The US President, Donald Trump, is refusing to approve an urgent loan to the United States Postal Service (USPS), which is reeling under the impact of the coronavirus, unless it massively increases commercial parcel delivery prices. The USPS has been hit hard by a collapse in its most profitable customer mailings, first class, marketing leaflets and catalogues, and predicts it will lose $2bn each month through the coronavirus recession.
President Trump intervened to keep the USPS out of a US $2.3 trillion economic stimulus package agreed last week. Instead, the Postal Service received an offer of $10 billion in additional debt, and this will only be granted if it agrees to Trump’s demand that it ‘raise the price of a package by approximately four times.” The USA parcel delivery specialist ParcelHero says mail deliveries to the USA could be severely impacted if the USPS does not get this essential loan.
ParcelHero’s Head of Consumer Research, David Jinks MILT, says:
‘President Trump’s demand that the USPS introduces a fourfold increase in e-commerce parcel prices is commercially unrealistic; financial reasons are less likely to be the cause than Trump’s ongoing feud with Amazon boss Jeff Bezos.
‘There will be widespread disruption to US postal deliveries if the President does not grant aid to the USPS immediately, with no strings attached. Without this bail-out, the USPS admits it will be “financially illiquid” by 30 September.
‘Congress originally agreed to a $13bn (£10.4bn) direct grant the Postal Service would not have to repay. That effort was blocked by Steven Mnuchin, President’s Trump’s Treasury Secretary, who reportedly threatened to block the whole national coronavirus relief bill unless this was removed. Instead, the USPS has been offered a loan of $10bn dollars, but only if it agrees to massively raise the cost of parcel deliveries.
‘Last Friday, President Trump told reporters, “The Postal Service is a joke because they're handing out packages for Amazon and other internet companies and every time they bring a package, they lose money on it…The post office, if they raised the price of a package by approximately four times, it would be a whole new ballgame… But they don’t want to raise it because they don’t want to insult Amazon ….If they don’t raise the price, I’m not signing anything.”
‘But ParcelHero’s assessment is that the USPS is making more money on its parcel deliveries compared to any other sector. Quadrupling its commercial parcel prices would make it considerably more expensive than rival US courier services. The increase would force Amazon to cancel its USPS contracts and either return to other couriers or, more likely, increase its own Amazon Logistics capacity. Our analysis is that delivering packages is good business for the USPS. Parcels make up just 5 percent of the Postal Service’s volume but account for 30 percent of its revenue.
‘We suspect that the motivation for withholding vital USPS funding unless it increases parcel delivery fees to businesses is because a major client, Amazon, is owned by Jeff Bezos, who also owns the Washington Post, which is a fierce critic of Trump’s presidency. Linking the two, he sometimes refers to the Washington Post as the “Amazon Washington Post”. He also claims Amazon costs the USPS “massive amounts of money for being their Delivery Boy”.
‘The major concern is that this feud could not only impact on Amazon and the USPS, it could also have serious consequences for the whole US economy and society in general, at this highly sensitive time. The US National Retail Federation’s Jon Gold says higher parcel prices will “significantly hurt rural communities and small businesses in addition to USPS. Retailers and consumers are heavily relying on USPS during the pandemic to deliver goods, as bricks-and-mortar stores are temporarily closed.” Additionally, older people still rely on the service to receive medications, and many US citizens have been receiving their coronavirus relief payment as a physical cheque via the USPS. There could not be a worse time to force the collapse of the service.
‘As far as UK-US services are concerned, economy mailings of up to 2kg to the US from UK Post Offices will be worst impacted by significant problems at the USPS, as these use the postal service for final delivery. International courier services should not be greatly impacted. Even during the UK’s own lockdown, couriers are still safely picking up packages to the USA from Britain’s doorsteps, though service guarantees are largely suspended as, in the current climate, it’s not possible to be sure your parcel will arrive absolutely on time.
‘A wide variety of competitive next day, 2 day and 4+ day services are currently showing on ParcelHero’s USA parcel delivery pages, and these are constantly updated to reflect any changes that might be needed. For all the very latest information on sending a package to the USA see: https://www.parcelhero.com/en-gb/international-courier-services/usa-parcel-delivery