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The United States Postal Service (USPS) has proposed a price increase of 9-12% for the shipping service used by companies including Amazon, UPS and FedEx.

This follows President Trump’s executive order earlier in the year to have USPS investigated for its financial arrangements, though USPS has said these changes are not due to Trump’s criticism.

“The USPS is on an unstable financial path and must be restructured to prevent a taxpayer-funded bailout,” Trump said in the order. On Twitter, he claimed that USPS lost an average of $1.50 per parcel delivered for Amazon, under their current deal, calling it a “scam”.

Trump’s personal grievances with Amazon CEO Jeff Bezos aside, some argue that USPS has to raise prices to maintain profitability and stay competitive.

In any case, USPS is now proposing price hikes for its mail and parcel services, with a 9.3% increase for parcels over one pound and a 12.3% increase for lighter packages.

USPS to raise mail and parcel delivery prices
Credit: Rhodi Alers de Lopez

Amazon is among several companies who have formed a lobbying group called the Package Coalition, arguing against price hikes for parcel deliveries on the basis that USPS services are already profitable.

“The Postal Service is required by law to ensure that the prices for its package delivery services cover their costs,” the group said on Twitter. “According to the Postal Regulatory Commission, USPS package delivery services have been profitable for the past 7 years.”

For companies such as Amazon and UPS, USPS fulfils the “last mile” leg of the journey, from hub to customer, which is typically the most expensive.

If approved by regulators, the price hike will go into effect on 27th January 2019.

Source: CNBC, Supply Chain Dive

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