Tag Archives: USPS
Is there anyone who Amazon isn’t competing with?
In a recent regulatory filing, (amzn) Amazon added “transportation and logistics services” to the already long list of industries and services it views as competition. While Amazon relies on shipping partners, like USPS, UPS, and FedEx to help make deliveries, the disclosure signals that Amazon is getting serious about making its mark with its own delivery service.
“The worldwide marketplace in which we compete is evolving rapidly and intensely competitive, and we face a broad array of competitors from many different industry sectors around the world,” Amazon said in the annual filing.
Amazon’s shipping costs were $ 9 billion, according to its most recent earnings report. That’s a 23% increase from the previous quarter, but shows just how much customers value Amazon Prime’s free shipping options. Amazon has already taken some steps to build a delivery infrastructure to supplement its partners. The company leased a fleet of airplanes to carry cargo, has delivery vans, and has been piloting a “Shipping With Amazon” program, which entails drivers picking up packages from third party sellers and delivering them.
There has also long been speculation about whether Amazon, one of the world’s most valuable companies, might consider a surprise acquisition of a transportation and logistics competitor. UPS CEO David Abney said last month that while Amazon is a customer, he also sees the company as a competitor.
Amazon CEO Jeff Bezos has always been fascinated with finding ways to revolutionize delivery. He shared his vision for drone delivery in 2013. Bezos predicted it would be a reality by the end of 2018, however the program has hit regulatory snags in the United States. Amazon made its first commercial drone delivery in Cambridge, England in December 2016. They’re also deploying delivery robots. Last month, Amazon unveiled its new Scout delivery robot, which is making test deliveries in a neighborhood in Snohomish County, Wash.
WASHINGTON (Reuters) – The United States Postal Service should have more flexibility to raise rates for packages, according to recommendations from a task force set up by President Donald Trump, a move that could hurt profits of Amazon.com Inc (AMZN.O) and other large online retailers. The task force was announced in April to find ways to stem financial losses by the service, an independent agency within the federal government. Its creation followed criticism by Trump that the Postal Office provided too much service to Amazon for too little money.
FILE PHOTO – A view shows U.S. postal service mail boxes at a post office in Encinitas, California in this February 6, 2013, file photo. REUTERS/Mike Blake/Files
The Postal Service lost almost $ 4 billion in fiscal 2018, which ended on Sept. 30, even as package deliveries rose.
It has been losing money for more than a decade, the task force said, partially because the loss of revenue from letters, bills and other ordinary mail in an increasingly digital economy have not been offset by increased revenue from an explosion in deliveries from online shopping.
The president has repeatedly attacked Amazon for treating the Postal Service as its “delivery boy” by paying less than it should for deliveries and contributing to the service’s $ 65 billion loss since the global financial crisis of 2007 to 2009, without presenting evidence.
Amazon’s founder Jeff Bezos also owns the Washington Post, a newspaper whose critical coverage of the president has repeatedly drawn Trump’s ire.
The rates the Postal Service charges Amazon and other bulk customers are not made public.
“None of our findings or recommendations relate to any one company,” a senior administration official said on Tuesday.
Amazon shares closed down 5.8 percent at $ 1,669.94, while eBay (EBAY.O) fell 3.1 percent to $ 29.26, amid a broad stock market selloff on Tuesday.
The Package Coalition, which includes Amazon and other online and catalog shippers, warned against any move to raise prices to deliver their packages.
“The Package Coalition is concerned that, by raising prices and depriving Americans of affordable delivery services, the Postal Task Force’s package delivery recommendations would harm consumers, large and small businesses, and especially rural communities,” the group said in an emailed statement.
Most of the recommendations made by the task force, including possible price hikes, can be implemented by the agency. Changes, such as to frequency of mail delivery, would require legislation.
The task force recommended that the Postal Service have the authority to charge market-based rates for anything that is not deemed an essential service, like delivery of prescription drugs.
BAD NEWS FOR AMAZON
“Although the USPS does have pricing flexibility within its package delivery segment, packages have not been priced with profitability in mind. The USPS should have the authority to charge market-based prices for both mail and package items that are not deemed ‘essential services,’” the task force said in its summary.
That would be bad news for Amazon and other online sellers that ship billions of packages a year to customers.
“If they go to market pricing, there will definitely be a negative impact on Amazon’s business,” said Marc Wulfraat, president of logistics consultancy MWPVL International Inc.
If prices jumped 10 percent, that would increase annual costs for Amazon by at least $ 1 billion, he said.
The task force also recommended that the Postal Service address rising labor costs.
The Postal Service should also restructure $ 43 billion in pre-funding payments that it owes the Postal Service Retiree Health Benefits Fund, the task force said.
Cowen & Co, in a May report, said the Postal Service and Amazon were “co-dependent,” but that Amazon went elsewhere for most packages that needed to arrive quickly.
Cowen estimated that the Postal Service delivered about 59 percent of Amazon’s U.S. packages in 2017, and package delivery could account for 50 percent of postal service revenue by 2023.
The American Postal Workers Union warned against any effort to cut services. “Recommendations would slow down service, reduce delivery days and privatize large portions of the public Postal Service. Most of the report’s recommendations, if implemented, would hurt business and individuals alike,” the union said in a statement.
Reporting by Diane Bartz and Jeffrey Dastin; editing by Bill Berkrot