Amazon in the Trump crosshairs

2018-01-02 18:46 - Justin Sink
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Washington - President Donald Trump said on Friday the US postal service should charge Amazon more to deliver packages, the latest in a series of public criticisms of the online retailer and one that sent the company’s stock lower in pre-market trading.

The post office “should be charging MUCH MORE” for package delivery, the president tweeted from his Mar-a-Lago estate in Florida, where he’s been spending the holidays.

“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” Trump told his 45 million followers.

Trump has regularly criticised Amazon from his Twitter account and targeted Chief Executive Officer Jeff Bezos, who also owns the Washington Post newspaper and is currently the world’s richest man with an estimated net worth of $100bn. In August, Trump accused the company of causing “great damage to tax paying retailers”, even though the internet giant began collecting sales tax on products it sells directly in April.

As with prior missives targeting the company, Trump’s message appeared to concern investors. Amazon stock was positive in pre-market trading on Friday and then fell as much as 0.6% after Trump’s post to Twitter. It was down 0.35% shortly before 09:00.

'Last mile'

Amazon regularly uses the US Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at about 150 million residences and businesses daily.

While full details of the agreement between Amazon and the Postal Service are unknown - the mail service is independently operated and strikes confidential deals with retailers - David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40% of Amazon’s volume the previous year.

He estimated at the time that Amazon pays the USPS $2 per package, which is about half what it would pay UPS and FedEx.

The Postal Service reported a net loss of $2.1bn in the third quarter of 2017, and has $15bn in outstanding debt. The service has lost $62bn over the last decade.

Amazon has been experimenting with a new delivery service of its own that is expected to see a broader roll-out in the coming year. Under the programme, Amazon would oversee the pickup of packages from warehouses of third-party merchants and the delivery to home addresses.