Why Amazon may be in trouble

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Why Amazon may be in trouble

By Louisa Hallett - 10/12/2018
The Postal Service plans to raise rates for the Parcel Select service used by Amazon, FedEx, and UPS by 9.3 to 12.3 percent, according to a new filing with the Postal Regulatory Commission.

The Postal Service plans to raise rates for the Parcel Select service used by Amazon, FedEx, and UPS by 9.3 to 12.3 percent, according to a new filing with the Postal Regulatory Commission.

According to CNBC, the parcel select service, which is also used by United Parcel Service and FedEx, is the last and typically the most expensive step in the shipping process that gets the packages to customers’ doorsteps. The USPS proposed a 9.3 percent increase on this service for packages weighing over one pound and a 12.3 percent increase on lighter packages.

This initiative would put further pressure on profits while other retailers are gaining traction with click and collect, especially for the grocery industry. 

Trump issued an executive order in April to set up a task force to examine the USPS, claiming that it was on an “unsustainable financial path.” He’s also tweeted that the USPS is Amazon’s “delivery boy” and doesn’t make money from Amazon’s business, according to CNBC.

A USPS spokesperson said these proposed changes are not a response to Trump’s criticism.

“The price increases reflect the best judgment of the Postal Service Governors, who are seeking to establish new rates that will keep the Postal Service competitive, while also providing the Postal Service with much needed revenue,” the spokesperson said.

The USPS also proposed a 3.9 percent increase on priority mail express, a 5.9 percent increase on priority mail and a 10 percent increase on first-class stamps, according to CNBC.

These changes, if approved by regulators, will go into effect on Jan. 27, 2019.

To read the full CNBC article, click here.

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