Trump administration recommends postal rate increases

Trump administration recommends postal rate increases

The report recommends separating commercial services as a non-essential category, which wouldn't be subject to price caps, and mandated delivery standards that apply to essential services such as person-to-person mail.

The task force also recommended that the Postal Service address rising labor costs.

The U.S. Department of Treasury said in a report that the recommendations were made after a "thorough" evaluation of the USPS, following an executive order on the Task Force on the U.S. postal system by President Donald Trump issued in April.

The Postal Service "is on an unsustainable financial path which poses significant financial risk to American taxpayers", Treasury Secretary Steven Mnuchin, who chaired the panel, said in a statement. Its creation followed criticism by Trump that the Postal Office provided too much service to Amazon for too little money.

It has been losing money for more than a decade, the task force said, partially because the loss of revenue from letters, bills and other ordinary mail in an increasingly digital economy have not been offset by increased revenue from an explosion in deliveries from online shopping. But Amazon and its CEO, Jeff Bezos, have been frequent targets of Trump's attacks, with the president widely seen as targeting the company because Bezos owns The Washington Post, which has reported critically on the president.

Cowen & Co, in a May report, said the Postal Service and Amazon were "co-dependent", but that Amazon went elsewhere for most packages that needed to arrive quickly.

Online retailers Amazon and eBay participated in the report, according to the task force.

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Amazon is one of the USPS' biggest single customers, prompting the agency to offer specialized services.

Amazon, FedEx Corp and United Parcel Service Inc did not return requests for comment.

The administration found that the Postal Service has not accounted for a decline in mail volume and the growth in package volume in its current pricing structure.

If the White House Task Force on the Postal Service's report was assigned a ZIP Code it would be 00000.

A key recommendation would alter the Postal Service's "universal service obligation", a mandate to provide affordable service to all customers.

The ostensibly unstable state of the USPS was again made clear in its recently released fiscal year 2018 results in which it incurred a $3.9 billion net loss, which was steeper than the FY 2017 $2.7 billion net loss, while not as severe as the $5.5 billion net loss in FY 2016. "The USPS must pursue price increases, reduce service costs, or exit the business line for any class of mail that falls outside of the determined essential services and that does not cover attributable costs". The report concludes that the USPS isn't correctly pricing the costs of its commercial parcel delivery service to achieve profitability and suggests raising prices on e-commerce companies like Amazon.

"The flawed business model imposed by law continues to be the root cause of our financial instability", Brennan said.

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