President Donald Trump claims that Amazon.com Inc. (NASDAQ: AMZN) underpays the U.S. Postal Service billions of dollars for the shipment of its packages. Even if Amazon were forced to pay a portion of that, the USPS is so bloated with costs, the additional revenue would not help much.
The president tweeted:
He does not think much more of the management of the USPS than of Amazon’s CEO, Jeff Bezos.
The USPS had revenue of $69.6 billion in its most recently reported fiscal year. Its operating loss was $2.6 billion. Retiree health benefits of $36.1 billion and a workers’ compensation liability of $17.9 billion ballooned the USPS “total net deficiency” to $58.7 billion.
The USPS has 644,000 employees, of which 19,339 work at the organization’s headquarters or are headquarters-related employees. More telling is that it has an extraordinarily high 25,410 post offices, stations and branches. The USPS trumpets new efficiency driven by technology and better employee training, but this has not allowed for cuts in employment and the number of locations.
Among the reasons many post offices should be closed is their inefficiency. When an analysis of the system was done in 2011, over 3,000 locations had revenue of less than $27,500 a year and a “workload” of less than two hours per day.
Amazon is not the source of the major problems the USPS has. The organization is oversized and wasteful. Better management could make the system more efficient, but it hasn’t.