- Two US representatives said on Monday that the Postal Service might cease regular operations as early as June.
- The lawmakers said the USPS had seen plummeting mail volumes and wouldn’t survive the summer without immediate help.
- A shutdown would be chaotic for Amazon, which heavily depends on the USPS to deliver its packages.
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The US Postal Service could be kaput by June without financial help, said two lawmakers on the House committee with jurisdiction over the service.
That’s not just bad news for all the places that still like to send physical junk mail instead of just emailing it, but for Amazon, which heavily depends on the USPS.
Reps. Carolyn Maloney and Gerry Connolly said in a statement on Monday that the coronavirus outbreak was leading to plummeting mail volumes and that the USPS “is in need of urgent help” from Congress and the White House. Maloney and Connolly said the Postal Service could shut down by the end of the summer unless it received swift emergency funding.
The lawmakers said the shutdown would cut Americans off from “vital goods and services” and impair voting by mail.
Another direct impact they didn’t highlight would be your Amazon Prime deliveries.
While Amazon has rapidly taken its delivery network in-house in recent years, the mega-retailer still depends on the USPS to deliver many orders. As recently as July, the USPS was delivering about a third of Amazon packages, according to data from Rakuten Intelligence.
Amazon also pledged last April that it would soon deliver all Prime packages in one day. In rural America, the USPS would be a major part of that.
The Postal Service makes up a large percentage of deliveries in rural areas, where Amazon has not invested in its own so-called last-mile network. A December report from Morgan Stanley said it’s not a coincidence: The retail giant was “cherry picking” America’s densest ZIP codes and leaving areas where homes are more spread out – and more expensive to service – to the USPS.
But the service has a legal imperative to serve all US addresses, even low-margin, low-density rural neighbourhoods. Rural America is so costly to service that McKinsey has said that even drone delivery might not offset the costs.
If the USPS were to vanish, Amazon would have to build its last-mile network in rural America or set up partnerships with delivery giants like UPS. CEO Jeff Bezos has already plunged billions into accelerating Amazon’s shipping network – its worldwide shipping costs increased by 43% in the fourth quarter of 2019 as online sales grew by only 15%.
The USPS and Amazon did not respond to a request for comment from Business Insider.
The coronavirus outbreak is delivering yet another blow to the USPS
The Postal Service lost $US3.9 billion in fiscal 2018, according to a report from the Task Force on the United States Postal System. Its cumulative losses are nearing $US70 billion.
One major contributor to the USPS’s woes is a 2006 law that required it to determine how much it would spend on pensions over the next 75 years and quickly build up a fund to cover that. According to the USPS’s inspector general, the requirement to pre-fund retirement benefits accounted for $US54.8 billion of the agency’s $US62.4 billion in losses from 2007 to 2016.
And the coronavirus pandemic is yet another hit to the USPS. To give it a boost, Maloney and Connolly introduced a bill that would provide it $US25 billion in emergency funding.
“Every community in America relies on the Postal Service to deliver vital goods and services, including life-saving medications,” they said. “The Postal Service needs America’s help, and we must answer this call.”