The Citigroup analysts estimate that would add $2.6 billion to its current shipping costs, an increase of about 28%. That could be a big hit to Amazon, which is one of the largest users of that parcel delivery service. (Those calculations are based on an analysis by UPS ( UPS), which along with FedEx ( FDX) stands to gain enormously if the Postal Service raises its prices, so they should be taken with a grain of salt.) It makes sense to look to package delivery as a way to turn those fortunes around.Īn analyst note by Citigroup from April found that prices would have to go up by $1.41 per package in 2018 - or about 40% - to reflect the true cost of delivery. In fiscal 2016, the Postal Service brought in $69.4 billion in revenue, was liable for $5.8 billion in retiree health benefits and reported a $5.6 billion net loss. Still, the Postal Service might be able to eke out a profit if it weren't for another way in which Congress has tied its hands: It requires the agency to pre-fund its retiree health benefits and count them as operating expenses. Related: UPS unveils Saturday delivery - and 6,000 new jobs But the Postal Service hasn't been able to compensate for collapsing mail volumes due to a 2006 law that capped price increases at the rate of inflation and also limited the proportion of its budget that could be devoted to its parcel business. Meanwhile, the parcel delivery business has exploded. With email replacing snail mail, that first-class mail business has declined dramatically - it's down by 40% since peaking in 2000. At the same time, it competes with FedEx and UPS to deliver parcels - but its rates are approved by a board appointed by the president, and almost every aspect of its operations are governed by Congress.
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