Trump on Friday threatened to withhold emergency aid funding congressionally approved for the United States Postal Service unless the agency agreed to increase pricing on package deliveries by four times.
“The Postal Service is a joke,” Trump told reporters in the Oval Office. To obtain a $10 billion line of credit Congress approved this month, “The post office should raise the price of a package by approximately four times,” he said.
Trump has accused the Postal Service for years of not charging enough to big online retailers to ship packages. Several anonymous administration officials have said that Trump’s criticisms stem from his dislike of Amazon founder and Washington Post owner Jeff Bezos.
But analysts insist that a sharp increase in pricing by the USPS would price them out of the market, far above FedEx and UPS.
“This is about as catastrophically stupid an idea that anyone could ever imagine,” said Mark Cohen, director of retail studies at Columbia University Business School. “As if anyone from Amazon to the local mom and pop delivery businesses would ever put up with a rate increase like that when they have alternatives.”
Jon Gold, the vice president of supply chain and customs policy at the National Retail Federation, said in a statement that higher prices would “significantly hurt rural communities and small businesses in addition to USPS.”
Raising rates on the Post Office would only cause retailers to use other services, and would kill the Post Office. Delivering packages has been a good source of revenue for the USPS, making up 5% of their volume of business, but 30% of their revenue. Package volume increased 53% last week compared with the same week in 2019, as more homebound consumers are relying on online sales for groceries, pharmaceuticals, and household goods. Overall, the postal service has suffered from the pandemic as advertising and business mail has significantly declined, with overall revenue down by almost a third.
The Postal Service has not taken federal funding since 1970, operating instead from revenue it raises from stamp sales and other products. But it has struggled as first-class mail plummeted in the Internet era, and is burdened by a congressional requirement to pre-fund its health benefits for retired employees. The agency has stopped making those payments. As it has run up multibillion-dollar debts, Congress has debated new subsidies and business plans to lessen its financial problems — but never agreed on a solution.
See this story at The Washington Post.