Why are Amazon and Rival retailers united to defend the US postal service?



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Concerns over a possible increase in parcel delivery rates and a reduction in USPS service have brought Amazon and other competing retailers closer together. (Photo by Robert Alexander / Getty Images)

Many US retailers may hate and fear

Amazon.com
but their common interest in ensuring that the US Postal Service continues to deliver "reliable and affordable" parcel delivery – essential for all retailers in this growing e-commerce era – goes beyond any usual business enmity.

Amazon and the National Retail Federation, the leading retail group representing retailers, including

Walmart
and

Target
, have joined other retailers and companies for create& nbsp; The Coalition Package, a lobby group seeking to educate and give facts on the state of play of USPS parcel services. (Amazon is also a member of the NRF.)

The news of the advocacy group, announced Wednesday, preceded the publication of a report expected by & nbsp; later in the week by a task force created by President Trump in April executive order study the American postal service, which is losing money, for possible reform. Trump has also publicly attacked Amazon in many tweets, including call& nbsp; the USPS "deliverer" Amazon & & nbsp;suggesting without any evidence& nbsp; that the special tariff relief granted by Amazon and other package shippers resulted in the loss of USPS.

Trump's comments & nbsp; raised concerns about a possible rise in package rates and a reduction in postal service at a time when so-called last mile delivery is a battleground for retailers responding to the growing demands of online shopping. The USPS delivery service to all addresses in the United States, especially in rural markets, which even giants like Amazon, are essential.

"Here are the realities of the postal service's packaged activity: it's one of the few highlights of the US postal service," said John McHugh, president of The Package Coalition, in a statement. interview, adding that the USPS recorded losses, the packet segment contributed $ 7 billion to its & nbsp; its net result last year. "All of our members provide a strong financial foundation for the postal service. The last thing you want to talk about is disrupting one of the few positives of the postal service. "

McHugh should know. A former Republican congressman and former Secretary of the US Army under President Obama, he has said he has been involved in postal service issues since 1995.

How important is the postal service in rural markets? & Nbsp;

"The US Postal Service has 157 million delivery points," McHugh said. "No other organization in America has that kind of reach and penetration. Especially in rural areas, it's absolutely essential. In the era of e-commerce, it's even more crucial. For residents of rural communities and small businesses, the only way they can afford is the postal service."

Some 24,000 postal codes, representing more than half of the 42,000 postal codes in the United States, are attributed to rural areas, he said.

When you make a total of & nbsp; USPS deliveries to rural residential and commercial addresses, & nbsp; its & nbsp; rural penetration & nbsp; was about 28% of the 157 million delivery points, according to data from the 2017 USPS annual report.

Even though Amazon and other large parcel senders benefit from a USPS wholesale rate, the amount they ship and pay must not only cover the cost of the USPS, but also help pay for the rest overhead, said McHugh.

The MuHugh points are part of the Annual Report, who stated that the prices charged for the shipment of a package "must cover the costs attributable to each product" and "must contribute to a reasonable share" of its "institutional costs".

"We have enabled the continued growth of e-commerce in America by providing customers with unprecedented visibility and competitive shipping solutions that reach every door of the United States every day of delivery," said Megan Brennan, Executive Director. and Executive Director of the USPS, in the annual report. The service is "self-financing" and "receives no tax on operating expenses and relies on the sale of postage, products and services to finance its activities".

She also rebuffed Trump's demands that the USPS double the rate charged to Amazon and others, saying that the USPS 'relationship with Amazon is "beneficial," as reported by the USPS. Washington Post, which belongs to the CEO of Amazon, Jeff Bezos and is another routine target of Trump's attacks.

To be clear, the Package Package is independent of the USPS and does not "coordinate with the postal service" in its lobbying efforts, McHugh said.

The package segment: a major asset for USPS & nbsp;

According to the data appearing in the USPS 'annual report, the segment of shipments and parcels is really a major plus for the USPS: it's the only segment to register an increase of its revenues every year since at least FY 2014. & nbsp; On the other hand, first-class mail, marketing mail, and periodical revenues have declined over the same period, reflecting less frequent mailings of letters and cards in the era of e-mail and other electronic communications as well. as the reduction of mailings of catalogs, printed circulars and subscriptions to magazines.

As consumers continue to spend more online, USPS expects that this year's shipping and parcel revenue will reach $ 21.4 billion, an increase of 60% over fiscal year 2014 On the other hand, first class mail remains the largest USPS segment. , will see its revenues decrease by about 10% over the same period to reach nearly $ 25 billion in fiscal year 2018.

As regards the number of pieces sent, the same contrast between the packaging sector and the others is also valid.

The report showed that the USPS had recorded a loss not because of the shipment of parcels: in addition to the decline in revenues from first-class mail services and other postal services, severance pay at the unfunded pensions and the costs related to employee compensation and benefits also increased.

The USPS has recorded cumulative losses of $ 65 billion since the 2007-2009 recession, according to Executive Order & nbsp; which adds that the postal service has not been able to make the payments required by law for its obligations with respect to retiree health benefits.

USPS "Strikes All Citizens of the United States"

"Package delivery brings money back to the postal service," said Jon Gold, vice president of supply chain and customs at NRF, & nbsp; in a separate interview. "The postal service is an integral part of this last mile delivery. USPS is a major component of the retail supply chain. Rural markets are a key differentiator for USPS: All US citizens are affected "

Gold confirmed that retailers feared that postal delivery rates will increase, along with a reduction in delivery service. "We speak on behalf of the industry," he said. "Several members of the NRF have told us: if tariffs increase, they will have to be passed on to consumers."

Although Amazon may be attracting the most attention, Mr. McHugh said that every member of the coalition, who has met in the last two months, is an "equal member" with an "equal voice" .

"There is no leader," he told me.

Amazon has not responded to a request from & nbsp; comment.

The coalition is addressing "a wide range of similar businesses," including "a number of renowned retailers," about individual membership. McHugh said he was "reasonably optimistic" and would join more.

Other coalition members announced include the QVC commercial network, Columbia Sportswear, Express Scripts, Pharmacy Benefits Manager, OSM Worldwide, shipping service and equipment maker Pitney Bowes and Publishers Clearing House.

McHugh said between Wednesday and Friday, he had already sent emails to dozens of congressmen, with others coming. The coalition also sent a letter to the president's working group to present some data and will deploy targeted information efforts in some states.

"It's not that we have a dispute with the working group or the executive order," McHugh said. "Our commitment is to make sure all the facts are known."

Also on Forbes:

Does the millennium generation kill the kitchen with increasing delivery orders?

What is Amazon doing to keep Alexa at the forefront & nbsp;

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Concerns over a possible increase in parcel delivery rates and a reduction in USPS service have brought Amazon and other competing retailers closer together. (Photo by Robert Alexander / Getty Images)

Many US retailers may hate and fear
Amazon.com
but their common interest in ensuring that the US Postal Service continues to deliver "reliable and affordable" parcel delivery – essential for all retailers in this growing e-commerce era – goes beyond any usual business enmity.

Amazon and the National Retail Federation, the leading retail group representing retailers, including
Walmart
and
Target
, partnered with other retailers and companies to create the Coalition Package, a lobby group that aims to educate and provide facts about the state of the packaging industry in the United States. (Amazon is also a member of the NRF.)

The rights group's announcement, announced on Wednesday, preceded the release of a report of the task force created by President Trump in a decree in April to examine the possibility of reforms to the US postal service, which is losing ground. money. Trump has also publicly attacked Amazon in many tweets, including call "Deliveryman" of USPS Amazon and suggesting, without any evidence, that the special tariff suspension imposed by Amazon and other parcel senders resulted in the loss of the USPS.

Trump's comments have raised concerns about possible price increases for packages and the reduction of postal service at a time when the so-called last mile delivery is a battleground for retailers who meet the requirements. the growth of online shopping. The USPS delivery service to all addresses in the United States, especially in rural markets, which even giants like Amazon, are essential.

"Here are the realities of the postal service's packaged activity: it's one of the few highlights of the US postal service," said John McHugh, president of The Package Coalition, in a statement. interview, adding that the USPS losses recorded, the package segment contributed $ 7 billion to its net profit last year. "All of our members provide a strong financial foundation for the postal service. The last thing you want to talk about is disrupting one of the few positives of the postal service. "

McHugh should know. A former Republican congressman and former Secretary of the US Army under President Obama, he has said he has been involved in postal service issues since 1995.

What is the importance of postal service in rural markets?

"The US Postal Service has 157 million delivery points," McHugh said. "No other organization in America has that kind of reach and penetration. Especially in rural areas, it's absolutely essential. In the era of e-commerce, it's even more crucial. For residents of rural communities and small businesses, the only way they can afford is the postal service."

Some 24,000 postal codes, representing more than half of the 42,000 postal codes in the United States, are attributed to rural areas, he said.

If you add USPS deliveries to residential and rural business addresses, its penetration into rural areas accounted for about 28% of the 157 million delivery points, according to data from the USPS annual report for the year. 2017.

Even if Amazon and other large parcel senders get a USPS wholesale rate, the amount they ship and pay must not only cover the cost of the USPS, but also help pay for the rest of the USPS. his overhead, said McHugh.

The annual report of the USPS confirms MuHugh's statement, which states that the prices charged for the shipment of parcels "must cover the costs attributable to each product" and "must contribute to a reasonable share" of its "Institutional costs".

"We have enabled the continued growth of e-commerce in America by providing customers with unprecedented visibility and competitive shipping solutions that reach every door of the United States every day of delivery," said Megan Brennan, Executive Director. and Executive Director of the USPS, in the annual report. The service is "self-financing" and "receives no tax on operating expenses and relies on the sale of postage, products and services to finance its activities".

She also rebuffed Trump's requests asking the USPS to double the rate charged to Amazon and others, claiming that the relationship between the USPS and Amazon is "beneficial," as the company said. 39, reported the Washington Post, owned by the CEO of Amazon, Jeff Bezos, and another. routine target of Trump attacks.

To be clear, the Package Package is independent of the USPS and does not "coordinate with the postal service" in its lobbying efforts, McHugh said.

The package segment: a great asset for the USPS

According to the data appearing in the USPS annual report, the segment of shipments and parcels constitutes a major asset for the USPS: it is the only segment to have recorded an increase year-on-year revenues since at least FY 2014. On the other hand, revenues from first-class mail Mail and periodicals have declined over the same period, reflecting lower mailings of letters and letters. cards in the era of e-mail and other electronic communications, as well as fewer mailings of catalogs, printed circulars and magazine subscriptions.

As consumers continue to spend more online, USPS expects revenue from mail and parcels for fiscal year will rise to $ 21.4 billion, an increase of 60% over the previous year. Fiscal year 2014. By contrast, first-class mail, which remains the largest USPS segment will see its revenues decline by about 10% over the same period to reach nearly $ 25 billion during the year 2018.

By the number of pieces sent, the same contrast between the packaging sector and the others is also true.

The report showed that the USPS had recorded a loss not because of the shipment of parcels: in addition to the decline in revenues from first-class mail services and other postal services, severance pay at the unfunded pensions and the costs related to employee compensation and benefits also increased.

The USPS has suffered cumulative losses of $ 65 billion since the 2007-2009 recession, according to the order, adding that the postal service has not been able to make the payments required by law for its obligations in the area of ​​retiree health benefits.

USPS "Strikes All Citizens of the United States"

"The delivery of parcels is money for the postal service," said Jon Gold, vice president of the logistics and customs policy of NRF, in a separate interview. "The postal service is an integral part of this last mile delivery. USPS is a major component of the retail supply chain. Rural markets are a key differentiator for USPS: All US citizens are affected "

Gold confirmed that retailers feared that postal delivery rates will increase, along with a reduction in delivery service. "We speak on behalf of the industry," he said. "Several members of the NRF have told us: if tariffs increase, they will have to be passed on to consumers."

Although Amazon may be attracting the most attention, Mr. McHugh said that every member of the coalition, who has met in the last two months, is an "equal member" with an "equal voice" .

"There is no leader," he told me.

Amazon has not responded to a request for comment.

The coalition is addressing "a wide range of similar businesses," including "a number of renowned retailers," about individual membership. McHugh said he was "reasonably optimistic" and would join more.

Other coalition members announced include the QVC commercial network, Columbia Sportswear, Express Scripts, Pharmacy Benefits Manager, OSM Worldwide, shipping service and equipment maker Pitney Bowes and Publishers Clearing House.

McHugh said between Wednesday and Friday, he had already sent emails to dozens of congressmen, with others coming. The coalition also sent a letter to the president's working group to present some data and will deploy targeted information efforts in some states.

"It's not that we have a dispute with the working group or the executive order," McHugh said. "Our commitment is to make sure all the facts are known."

Also on Forbes:

Does the millennium generation kill the kitchen with the increase of food delivery orders?

What is Amazon doing to keep Alexa in the lead