May 14, 2020 / 7:24 PM / 14 days ago

UPDATE 2-U.S. Postal Service reviewing delivery contracts -WashPost

(Adds response from Package Coalition)

WASHINGTON, May 14 (Reuters) - The U.S. Postal Service has launched a review of package delivery contracts with Amazon.com , United Parcel Service Inc, FedEx and other large shippers, The Washington Post reported on Thursday, citing six people with knowledge of agency operations.

The USPS has sought bids from consulting firms to assess what the agency charges companies to deliver products on their behalf, the Post said.

The service, which is funded entirely through postage and services and has struggled financially for years, is a frequent target of President Donald Trump. He says it charges too little to deliver packages sent by retailers such as Amazon, whose founder and Chief Executive Jeff Bezos also owns the Washington Post, which has been critical of the president.

A spokesman for the U.S. Postal Service declined to comment.

The Package Coalition, which includes Amazon.com, eBay, Express Scripts and CVS Health, warned that higher prices could mean less business for the Postal Service.

“It is our view that this new backdoor review is an attempt to arbitrarily raise package prices based on a political agenda,” said Coalition Chairman John McHugh.

The Postal Service Board of Governors, made up of Trump appointees, recently tapped Louis DeJoy to be the new postmaster general. DeJoy is the finance chair of the Republican National Convention.

The postal service has struggled for years because of a combination of reduced first class mail as social media has replaced greeting cards and a requirement that it pre-fund employee pension and retirement health care costs for the next 75 years.

The U.S. Postal Service said this month its losses more than doubled. Outgoing Postmaster General Megan Brennan, who steps down June 15, said the poor state of the service’s finances endanger its “ability to fulfill our universal service missions absent congressional intervention.”

Congress authorized the Treasury Department to lend the Postal Service up to $10 billion as part of a $2.3 trillion coronavirus stimulus package. Trump threatened to block that aid.

Meanwhile, the pandemic has meant increased dependence on online sales, with packages that are often delivered by the U.S. Postal Service. The service already delivers medicines, while the pandemic has also boosted interest in voting by mail rather than crowding into polling places for November’s presidential election.

The three largest USPS customers, Parcel Select users Amazon.com, UPS and FedEx, account for 8.5% of its operating revenue.

The USPS makes money on every package, based on a review by the Postal Regulatory Commission.

Shippers get discounted rates for some U.S. ZIP codes, but not on roughly 23,000 ZIP codes outside of urban areas, where shipping is more competitive, according to Robert Fisher, a postal consultant and a former USPS executive. (Reporting by Doina Chiacu, Diane Bartz and Lisa Baertlein; Editing by Chris Reese, David Gregorio and Dan Grebler)

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