Administration

Trump-Amazon feud shadows critical Postal Service report

The Trump administration is expected to release a report in the coming weeks on reforming the U.S. Postal Service (USPS), an event that could revive President Trump's feud with Amazon.

Trump earlier this year assembled a task force to recommend fixes for the Postal Service's fiscal woes soon after he accused the online retail giant of abusing its relationship with the USPS.

Business groups worry the task force could recommend an increase in shipping rates, something that could threaten Amazon's lucrative arrangement with the USPS. 

A group of major U.S. shippers sent a letter last week to Treasury Secretary Steven Mnuchin, who leads the task force, urging him not to raise package rates. 

"If one is concerned about the financial stability of the Postal Service, then it seems self-evident the thing you don't want to do is negatively impact the conduct of the one truly bright spot in the Postal Service's business model. That is packages," former Rep. John McHugh (R-N.Y.), chairman of the Package Coalition, said in an interview with The Hill. 

The coalition, which includes Amazon and its rival online retailers, was formed earlier this month, underscoring members' concerns that the task force report could result in price increases and service cuts. 

"We are extremely nervous about a situation in which this task force becomes about one company," said one industry lobbyist, who requested anonymity to speak freely about the business community's concerns. "Bottom line, Amazon is not the problem. There may be some nuance around how products are priced. But one company is not the problem here." 

Amazon declined to comment ahead of the report's release. 

Major mailers and shippers are crossing their fingers ahead of the release of the task force's findings.

Trump issued an executive order in April creating the task force and gave it four months to draft its report. The group met its deadline, delivering the report to the president on Friday. Trump will be briefed on the report in the coming days, according to a Treasury Department spokesperson. 

The spokesperson said the Postal Service task force "conducted outreach and engaged experts and stakeholders to evaluate the operations and finances of USPS" in order to draft recommendations for "re-establishing a sustainable business model for USPS."

Task force members have kept those recommendations under wraps, with business groups who met with the administration saying they have been left in the dark regarding the details of the report.

It also remains unclear when the report will be released to the public. Administration officials declined to provide a date for its expected publication. 

But major companies are aware of the circumstances around which the task force was first created. 

In the executive order, Trump ordered administration officials to examine "the expansion and pricing of the package delivery market and the USPS's role in competitive markets," language that set off alarm bells about a possible rate hike. It also directed them to look at the decline in mail volume and the scope and cost of the USPS's operations.

The president for months has criticized Amazon and the USPS for the shipping agreement between the two, saying it is too friendly toward the nation's No. 1 online retailer.

"Only fools, or worse, are saying that our money losing Post Office makes money with Amazon," Trump tweeted in April, 10 days before signing the executive order. "THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country ... not a level playing field!"

The Washington Post reported in May that Trump personally urged the U.S. postmaster general to double the rate USPS charges Amazon and other retailers to ship packages, but was rebuffed.  

Trump's focus on the shipping deal appears to stem in large part from his animosity toward Amazon founder Jeff Bezos, who also owns The Washington Post. The president has raged against the Post's coverage of him and has accused Bezos of using the paper as a lobbying arm for Amazon, a claim Bezos and the Post deny. 

"The Amazon Washington Post has gone crazy against me ever since they lost the Internet Tax Case in the U.S. Supreme Court two months ago. Next up is the U.S. Post Office which they use, at a fraction of real cost, as their 'delivery boy' for a BIG percentage of their packages," Trump tweeted last month.  

Critics say Trump's proposal would hurt, not help, the Postal Service. 

The USPS is in deep financial straits, reporting a net loss in $2.7 billion on $69.6 billion in revenue in fiscal 2017. The losses have been driven in part by a steep decline in first-class and marketing mail. 

Packages, on the other hand, have made up a growing portion of the USPS business. Revenues from shipping and packages grew by $2.1 billion last year, according to the Postal Service.

The president and his supporters believe raising package rates could help generate even more revenue to help the USPS climb out of its fiscal hole, but Amazon and business groups say a rate hike could drive e-commerce companies to alternatives like FedEx or UPS in order to save money.

Business groups also warn that raising Postal Service rates could result in service cuts to rural or other remote areas. Unlike their private-sector competitors, USPS has the ability to carry out last-mile delivery all over the country.

"Amazon in particular has made a lot of money for the Postal Service," said Art Sackler, head of the Coalition for a 21st Century Postal Service. "The last thing we want is for something to kill the goose that laid this postal golden egg and has helped sustain it through a very tough patch." 

Despite those concerns, several industry officials said they are not fearing the worst from the task force. They reported having positive discussions with the panel's representatives, whom they said were asking a range of questions about the Postal Service's operations.

Business groups are urging the Trump administration to focus on overhauling the Postal Service's retiree benefits structure, which they argue is the main driver of its financial problems. 

They are urging the task force to throw its support behind bipartisan House legislation and Senate legislation that would end USPS's practice of pre-paying future pension and health care obligations, among other sweeping changes to its operations. 

And they want the administration to steer clear of more extreme proposals, such as privatizing the USPS, a possibility that was raised in the Office of Management and Budget's plan for restructuring the federal government. 

"We are aware of the speculation that that's a direction that the report will take," said Rafe Morrissey, vice president of postal affairs for the Greeting Card Association.  "The mailing community ... [does] not believe in privatization."

Manufacturers also want the administration to target low-cost payments, known as terminal dues, that international shippers pay the Postal Service to deliver small packages to the U.S. They argue Chinese companies have taken advantage of the payments, which are set by a United Nations body, to undercut their American competitors who must pay higher rates.

"It would be a huge missed opportunity if they don't go at the China problem here," said Patrick Hedren, vice president for labor, legal and regulatory policy at the National Association of Manufacturers.

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