The horizon is not so far as we can see, but as far as we can imagine

The Postal Deal for Last-Mile Delivery for Amazon Is Bad

So, Trump has said that the US Postal Service deal with Amazon is a bad one.

It’s not costing the USPS more than the USPS makes, to be clear, and it isn’t the cause of the USPS’s problems: That’s a result of having to pre-fund pension obligations that no other government organization or private firm has to do, so that even though the USPS is operationally in the green, it shows as is in the red.

This was passed by a Republican Congress in an attempt to kill the USPS, which they don’t like on ideological grounds.

However, the USPS does under-charge Amazon and other companies for last mile delivery.

David Dayen, whom I respect, made the argument. This is an argument I heard before Trump was president, though this version is dated in 2018:

Nobody has the delivery infrastructure of the USPS, which visits 150 million locations 6 days a week. Shippers like UPS, FedEx, and Amazon pay the USPS to access that delivery network and have USPS carriers deliver their packages.

In other words, USPS is letting competitors use its monopoly infrastructure to offload their least profitable package deliveries.

You’d think this would fetch the highest rates for USPS’ network, but actually it’s the lowest. Who offers this kind of cheap service to the companies they compete with?

The competitors don’t really have a choice but to use USPS, they don’t have this infrastructure in place. And yet USPS gives it away for a song. The rate also appears to be flat regardless of size and weight of the package. Mail carriers are lugging around 50-pound bags of dog food.

The USPS is also severely undercounting these outside packages as a percentage of overall deliveries. The accounting on this is pretty wild. The economics of this makes no sense. While pre-funding retirement benefits is the sole cause of USPS’ financial woes, this appears to be a tremendous missed opportunity.

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  1. realitychecker

    I’ve learned to never accept at face value criticism of Trump that comes from established Establishment players or lackeys.

    It’s amusing (but also disheartening) that the presumption of dishonesty never gets attached to any of the proven liars that work for Establishment interests.

  2. Steeleweed

    Why then does any company have UPS/FedEx/DHL deliver to my door instead of just to the local PO & let USPS deliver the “last mile”.

    BTW: I looked into the law that mandates USPS pre-funding long-term pensions from short-term funds (75 years of benefits originally funded in 5 years, think it was changed to 10 years), figuring sponsors might have been lobbied by non-USPS. Nope. The House and Senate activity was led by people with major political funding from USPS unions rather than UPS/FedEx. My suspicion is that the unions were engaged in very tough contract negotiations at the time and would take any offer that ensured pensions. How the USPS could fund it wasn’t their problem. The House/Senate actors, of course, may have had a different agenda.

  3. Delivery of the mail, the Postal Service, is constitutionally mandated. We all know how the retards feel about the constitution.

  4. VietnamVet

    This is the classic case of monopolies and power players having privileges that the little people don’t have. Yes, I can order Amazon goods and have no apparent delivery cost but if I go to the post office to mail a package I am charged exorbitantly. Once there is no alternative to a monopoly, prices go through the roof. This already has happened with shelter, healthcare and higher education in the USA.

    We need a government that breaks up monopolies, promotes competition, and restores regulation of cartels. If neo-liberalism is not eradicated in the next several elections, chaos will spread across North America.

  5. BlizzardOfOzzz

    Matt Stoller’s Twitter feed — high comedy. He alternates between dumping out John Oliver-tier DRUMPH insults for his soyboy fan-base, and reluctantly noting Trump’s latest New Deal feints that no president in living memory has been willing to touch. So far Matt hasn’t offered Trump his expert advice, nor has he discovered that (ACTUALLY) anti-trust is just anti-semitism — but either one is a possibility at this point.

  6. highrpm

    repub’s and their privatization. (will they ever get over it?) long live ronny-boy. owned by lew wasserman and co. what does that say? “no” on a few measly $$$ for proletariate pensions. “yes” on several 100x multiples of $$$ spreads between top level executive compensations and the janitors. ra, ra, sis boom bah for privatization! maybe wall street can take washington public.

  7. jrkrideau

    Sounds like typical US/Trump incompetence/political insanity.

    Last I heard, Canada Post was doing very well from postal packages. To the extent of encouraging people doing on-line ordering to ask for Canada Post delivery.

    CP will give you a special delivery address and e-mail notice in case you are not home and want to pick up the delivery at your local post office.

  8. Ed Miller

    My contention about the pre-funding of pension obligations is that the requirement is a fraud with a purpose. With the intention of privatizing the USPS by (I assume) some private equity scumbag(s), these pension assets will be immediately stolen as part of the plan to add huge debt to financially enslave postal workers. Stealing massive pension funds plus all the cash from loans is private equity players wet dream.

  9. Richard B McGee

    I think there’s a humanitarian case for USPS servicing the least profitable routes (which are often the rural areas) at near cost. If there’s a way to do this without unduly benefiting its competitors, then it should be done that way. But it should be done.

  10. Tom

    I never got the Republican hate against the USPS. Without it, the nation would utterly crash and hard. It is also self-funded and delivers mail directly to combat zones and disaster zones.

  11. Andre

    Well, it all sounds good, but the fact is that ALL USPS rates are dictated by law and can’t be changed without proper authority. This is part of the problem with the USPS, they can not compete. They are not allowed to, and need I say more, Paul Ryan’s biggest corporate contributor is UPS, who would take over the USPS in a day, if they could.

  12. nihil obstet

    The worst problem the USPS has is the restrictions on its activities, that keep it from modernizing its services. Capitalist governments can’t allow public services to compete with for profit enterprises. Profits must be made, although they cost the people more for less service.

  13. Webstir

    The USPS “last mile” policy due to monopoly infrastructure sounds suspiciously like the Bureau of Land Management & US Forest Service’s grazing fee policies. These agencies maintain a similar infrastructure monopoly on land, as it applies to those who would scrape a living off of it. Compare the federal grazing fee rate at approximately $1.50 per AUM:

    To the Idaho’s idea of the value of a similar allotment at around $9.50 per AUM:

    This is a relic of the sodbuster land grant days. The US Govt. wanted to get people on the land using it productively. Does the same calculus apply to the Postal Service? Yes.
    But like the land management agencies, it is a relic that is being abused by modern special interest politics.

  14. No-one can accuse the USPS of being “too opportunistic”.

  15. different clue

    Ten Bears said it first. Having a Post Office in charge of a Postal System is Constitutionally mandated. Plots to destroy the Post Office are just more anti-Constitutional initiatives.

    I suppose BlizzardOfOzzz is the new spelling of BlizzardOfOz? How is anti-trust really (actually)
    anti-semitism? Can someone explain it to me? Please use small words. And type real slow, so I can keep up.

    I assumed the highly exceptional “prepay-forward” mandate for postal employee retirees was designed to bankrupt the Postal System into roach motel bankruptcy and asset-stripping liquidation. It didn’t occur to me that the Prepaid Forward retirement fund money-pile would itself be one of the assets to be stripped and piratized, but of course it would be.

    Sanders and the Sanderists might make Post Office Preservation and Restoration one of the several things they run on. It would be an “attention span test” to see which of his supporters could bear to think long enough to understand the argument for the necessity of Post Office Preservation and Restoration.

  16. EverythingsJake

    I’ve read that Warren Buffett loves to exploit this kind of monopoly. For example, rail tracks from general lines to local distribution points (a single mile of rail track) may be charged at 4-5X the rate of general regional or national rail. Of course, that the USPS might do the same would be deemed abhorrent, a state enterprised attack on the free market. Who knows? The human species is rightly doomed. On a positive note, perhaps we will take cats down with us, when they can no longer reliably depend on humans to provide necessary feeding and litter cleaning services. Those murderous MFs truly deserve eradication.

  17. Hugh

    Pre-funding the postal pension fund and doing so at an accelerated rate, as required by the Postal Accountability and Enhancement Act of 2006, come across as a riff on the 1983 Reagan/Greenspan Social Security reform which created the Social Security “trust fund.” You see the key question to understanding these cons is what happens to the money. In a private or state fund, for example, the excess money, the money that goes beyond immediate payouts, is invested in stocks and bonds, i.e. external assets. In a Fed program like Social Security and as far as I know as of last year, the Postal Service Retirement programs, excess money is traded for “special” government bonds. The money is then dumped into general revenues and spent. In other words, these excess monies are a hidden tax. They are bonus bucks for politicians. The trick is to make sure that the flow of funds is as one way as possible. Future politicians don’t want to pay back the obligations incurred by previous politicians. They don’t want their own spending restricted by them. And the rich who pay most of the income taxes and who own the politicians don’t want to be the ones paying these obligations off.

    Re delivery, UPS and FedEx poached most of the USPS’s most profitable business. So what it has left is the less profitable stuff. And while you could argue that the USPS could raise its rates on this. The more it does so, the more it invites more poaching.

  18. Hugh

    BTW the Postal Accountability and Enhancement Act of 2006 passed in a Congress in which the Republicans controlled both Houses. However, it passed both Houses by voice votes, avoiding the nicety of specific names being attached to it. It was introduced by Tom Davis (R-VA) and had one Republican and two Democratic cosponsors: Davis, Danny [D-IL7], McHugh, John [R-NY23], and Waxman, Henry [D-CA30]. So it does seem that the fix was in and it was bipartisan. Dubya signed it into law.

  19. Tom W Harris

    And Danny Davis has (AFAIK) a good liberal/progressive rep here in Illinois. I guess ya just can’t believe in anybody (sob).

  20. Tom W Harris

    I too would like to BOZ to tell us why “anti-trust is just anti-semitism.” Also maybe he could explain, in policy terms, his beef with Matt Stoller. Stoller after all is a liberal who emphasizes class over identity politics – exactly what’s needed.

  21. Synoia

    Further, apologists, that warmer climates are more lush in the long run


    Lush yes. More productive at producing food? No.
    The organic litter which enriches soil decays much faster in tropical climates.

    Intensive farming in Tropical forests rapidly promote deforestation, because of the lack of “extra or slow decaying” organic matter in the soil.

  22. BlizzardOfOzzz

    I was alluding to this – globalist anti semitic. If Trump moves anti-trust forward, you can be certain these people will make the discovery that trust busting is just a dog whistle.

    As for Stoller, if you’ve followed him at all you know that anti-trust is his wheelhouse. He’s already said at least once that it’s bad when Trump does it:

    Here’s one where Matt can’t talk himself into disagreeing, but he still manages to kvetch:

    Of course, Matt must know that “ideological confusion” was one of the big criticisms of his hero FDR. Also, it’s an aptly ironic turn of phrase – his co-ethnics are notorious for hiding behind various ideologies while they have no ideology but “what’s good for the tribe”. (See the neo-cons’ frequent party-jumping.)

    I want to see Stoller denounce trust busting as anti-semitic — it would be the reductio ad absurdam of Current Year politics, realized.

  23. Ten Bears: “We all know how the retards feel about the constitution.” Yes, exactly! The Constitution is just a charter written by rich white colonialists and benefits only them! Thanks for telling the Truth …

  24. Seriously, though, Andre: “This is part of the problem with the USPS, they can not compete.” But in fact, it does, and it competes quite well. It only appears to be in the red because of the pension pre-funding requirement. You seem to have missed that important point to push your own talking point. Why? The USPS shouldn’t compete. It’s not supposed to be a profit-making entity crushing all the others. It’s a government service.

  25. different clue

    @BlizzardOfOzzz . . .

    Oh I see. You were being ironic.

    The web is a very poor place to try being ironic. The irony hardly ever transmits well. Or at all.

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