US Postal Service price hikes could cost Amazon more than $1 billion

The
US Postal Service has proposed hiking prices.
Getty Images

• The US
  Postal Service has proposed
  price hikes that could be a major blow to Amazon. 
• Credit Suisse estimates the price hikes could cost Amazon
  up to $1.1 billion. 
• The price hikes come after months of criticism from President
  Donald Trump, who argued that the Postal Service gives Amazon an
  unreasonably good deal. 

The US Postal Service’s proposed price hikes could be a major
blow to Amazon. 

Earlier in October, the USPS proposed a price increase of
12.3% for its lightweight parcel select service. Non-lightweight
parcel select prices would increase by an average of 9.3%. The
proposed price hikes would go into effect in January
2019 if they are approved by the Postal Regulatory
Commission.

Credit Suisse estimates the price hikes could cost Amazon
somewhere in the range of $400 million to $1.1 billion,
CNBC reports.

Parcel select is used by Amazon, as well as companies such as
FedEx and UPS, for “last-mile” package delivery. The USPS’ low
fixed costs and mandate to deliver mail to Americans make it an
ideal option to get a package from a fulfillment depot to its
final destination.

Amazon doesn’t seem too worried about the proposed rate
hikes, however.

“
We’re not expecting a material impact from
these rate changes in 2019,” CFO Brian Olsavsky said during the
company’s third-quarter earnings call on Thursday. 

Trump has criticized Amazon’s deal with the USPS for months.

“The Amazon Washington Post has gone crazy against me ever since
they lost the Internet Tax Case in the U.S. Supreme Court two
months ago,” Trump tweeted
in July. “Next up is the U.S. Post Office which they use, at a
fraction of real cost, as their ‘delivery boy’ for a BIG
percentage of their packages.”

President
Donald Trump.
Carlos
Barria/Reuters