First, the good news. Oh wait, when it comes to the profitability of the United States Postal Service, there really isn’t any good news. Last year the USPS posted a second quarter loss of over $562 million. This year the second quarter loss was just about $1.3 billion. Seriously, the United States Postal Service is headed down the wrong road. Big time.
Even though its package volume increased 5% this year, its "controllable losses" amounted to somewhere around $656 million while pulling in just $12 million for the same period. This includes automatic increases in wages all down the line.
This downward spiral in profitability, according to the USPS, is largely due to skyrocketing compensation costs, which suggests to most financial experts that the organization is putting its bottom line in jeopardy in a questionable attempt to keep up with competition.
The conundrum seems to be that while the USPS is working overtime (and paying overtime) to deliver packages, and making money at it, the escalating costs involved are eating ever deeper into its revenue stream -- in other words, the harder it works to remain a viable package delivery service, the greater its losses become.
It doesn’t take a genius to figure out that when the USPS talks about its competition, it means pretty much just one company, Amazon. In the past decade, the USPS has watched helplessly as the behemoth Amazon, as well as other smaller outfits, have steadily eroded its customer base by offering better, quicker and usually less expensive options for online orders that need to be delivered in a timely manner.
While both Amazon and the USPS are obviously in the business of "serving the public," its methods and operations are drastically different. Anyone interested in seeing this for themselves can first visit the local Post Office to observe how things are done (slowly and with unionized indifference) and then visit an Amazon warehouse where the management and workers (who, for the most part are not unionized and not making nearly the same amount of money as USPS workers) are continually creating new ways to become more efficient and quicker.
This is not to say that unions are a bad thing, but that what is motivating USPS workers (the day they can retire with a fat pension), is not at all the same thing that motivates staff at Amazon (working smarter, not harder).
This problem has not gone unnoticed on Capitol Hill, which subsidizes the USPS. President Donald Trump recently unleashed a Tweetstorm against Amazon, accusing the company of digging the grave of the USPS all in the name of profits. Trump and many members of Congress are saying they think Amazon is getting a free ride because of the company’s tax structure.
Trump wants Amazon to pay more corporate tax -- lots more. If he can muster the numbers in Congress (and he seems to be getting better at it all the time) there is a serious chance that amendments to the new tax laws will hit Amazon where it hurts -- its bottom line.
