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Treasury suggests review of postal rates but not just for Amazon

A letter carrier holds Amazon.com Inc. packages while preparing a vehicle for deliveries at the United States Postal Service Joseph Curseen Jr. and Thomas Morris Jr. processing and distribution center in Washington. MUST CREDIT: Bloomberg photo by Andrew Harrer.

A task force commissioned by President Donald Trump to evaluate the Postal Service's business model is recommending a slew of options to stabilize its long-term finances. But it did not go so far as to say the financially strapped Postal Service is losing money to Amazon.com, a company which contracts services from the Postal Service and that has consistently drawn Trump's ire.

Even though the report does not specifically cite Amazon, it does recommend a reevaluation of the pricing for e-commerce packages and other non-essential mail shipped by companies like Amazon.

Earlier this year, Trump pushed Postmaster General Megan Brennan to double the rate the Postal Service charges Amazon and other firms to deliver packages. Trump also signed an executive order in April mandating a government review of the Postal Service. On Tuesday, that task force suggested steps the Postal Service can take to respond to the rise of e-commerce and boost profitability, but senior administration officials said the findings don't apply to any particular Postal Service customer.

Specifically, the report recommends a sharpened definition of the Postal Service's "Universal Service Obligation." The public policy that establishes the minimal level of service the government postal service must provide to citizens and businesses.

The rise of e-commerce has challenged long-held ideas about that standard -- as businesses rely on the postal service to deliver not just letters but products of all sorts. Pharmaceuticals, for example, are considered essential mail. But, say, a T-shirt or a vacuum cleaner would not be.

For essential items, the government can step in and offer a subsidy to help cover added cost of delivery.

The Postal Service has been losing money for more than a decade. According to the report, it is slated to lose tens of billions of dollars more over the next decade. As of the end of fiscal year 2018, the Postal Service balance sheet reflects $89 billion in liabilities against $27 billion in assets -- a net deficiency of $62 billion.

Those losses have been compounded by a decline in mail volume and caps on mail pricing. And while e-commerce has boosted package volumes, that revenue is not enough to offset the decline in mail revenue, the report said.

The report also recommends modernizing the Postal Services methods for cost standards and allocation so that it can make better-informed management decisions, government policies and regulatory reporting. The Postal Service should also address its rising labor and operating costs, which are expected to grow as the country's population expands.

When Trump pressured Brennan to double the rate the Postal Service charges for Amazon.com and other firms to ship packages, she told the White House that the Postal Service is bound by contracts and that arrangements would have to be reviewed by a regulatory commission. Brennan told Trump that the Postal Service benefits from its contract with Amazon, and noted for him a wide range of other companies that it partners with for deliveries.

Amazon, the tech and retail giant founded by Jeff Bezos, has boomed to become the second-largest U.S. company in terms of market capitalization. Since before taking office, Trump has publicly fumed against Amazon and Bezos, who also owns The Washington Post. In 2015, Trump falsely accused Bezos of using The Post as a tax shelter that helped Amazon avoid paying taxes. Trump has also incorrectly said that Amazon is being subsidized by the Postal Service and suggested The Post is Amazon's "chief lobbyist."

In an April tweet, Trump said "I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don't have a clue (or do they?)!"

As he does with other foes, Trump has repeated tweets and comments against Amazon. But his push for this review of the Post Office's practices has been viewed as an official action taken to penalize the company.

Amazon transports packages to the post offices that are closest to their final destinations, and then the Postal Service carries them through their "last mile" of delivery. Amazon said that it spent $21.7 billion on shipping costs last year, including sorting, delivery center and transportation expenses. It's not clear how much of that was paid directly to the Postal Service.

The details of Amazon's contract with the Postal Service are kept under wraps. Amazon has said that making the contract public -- as well as detailed information about Amazon's own delivery systems -- would give its competitors an unfair advantage.

This article was written by Rachel Siegel, a reporter for The Washington Post.

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