Mendoza School of Business

Cheap Amazon shipping leaves the Postal Service ‘dumber and poorer,’ Trump says

Published: December 29, 2017 / Author: The Washington Post

James O’Rourke IV

President Trump on Friday called for the U.S. Postal Service to raise the shipping rates that it charges, the online retailer, in a deal that he said disadvantages the federal agency.

“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? Should be charging MUCH MORE!” Trump tweeted Friday morning.


James O’Rourke, a management professor at the University of Notre Dame who studies the Postal Service, said the USPS’s essential problem is that it faces costs few other carriers do. Unlike UPS or FedEx, much of whose business revolves around moving parcels from one hub to another, the Postal Service is far more involved in delivering parcels over the “last mile” of a trip. This can be costly, especially in rural and suburban areas.

What’s more, the Postal Service pays for employee health care and retirement plans, while its competitors have shifted more of that responsibility to employees. An act of Congress waiving those obligations would make the Postal Service profitable again almost overnight, O’Rourke said.

One of the Postal Service’s biggest immediate obstacles to raising prices might be Trump. That’s because the body that sets postal rates, the nine-member Postal Service Board of Governors, has only two serving members and lacks a quorum to make decisions. The board cannot raise rates without Trump nominating political appointees to fill the remaining slots, O’Rourke said.

“There is a level at which government operates that elected officials sometimes don’t fully grasp,” O’Rourke said. “And this is true whether you’re talking about USPS, the State Department or Interior. There are people four and five levels down who make the government of the United States work every day.”

Read the entire story on the Washington Post website.