Fact Check: Is The Post Office Losing Money By Delivering Packages For Amazon? | KNKX

Fact Check: Is The Post Office Losing Money By Delivering Packages For Amazon?

Apr 4, 2018
Originally published on April 5, 2018 9:50 am
Copyright 2018 NPR. To see more, visit http://www.npr.org/.

MARY LOUISE KELLY, HOST:

President Trump has been insisting in recent days that the post office has been undercharging Amazon for delivering its packages to homes around the country. Here's the president yesterday at a White House meeting.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: The post office is losing billions of dollars, and the taxpayers are paying for that money because it delivers packages for Amazon at a very below cost.

KELLY: NPR's Brian Naylor takes a look at that charge and finds that's not quite the case.

BRIAN NAYLOR, BYLINE: The U.S. Postal Service delivers an estimated 40 percent of Amazon's packages. And per package, while we don't know for sure, they probably do pay less than we would if we were mailing a present to Aunt Ruth, in part because the logistics are a bit different, too.

MICHAEL PLUNKETT: When Amazon hands a package over to the Postal Service, they're doing it very close to its destination, and it's ready to be handed over directly to the carrier who's going to deliver it, unlike when you or I take a package into our local post office.

NAYLOR: That's Michael Plunkett, who was a vice president at the Postal Service and now leads PostCom, an association of large mailers.

Plunkett says no one really knows what kind of deal Amazon made with the Postal Service because the details are sealed. But he says contrary to what the president tweeted - that they lose a fortune - the Postal Service does not lose money delivering Amazon's or anyone else's packages.

PLUNKETT: The Postal Regulatory Commission does review the Postal Service's contracts, and they've concluded the opposite - that the Postal Service does make money from its shipping contracts.

NAYLOR: Plunkett says the Postal Service's deal with Amazon is probably unlike what it has arranged with other shippers.

PLUNKETT: Amazon probably looks very different from the rest of the Postal Service's shipping business because they have enough volume in their own network of distribution centers, so the vast majority of their packages are being entered locally, and they're very cost-efficient for the Postal Service to handle for the most part.

NAYLOR: In fact, package deliveries have been the bright spot in the Postal Service's financial picture the last several years. It reported more than $19 billion of revenue from package deliveries last year - an increase of 11 percent.

Still, that wasn't enough to put the Postal Service into the black. In part, that's because fewer people are mailing first-class letters and bills. The Postal Service lost some $2.7 billion last year. Democratic Senator Tom Carper of Delaware says there's another reason for the red ink - something few, if any, other businesses have to deal with.

TOM CARPER: The other thing that's hurting the Postal Service's bottom line is a requirement to pay off, over a 10-year period of time, health care costs for their pensioners. That's what's really choking the Postal Service - that and the decline in first-class mail.

NAYLOR: Carper and other lawmakers have proposed allowing the Postal Service to pay its future retirees health benefits over a 40-year period, rather than 10 years, and to shift retirees onto Medicare. If the president wants to have a say in postal matters, there's one thing he could do, Carper says. Appoint some members to the Postal Board of Governors.

CARPER: There are no folks on the Postal Board of Governors now who come from outside the Postal Service. And this is like, imagine one of the two or three largest companies in America not having a board of directors. It would be unheard of. Well, that's essentially where the Postal Service is.

NAYLOR: There are three nominations to the board pending, but even if they were confirmed, the board would still be short of a quorum needed to meet. Brian Naylor, NPR News, Washington. Transcript provided by NPR, Copyright NPR.