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Why The Postal Service Wants To Deliver Amazon Packages On The Weekend But Not Other Mail

CREDIT: AP
CREDIT: AP

The United States Postal Service (USPS) announced on Sunday that it struck a deal with Amazon to deliver its packages on Sundays. It’s also seeking similar deals with other retailers, taking some business away from other carries like the United Parcel Service (UPS) and FedEx that don’t deliver on Sundays. Package delivery is profitable for the USPS and will help it bring in revenue while it struggles financially.

Meanwhile, the USPS has been trying to end its Saturday delivery for other mail amid its financial troubles. That was supposed to help it avoid bankruptcy, but Congress rejected its proposal to move to five-day delivery in March. Postal service officials say cutting Saturday delivery would have saved it about $2 billion a year.

While the USPS has seen first-class mail, its main source of revenue, decline — it was down to about 69 billion pieces last year compared to 92 billion in 2008 — its financial woes stem mostly from a Congressional requirement no other institution has to face: that it pre-fund 75 years’ worth of employee health benefits. The majority of its losses since 2007 have come from this requirement, contributing to it defaulting for the first, second, and third time in history. Without it, it is estimated that the USPS would have a $1.5 billion surplus.

Shipping packages is one bright spot for the USPS, increasing to about 3.5 billion pieces since 2008 and generating $11.6 billion in revenue. The e-commerce delivery market is $186 billion. The agency has also looked into a workaround after Congress blocked its move to a five-day schedule by trying to cut back on first-class mail, magazine, and direct mail delivery and has also considered shuttering post office locations. But without Congress’s pre-funding mandate, the agency wouldn’t have to consider these other options at all.

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Changes to mail delivery, particularly closing post offices, have a disproportionate impact on poor Americans and those living in rural areas. Eighty percent of the locations that were eyed for closure were in rural areas, and those places tend to have spotty access to information through the internet. But while the majority of its problems would disappear with one simple step — repealing the pre-funding requirement — and one Congressman has even introduced a bill to do just that, it doesn’t look likely that Congress will take any action.