Trump panel seeks higher postal shipping rates after Amazon feud

Trump-appointed commission seeks higher postal shipping rates after Amazon feud

Proposed Postal Service reforms could hike package delivery costs

Among its key recommendations, Tuesday's report calls for the development of a new pricing model, which eliminates across the board price caps and suggests charging "market-based prices" for both mail and package items that are not considered essential postal services. "Today's report contains achievable recommendations that fulfill the President's goal of placing the USPS on a path to sustainability, while protecting taxpayers from undue financial burdens and providing them with necessary mail services". President Trump has sharply criticized the Postal Service for undercharging companies for package delivery - specifically e-commerce giant Amazon.

"The USPS is on an unsustainable financial path which poses significant financial risk to American taxpayers", said Treasury Secretary Steven T. Mnuchin in a statement.

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.

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Amazon, United Parcel Service, Inc (NYSE: UPS), FedEx Corporation (NYSE: FDX) and others will be watching closely to see if the Postal Regulatory Commission, which regularly reviews USPS rates and fees, will implement the methodology changes recommended in the Treasury Department report.

Online retailers Amazon and eBay participated in the report, according to the task force.

Amazon announced that customers bought more products during this year's "Cyber Monday" than any other single day in Amazon's history. The report didn't say how much the Postal Service should increase its prices. Amazon did not immediately respond to a request for comment.

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Cowen estimated that the Postal Service delivered about 59 percent of Amazon's USA packages in 2017, and package delivery could account for 50 percent of postal service revenue by 2023.

Another recommendation would be to clearly define the Postal Service's "Universal Service Obligations", which would spell out the types of mail and packages for which a strong rationale existed for government support of deliveries.

Between 2007 and 2018, the USPS experienced net losses totaling 69 billion US dollars, with 3.9 billion dollars for 2018 alone, the report said, adding that it is forecast to lose "tens of billions of dollars" over the next decade. "The USPS must pursue price increases, reduce service costs, or exit the business line for any class of mail that falls outside of the determined essential services and that does not cover attributable costs". This poorly conceived report makes many of its recommendations based on myth and misinformation that instead of improving mail services, would deliver higher prices and less service for the public.

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"The flawed business model imposed by law continues to be the root cause of our financial instability", Brennan said.

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