United States Postal Service Long-Life Vehicles in Waltham, Mass. Photo by Sam LaRussa, via Flickr, Creative Commons 2.0.

The U.S. Postal Service generated $1.6 billion in profit from Amazon in its 2019 fiscal year, on $3.9 billion in revenue from its business with the e-commerce giant.

That’s one of several revelations about the USPS in a Washington Post report Thursday, citing internal USPS emails and financial statements obtained by the American Oversight watchdog group through a public records request.

The numbers appear to debunk repeated claims by President Donald Trump that the U.S. Postal Service loses money on Amazon whenever it ships a package.

President Trump has repeatedly criticized Amazon and its CEO Jeff Bezos, who owns the Washington Post, over the issue. The president has called on the USPS to raise the price of delivering packages for Amazon.

But the documents, posted by American Oversight, indicate that Amazon does generate a profit for the USPS, in some cases at a significant rate.

“While Amazon is the USPS’ largest package customer ($3.9B of revenue in FY19), it represents <10% of USPS total annual revenue, and is a high-contribution relationship (>150% cost coverage in its largest product relationship),” reads one of the documents.

The document, entitled “Brief on Amazon-USPS Relationship,” includes a list of “Fact-checking Statements” responding to President Trump’s comments about Amazon during a Coronavirus Task Force Briefing.

The Post says the brief appears to have been circulated inside the Post Office, although the author and origin aren’t clear from the documents as made public.

Excerpts from the USPS documents that formed the basis for the Washington Post’s reporting, sections of which were heavily redacted. Watchdog group American Oversight obtained the documents through a public records request. (GeekWire Graphic)

This is the document that discloses the FY19 revenue of $3.9 billion and profit (contribution) of $1.6 billion from Amazon in fiscal 2019.

It adds, “USPS derives incremental margin dollars from every parcel, for every product, for every customer. Package business (both last-mile and full-network) represents a net improvement in profitability for USPS versus a detractor.”

The U.S. Postal Service’s yearly loss doubled to $8.8 billion last year. The memo attributes the financial challenges to unfunded government mandates and restrictions, such as the requirement for equitable pricing across geographies, and obligations to pre-fund employee retirement, among other factors.

Meanwhile, Amazon has been aggressively building up its own shipping and delivery capabilities, to supplement its use of the USPS and UPS, the company says.

A new report Thursday from analyst Mark Mahaney at RBC Capital Markets says Amazon could reduce its shipping costs by relying more on its own logistics and delivery networks, known in the industry as “AMZL.”

The report says Amazon “will soon be handling delivery from desktop to doorstop for 85% of all its packages,” covering 70% of U.S. households.

“We estimate that Amazon could save $2-$6B in last mile delivery costs, by further expanding its AMZL network,” the report says. “Amazon will be able to reduce its reliance on [third-party] services like USPS (30% of ’19 AMZN U.S. deliveries) and UPS (20%) which mitigates risk of potential supplier price increases.”

Other documents reported by the Washington Post describe tension between Amazon and the U.S. Postal Service in contract talks. According to the Post report, the documents reflect Amazon’s uncertainty over the status of the U.S. Post Office. They list questions from the company such as, “What does the USPS look like in the new few weeks, the next few months and the next several years?”

In response to a GeekWire inquiry, Amazon said it had no further comment beyond its statement in the Post story: “For more than two decades, Amazon has partnered closely with the United States Postal Service to invent and deliver for our customers, which has resulted in significant revenue for the USPS and thousands of American jobs. USPS continues to be a great partner in serving Amazon customers.”

As of Thursday afternoon, American Oversight says the USPS has asked the group to pull down the records that the agency produced under public records laws, “claiming they had been improperly released.” See its site for the latest.

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