more per package, it would have generated an additional $8.4 billion in 2017 — had volume not declined. But, of course, volume would have declined as prices increased by more than a third. There are obvious competitors who could pick up the slack. That’s the trick of running a business, as Trump knows: setting prices to maximize income while not shedding customers. (The caveat, of course, is the Postal Service isn’t a for-profit business.)
Trump’s other complaints about Amazon were a mixed bag. The company pays state and local taxes, where applicable, so he’s incorrect about that. Its broadly negative effects on other retailers are well-established.
That’s an odd argument for a businessman to make, of course: This company’s success is bad because other companies suffer. But for a president who has proved eager to guide the invisible hand of the market (away from wind energy and to fossil fuels, for example), it’s not surprising. Especially when he can at the same time target the owner of a newspaper he dislikes.
As with many other Trump arguments, it’s impossible to see his critiques as entirely objective.