I've read a few articles about Trump's claim that the Post Office is losing money delivering Amazon packages. Liberal new outlets say that Trump is wrong while conservative outlets seem to agree.
My guess is that the Post Office covers it's variable cost and generates a positive contribution margin delivering packages for Amazon, but that contribution margin is not sufficient to cover fixed costs like pensions and infrastructure.
The question is why can't the Post Office increase rates? Negotiated service agreements must be approved by the Postal Regulatory Commission but I don't know why that's a problem. Is the Post Office concerned that a price increase would encourage Fed-Ex/UPS to take over "last mile" deliveries? If so, why can those companies do it for less? Legacy pension costs? Efficiency? Post office insisting on supporting rural areas?
My guess is that the Post Office covers it's variable cost and generates a positive contribution margin delivering packages for Amazon, but that contribution margin is not sufficient to cover fixed costs like pensions and infrastructure.
The question is why can't the Post Office increase rates? Negotiated service agreements must be approved by the Postal Regulatory Commission but I don't know why that's a problem. Is the Post Office concerned that a price increase would encourage Fed-Ex/UPS to take over "last mile" deliveries? If so, why can those companies do it for less? Legacy pension costs? Efficiency? Post office insisting on supporting rural areas?
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