Question

President Trump has criticized Amazon on many instances for causing the United States Postal Service to lose billions of dollars every year. Below is a recent quote from the president,

“Amazon and other companies like it, they come and they drop all of their mail into a post office,” Trump said in an interview with ‘Fox & Friends.’ “They drop packages into the post office by the thousands and then they say, ‘Here, you deliver them.’ We lose $3 and $4 a package on average. We lose massive amounts of money.”(CNBC, 2020)

From other sites I have gathered the following information. The USPS states

Total operating revenue for USPS in 2019 was roughly $71 billion, $3.9 billion came was received from Amazon alone. The total costs in 2019 were roughly 80 billion .The net reported loss was $8.8 billion (USPS, 2020)¹. Fixed costs for USPS have been over 40 percent of total costs in the past, and possibly increasing significantly due to increasing payments to retirees. Whether or not you agree with the statement by Trump, based on what we have learned about costs in class answer the following questions in your video:

1. Are the USPS’s losses increased or decreased by delivering packages for Amazon?
2. Amazon has discussed building its own airport and internalizing the delivery of its packaging. Explain whether or not this would benefit the USPS and why.

Answer 1

*USPS's losses have increased by delivering packages for amazon,because loss of $3 and $4 a package was taking place as amazon and other companies like amazon were dropping all of their mail into post office and were not paying enough for it.in 2019 USPS's states total operating revenue for USPS was $71 billion.$3.9 billion came from amazon alone.the total cost in 2019 were roughly $80 billion.the net reported loss was $8.8 billion,and their fixed cost have been increasing considerably.therefore we can say that USPS's losses have increased as their total cost is exceeding total revenue.

*when amazon will have its own airport and when they will internalize packaging,it will benefit them because they will then not depend on UPSC for their delivery services.because of this,UPSC will not have to incur the extra cost of delivering amazon packages and hence their losses would be minimized and eventually they might start earning profit.