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Amazon builds out its own private delivery network to service their densest customer areas, while leveraging the USPS — which is legally mandated to deliver to

by zaroth 6y ago

Amazon builds out its own private delivery network to service their densest customer areas, while leveraging the USPS — which is legally mandated to deliver to every US address — to service their rural customers. This strategy starves USPS of package revenue for profitable routes while inundating them with packages to unprofitable addresses. If USPS needs to raise money, they can start by charging Amazon a surcharge to defend against this type of arbitrage.

lovehashbrowns 6y ago
USPS is mainly only the last-mile delivery for Amazon; Amazon already has many warehouses all around the US. Also packages continue to grow as revenue for USPS: https://about.usps.com/newsroom/national-releases/2020/0807-usps-reports-third-quarter-fiscal-2020-results.htm https://about.usps.com/newsroom/national-releases/2020/0807-... > Meanwhile, Shipping and Packages revenue increased by $2.9 billion, or 53.6 percent, on a volume increase of 708 million pieces, or 49.9 percent, compared to the same quarter last year. So apparently they're charging a good amount. There's also the Postal Regulatory Commission which has reported that USPS does make money on the contract with Amazon. It continues to be that the biggest drain on the USPS is the declines in first-class mail and billing mail. Junk mail is also declining.
clairity 6y ago
congress should allow USPS to raise rates if need be, but how would amazon force USPS to make special, money-losing trips just for them? most (all?) rural packages should go out with the regular (usually daily) mail carrier, so the marginal cost of also delivering amazon packages to rural addresses should basically be zero for USPS. for the really remote areas, i don't think you can choose any time-bound delivery you want, like next-day or two-day. they would only quote you what they'd be able to manage with the normal, likely less frequent, delivery schedule for the area (like weekly). so i can see how USPS misses out on lucrative urban deliveries, but not how they lose money on rural deliveries. amazon absolutely does gain by not delivering to rural though.
- zaroth 6y ago
  > but not how they lose money on rural deliveries It's part of the USPS pricing structure that the dense urban environments subsidize the sparse rural ones. It's not a question of "just one more package" being basically zero cost. In the aggregate there is incremental cost to delivering more packages, and that cost is higher for rural packages than urban packages. Apparently, the rate structure just assumes a certain urban/rural mix without accounting for a trillion dollar company with enough capital to arbitrage the lower urban delivery cost.
khuey 6y ago
USPS delivers plenty of my Amazon packages to my definitely not rural apartment in San Francisco.
dougweltman 6y ago
Solution is either to discriminate against individual shippers (can't imagine how that might be abused!), or to charge based on destination / cost of route. The answer is just so elusive!
- aaron_m04 6y ago
  Or we make sure the USPS is funded regardless of profitability.
  - dougweltman 6y ago
    or that! the policy for decades. I'm continuing with the thread's premise that USPS needs to break even at minimum on its activities.
    - aaron_m04 6y ago
      That is a silly premise. :)

by zaroth 6y ago

lovehashbrowns 6y ago

USPS is mainly only the last-mile delivery for Amazon; Amazon already has many warehouses all around the US. Also packages continue to grow as revenue for USPS: https://about.usps.com/newsroom/national-releases/2020/0807-usps-reports-third-quarter-fiscal-2020-results.htm https://about.usps.com/newsroom/national-releases/2020/0807-... > Meanwhile, Shipping and Packages revenue increased by $2.9 billion, or 53.6 percent, on a volume increase of 708 million pieces, or 49.9 percent, compared to the same quarter last year. So apparently they're charging a good amount. There's also the Postal Regulatory Commission which has reported that USPS does make money on the contract with Amazon. It continues to be that the biggest drain on the USPS is the declines in first-class mail and billing mail. Junk mail is also declining.

clairity 6y ago

congress should allow USPS to raise rates if need be, but how would amazon force USPS to make special, money-losing trips just for them? most (all?) rural packages should go out with the regular (usually daily) mail carrier, so the marginal cost of also delivering amazon packages to rural addresses should basically be zero for USPS. for the really remote areas, i don't think you can choose any time-bound delivery you want, like next-day or two-day. they would only quote you what they'd be able to manage with the normal, likely less frequent, delivery schedule for the area (like weekly). so i can see how USPS misses out on lucrative urban deliveries, but not how they lose money on rural deliveries. amazon absolutely does gain by not delivering to rural though.

zaroth 6y ago
> but not how they lose money on rural deliveries It's part of the USPS pricing structure that the dense urban environments subsidize the sparse rural ones. It's not a question of "just one more package" being basically zero cost. In the aggregate there is incremental cost to delivering more packages, and that cost is higher for rural packages than urban packages. Apparently, the rate structure just assumes a certain urban/rural mix without accounting for a trillion dollar company with enough capital to arbitrage the lower urban delivery cost.

khuey 6y ago

USPS delivers plenty of my Amazon packages to my definitely not rural apartment in San Francisco.

dougweltman 6y ago

Solution is either to discriminate against individual shippers (can't imagine how that might be abused!), or to charge based on destination / cost of route. The answer is just so elusive!

aaron_m04 6y ago
Or we make sure the USPS is funded regardless of profitability.
- dougweltman 6y ago
  or that! the policy for decades. I'm continuing with the thread's premise that USPS needs to break even at minimum on its activities.
  - aaron_m04 6y ago
    That is a silly premise. :)