Review proposes sweeping changes for Postal Service — and likely higher prices

Posted by on December 4, 2018 9:28 pm
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Categories: Money & Business

By John D. McKinnon of WSJ.com 

A Trump administration review of the struggling U.S. Postal Service proposes sweeping changes in its operations that could raise alarm bells — and prices — for Amazon.com Inc. and other major businesses.

The report, requested last April by President Donald Trump, prescribes raising prices for many types of commercial package deliveries, a growing business area for the Postal Service. The report says that package deliveries “have not been priced with profitability in mind.” It adds that the Postal Service should have the authority to charge market-based prices for mail and package items that aren’t deemed essential services. The study was compiled by an administration task force headed by the Treasury Department.

Trump has often claimed on Twitter that the Postal Service has given a sweetheart arrangement to Amazon AMZN, +0.09%  , which he blames for unfairly hurting bricks-and-mortar retailing. The president also has clashed with Amazon founder Jeff Bezos, whose Washington Post has been critical of Trump.

The report says that the Postal Service isn’t correctly assessing the costs it incurs in delivering packages for companies like Amazon. It says that the current cost methodology doesn’t “capture the cost implications that the rapid decline in mail volume and the rapid rise of package volume have had on the USPS’s cost structure.” Changing the Postal Service’s cost methodology could put further upward pressure on many package prices.

An expanded version of this report appears on WSJ.com.

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