The struggling US Postal Service was thrown a lifeline by the most unlikely of rescuers this week: Amazon.com. Starting this weekend, Amazon customers in New York and LA will receive package deliveries on Sunday courtesy of the United States Postal Service!
The USPS lost $15.9 billion last year and is clinging to fiscal life while it waits for a Congressional bailout. The long term prognosis for the USPS is bleak, it is being crushed by soaring pension costs all the while postal volume plummets. Could this new partnership with Amazon.com signal a future privatization of the USPS as the delivery arm of Amazon.com?
The possibility of an Amazon take over the USPS is more than a Orwellian wet dream, it might just be the best chance at rescuing the jobs of the over 500,000 employees of the Post Office. Those postal workers, along with the postal service’s distribution network of 30,000 post offices and 214,000 trucks offer Amazon the chance to bring the holy grail of online retailing to life, same-day shipping. Today Amazon.com relies completely on external shippers like UPS and FedEx to get its product to customers. That means no Sunday delivery and certainly no same-day delivery of orders. Creating an international delivery network to rival FedEx and UPS from scratch would be a Herculean undertaking for Amazon. Instead, acquiring the USPS operations would give Amazon a direct channel to every home in the country almost overnight.
Before we get too ahead of ourselves, there is little chance of any private corporation wanting anything to do with the current state of the USPS’s balance sheet and its $46 billion in unfunded pension liability. It’s likely that the USPS would need to undergo a GM like bankruptcy before Amazon or any other rational entity would think of absorbing it. However, the idea of privatizing a utility like the postal service is hardly a new one: Germany partially spun off its Deutsche Post operation in 2003 and Japan is preparing for a full privatization of Japan Post through an IPO in 2015. Given the mounting fiscal woes that face the US federal government and the ongoing catastrophe that is the USPS’s finances, the idea of Amazon Post might be closer to reality than you think.