Why the Post Office Gives Amazon Special Delivery ($1.46 for each box)

[TomSea]

Why the Post Office Gives Amazon Special Delivery
A Citigroup analysis finds each box gets a $1.46 subsidy. It’s like a gift card from Uncle Sam.

By Josh Sandbulte
July 13, 2017 7:12 p.m. ET

In my neighborhood, I frequently walk past “shop local” signs in the windows of struggling stores. Yet I don’t feel guilty ordering most of my family’s household goods on Amazon. In a world of fair competition, there will be winners and losers.

But when a mail truck pulls up filled to the top with Amazon boxes for my neighbors and me, I do feel some guilt. Like many close observers of the shipping business, I know a secret about the federal government’s relationship with Amazon: The U.S. Postal Service delivers the company’s boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon.

This arrangement is an underappreciated accident of history. The post office has long had a legal monopoly to deliver first-class mail, or nonurgent letters. The exclusivity comes with a universal-service obligation—to provide for all Americans at uniform price and quality. This communication service helps knit this vast country together, and it’s the why the Postal Service exists.

Continued: https://www.wsj.com/articles/why-the-post-office-gives-amazon-special-delivery-1499987531

[Sanguine]

Tom, it's behind the paywall.  Can you give a quick summary?

[truth_seeker]

Tom, it's behind the paywall.  Can you give a quick summary?

Letter deliveries dropped by 40%, so the USPS needed additional revenue.

For them, the incremental cost to carry light packages, to residential houses on their routes, is very small.

The USPS gives Amazon, and presumably other volume entities price breaks, if they pre-sort, etc.

The implication is this constitutes a special subsidy for Amazon, but I doubt it is exclusive to Amazon.

The USPS gives businesses discounts, for presorting, for example.

So it is essentially a dishonest headline, omitting the facts I just added.

[Sanguine]

Letter deliveries dropped by 40%, so the USPS needed additional revenue.

For them, the incremental cost to carry light packages, to residential houses on their routes, is very small.

The USPS gives Amazon, and presumably other volume entities price breaks, if they pre-sort, etc.

The implication is this constitutes a special subsidy for Amazon, but I doubt it is exclusive to Amazon.

The USPS gives businesses discounts, for presorting, for example.

So it is essentially a dishonest headline, omitting the facts I just added.

Thanks, that helps.