Trump orders Postal Service review after blasting Amazon deal | Hacker News Reader

Trump orders Postal Service review after blasting Amazon deal

theverge.com

44 pointsMimino12352 comments

What they should do is review the subsidization of Chinese companies shipping to U.S. customers, often at the expense of makers and merchants in the U.S.:

According to the terms set out in Universal Postal Union treaty, the USPS in 2014 gets paid no more than about $1.50 for delivering a one-pound package from a foreign carrier, which makes it hard to cover costs. [1] The USPS inspector general’s office estimated that the USPS lost $79 million in fiscal year 2013 delivering this foreign treaty mail. (The Postal Service itself declined to provide specific figures.)

In an effort to ride the e-commerce boom, the Postal Service signed a deal in 2010 with China’s state carrier to sell a special service for small packages entering the U.S. For a small premium, the USPS offered tracking and delivery confirmation, an essential feature for online retailers, as well as expedited shipping.

... In 2012, USPS was paid only 94 cents on average for each piece of Chinese ePacket mail, according to a February report from the Postal Service’s inspector general’s office. That report estimated that the Postal Service was losing about a dollar on each incoming item, adding up to a $29.4 million net loss in 2012.

Forums on eBay are filled with angry notes about ePacket. “I must say that it is simply an economic disaster for US Sellers,” one person wrote. “One product that we sell for 2.00 with 2.50 shipping a chinese company is selling for .99 with free shipping,” another complained.

Washington Post: USPS loses millions each year on local delivery of mail from abroad (2014) https://www.washingtonpost.com/news/storyline/wp/2014/09/12/...

Discussion: https://news.ycombinator.com/item?id=14651884

i guess they should review that but not as a financial concern. 30m of 5bn loss is just 0.5%. at such small percentage it doesn’t seem like it is the low hanging fruit wrt finance.

I'm curious what you mean by "makers" here. To me the term means end users who tinker and build their own gadgets for fun, education, or because nobody produces the thing they want. Cheap parts from China are a benefit to that group, not an expense, although shipping should be priced sustainably.

I'm thinking of the type of person who makes small-batch products and sells them, which kind of was the model for Etsy before cheap imported goods took over right around the same time the post office began subsidizing overseas carriers.

Wired uses the term "maker" interchangeably with "crafter" in the following article, which gives some of the history:

That Etsy began allowing manufacturing partners in 2013 underscored the reseller issue that has plagued the site for years. The Marketplace Integrity, Trust & Safety team—which has the unenviable task of policing sellers for adherence to Etsy rules—is unable or unwilling to weed out sellers of mass-manufactured goods.

https://www.wired.com/2015/02/etsy-not-good-for-crafters/

The package delivery business side of the USPS is a profitable venture. The USPS is in the state it is in not because of Amazon or last mile delivery that is doing for other businesses. The core problem is Congress and the requirement they put is the USPS that they prefund 75 years of pensions. A requirement placed on no other institutions in the US.

> The core problem is Congress and the requirement they put is the USPS that they prefund 75 years of pensions. A requirement placed on no other institutions in the US.

Why is this? Did the USPS have some kind of retirement funding scandal, or was someone trying to smother it?

Probably because it forces them to buy and hold long-term US debt.

Two reasons... it’s tranfers postal revenues to federal cash flow via bonds, and key GOP lawmakers want to make the service unsustainable to enable privatization.

Privatization is a key goal here. By making USPS appear to struggle to make money it improves the argument that UPS, Fedex and anyone else who could make more money would be "better" at delivery. But the requirement that all Americans have access to daily (6) deliveries which is a core requirement for the Post Office is in the way of privatization as no one can honor this requirement for so little money as a stamp and make public company profits. So this can be buried in this "review" by proposing doing away with daily or even direct to home deliveries of mail.

Interestingly enough by eliminating the daily delivery of mail also kills the DMA business, which while everyone hates spam mail, is still a vital business tool for small and local businesses. Fedex will not deliver mail to your house that costs a nickel.

Remember that saving money isn’t usually a privatization factor.

FedEx will deliver mail for a nickel when they get a dollar from the government to do so.

After reading multiple reports, I am confused if anyone really knows if it is profitable or not. Do you have a source for your claim ?

UPS and Fedex have operating margin of ~6%. They have spent 10's of billions of dollars into optimized sorting facilities and logistics. Yet, Amazon uses USPS for last mile delivery. USPS also has to deliver to non-profitable remote locations and has public unions which demand above-market salary/pensions. A less-optimized player with higher cost base offers service at lower cost than a business with 6% operating margin - simple math makes me believe they are losing money on those orders.

https://about.usps.com/news/national-releases/2016/pr16_092....

In the last week I've received packages shipped via DHL and via Fedex that used SmartPost, where the USPS actually delivers the package. I don't remember ever having a UPS-to-SmartPost shipment. If the USPS is cheaper than these global shippers for the last-mile deliver, it might be a sign that they're not charging enough. At least in my town, they also don't seem to be very efficient - two Saturdays ago I was working in the yard and the post office went by four times during a six hour period. I can understand that the package delivery might be a different than their normal service route but shouldn't the three package deliveries have been one vehicle on our street one time? UPS is a master of route efficiency.

If what the USPS charges for packages is "enough" depends entirely on your definition of "enough":

Does package delivery lower the USPS' losses? Absolutely!

Do they charge enough for package delivery to spin it out into a separate, viable business? Probably not.

This unusual situation stems from the fact that the USPS is mandated by law to pass by every house in the country at least once a day, six days per week.

Mind you, I have a biz address for the important mail, 95% of what comes to my home is junk mail. I don't need that daily.

I would imagine 3 days a week (M+W+F and T+T+S) would be fine for residential.

The problem is, that entails jobs being cut. That's a political no-go. This will never happen any time soon.

Yes ... and the best way to make money delivering packages is to include them with the regular mail so that you're passing each house exactly once. I might also agree that the package delivery is stemming the USPS' losses but you'd have to show that it's not actually causing more losses - our little village now has three USPS trucks (there used to be one). I'm also assuming additional personnel are needed for all those extra runs and we now see USPS trucks on Sundays.

> If the USPS is cheaper than these global shippers for the last-mile deliver, it might be a sign that they're not charging enough.

Conversely, it could be an indication of leveraging efficiency of scale.

USPS sends a mail carrier to my house specifically most days of the week. And on the days they don't, there's still a mail carrier coming to my street at minimum.

Meanwhile, UPS or Fedex may not even send a truck to my neighborhood on any given day. If they throw a package on a USPS truck for last mile delivery, they don't have to incur the cost of sending a truck out of its way.

USPS is essentially selling excess capacity. It can be both cheaper and appropriately priced at the same time.

It's a government service, not a business. It's not supposed to be profitable. It's supposed to provide a service.

That sounds like a excuse to wave off government accountability.

As a voter and taxpayer, then I demand an end to this service. The last time I received an actual piece of valid mail was probably years ago. The USPS has become an ad-delivery network subsidized by my tax dollars. Perhaps charging bulk-mailers full price could end the problem of junk mail or create financial solvency. Why should junk mail literally nobody wants be subsidized? For official notices, the government could contract with a commercial carrier for far less than paying billions to operate a fleet of trucks that mostly carry junk.

They don’t get any of your tax money.

Who is "they" here? USPS? Commercial carriers? Junk mailers?

USPS. I’m responding to “The USPS has become an ad-delivery network subsidized by my tax dollars.”

I should mention that USPS does get tax money when other agencies use their services, but they’re paying for it just like anyone else does. It’s not subsidized, other than indirectly by their monopoly on letters.

>The last time I received an actual piece of valid mail was probably years ago. The USPS has become an ad-delivery network subsidized by my tax dollars.

The Post Office's job is to deliver mail sent to you, not to presort it by "validity" on your behalf and then only deliver the mail they think you'll want... if advertisers are sending you junk mail and it's getting to you then the Post Office is doing its job.

>Why should junk mail literally nobody wants be subsidized?

Again, it's not the fault of the Post Office that junk mail is a business, or that no one wants to send you anything but that. As far as it's concerned, mail is mail, and the junk treated like any other correspondence. Junk mail isn't subsidized, "mail" is subsidized - that so much of that mail is junk is not the fault of the USPS.

Further, it's one of the only (if not the only) federal agency explicitly required by the US Constitution.

(US Constitution Article 1 Section 8 Clause 7) > The Congress shall have Power... To establish Post Offices and post Roads.

I Am Not A Constitutional Scholar, but I don't read that as the Constitution explicitly requiring the Post Office, but merely delegating the power to do so to Congress. Presumably Congress would still be within its rights to not exercise that power, or to abolish the Post Office entirely.

It'd be fun to see Amazon US spinning off their own delivery service if they are backstabbed by UPS/FedEx/Postal service

It's called AMZL, and it's been awful so far.

Oddly, I disagree. Package delivery is one of the few remaining 'low skill' professions that pay well. UPS pays their drivers exceptionally, and has very strict rules and safety standards. USPS also pays relatively well. In exchange, we consumers get service from generally trusted, uniformed individuals. I'm afraid Amazon would create a race to the bottom, which would leave us accepting subpar service like we have in other industries(retail, fast food, etc). The employees are paid less, and the service as a whole gets worse, all in the name of 'cost-savings.' I know that's the free market for us, but it'd be nice to not lose every segment in a race to the bottom.

I’m a Fedex Express courier in a rust belt city. Fedex pays well enough that, even when I started part-time, I was able to afford a mortgage payment on a three-bedroom in a quiet neighborhood.

That’s a big deal for low-income folk who usually have limited options.

That's awesome. Similar story...location in profile. Parents had a house, 2 cars, and raised 3 children on UPS salaries. Until one retired, both still worked there, and doing quite well for themselves.

They already have their own delivery service here: https://flex.amazon.com/

Short term bump in the road for Amazon. They will not need USPS in the long run anyway:

- Build out own network (AMZL, Amazon Flex)

- Buy UPS/Fedex/etc

- Drone delivery

It is unfortunate that AMZN is taking the fall for whatever this executive order is actually trying to accomplish.

Politics always needs a enemy.

So is the next question: should USPS be merged with AMZN? What happens if a high volumn of packages disappears from the USPS revenue stream?

If AMZN delivers it can also pick up. Feels like a new Prime add-on, doesn't it?

Guessing they’ll find some unrelated things to complain about instead of admitting amazon makes Usps a lot of money.

Amazon is going to rush in with its own delivery service, Amazon Flex: https://flex.amazon.com/

This is one of those things where, even if it were an issue, shouldn’t there be about 4,321 better ways for the federal government (much less the president) to choose their focus?

And it’s not like he has to go far to find bigger problems. How about “ordering a review” on poverty and homelessness for instance?

The Postal service seems to be a stepping stone for Amazon. It appears that before human delivery people are replaced with drones, Jeff Bezos plans to replace postal employees with people at least contracted to Amazon.

Looking at the bigger picture here, US has always been the closest thing to the Free Market idea, but lately, the government has been taking some measures that go against this idea, this is one of them.

Dupe of https://news.ycombinator.com/item?id=16826446

Slimy hit piece at Trump. But it does raise some interesting points for discussion.

As a consumer, I love Amazon. The convenience and selection are incredible.

But jobs have clearly suffered. (This is a point often raised by those on the left side of the political aisle).

What's the right thing to do, regardless of who's president?

Amazon isn't the only company using USPS this way. It might be worthy of investigation, but Trump's motive here is to get back at Bezos for things that The Washington Post publishes. The president using the power of the executive branch to fight personal political enemies is never the right thing to do.

They may find that Amazon is keeping USPS alive.

The whole "USPS is a in a fiscal hole" thing is part of the privatization playbook. It is in a hole, but it's a deliberately created hole:

https://www.nakedcapitalism.com/2015/10/the-right-wings-assa...

Note who owns the newspaper cheerleading for privatization:

https://www.washingtonpost.com/news/federal-eye/wp/2015/09/2...

I wonder if they have any ideas about potential buyers?

I wonder if he's trying to distract people from other news that makes him look bad.

Can anyone think of any news or investigations he'd want to distract people from?

If this attack doesn't work, he may start a war, which is guaranteed to distract.

Um. We're engaged in 5-7 foreign conflicts at the moment. No one I know is distracted.

Tweets are cheaper and far more effective. That said, Stormy Daniels was one of the best distractions yet. Sex sells...and it distracts? :)

It has been an exceptionally shitty week for Trump. Most notably, the FBI raided his personal lawyer’s office, residence and hotel rooms. Then it was revealed that said lawyer had a habit of recording his own conversations so now Trump is freaking the fuck out. And he is doing what he always does when he is mad, which is lash out.

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