Tuesday, December 4, 2018
WASHINGTON (AP) — A task force created by President Donald Trump to evaluate ways to stem billions of dollars in losses at the U.S. Postal Service suggested a range of options today, including proposals that could significantly boost the cost of sending nonessential mail.
The report recommended the Postal Service develop a new pricing model that would remove current price caps and charge market-based prices for mail and packages that were not deemed to be "essential postal services."
That recommendation could raise costs for Amazon and other major businesses that are currently using the Postal Service to supplement their delivery operations.
Treasury Secretary Steven Mnuchin said the report "contains achievable recommendations."
"The USPS is on an unsustainable financial path which poses significant financial risk to American taxpayers," Mnuchin said in a statement.
He said the task force review ordered by Trump last April had produced recommendations that would "fulfill the president's goal of placing the USPS on a path to sustainability."
The president ordered creation of the task force, which was overseen by Mnuchin, after complaining the Postal Service was not charging big users like Amazon enough to handle its shipments.
"Only fools, or worse, are saying that our money losing Post Office makes money with Amazon," Trump tweeted in April.
Since taking office, Trump has often criticized Amazon and the head of the company, Jeff Bezos, who also owns The Washington Post.
The report found the Postal Service is not correctly assessing the costs it incurs in delivering packages for companies like Amazon, but it did not make a finding that it was losing money in its dealings with Amazon.
Online retailers Amazon and eBay participated in the report, according to the task force. Both companies did not immediately respond to a request for comment.
In regard to charging more for nonessential postal services, officials who briefed reporters said person-to-person mail and person-to-person packages would be considered essential postal services and would be exempt from the higher rates that would be levied on nonessential mail.
Another recommendation would be to clearly define the Postal Service's "Universal Service Obligations," which would spell out the types of mail and packages for which a strong rationale existed for government support of deliveries.
The report said that between 2007 and 2018, the Postal Service had experienced net losses totaling $69 billion, with the Postal Service expected to lose tens of billions of dollars over the next decade.
"The USPS's business model – including its governance, product pricing, cost allocation and labor practices – must be updated in light of its current operating realities," the report said.
Last month, the Postal Service reported a financial loss for the 12th straight year, citing declines in mail volume and the costs of its pension and health care obligations.
Postmaster General Megan Brennan said Congress needed to give the Postal Service more flexibility to increase prices so it can return to profitability.
"The flawed business model imposed by law continues to be the root cause of our financial instability," Brennan said.