Trump tweets against Amazon
 

Not a political discourse here. From a purely business perspective I’m inclined to believe that this attention will just make them move faster on their nation wide delivery service. I would like to think this is a good thing for the ACMI world, though not sure how it will affect the pilot group.

Anyone think this will be a race to the bottom to secure contracts or a rising tide lifts all boats sort of situation?

No effect whatsoever

Amazon’s longterm plan is to mimic the DHL model. Work or not, thats where they are heading. It works with Amazon’s current corp culture of subbing out services as well. Dont hate the messenger, DHL has thoroughly sold them into the idea.

Nothing will change in CVG except added volume. Possibly another carrier to come in. Everyone on here misreads the industry. Yes ACMI pay will come up but nowhere near mainline/legacy. Traditionally these have always been first - second jobs on the way up the career path. In the coming 36-72mo this will be supported even more by the truly historic hiring mainline/legacy wish to obtain. You will see new pilots almost work for free to get the LB/resume fattened up. Its history folks its simply how it works.

Uhh, you clearly haven’t been to the regional section of this board. They’re paying 60K+ first year and still can’t fill classses.

Work for free? Those days are long gone.

The regionals have done all of us a great favor by convincing young people to do other careers. It will take a long history of high pilot pay and good work rules to convince mainstream to want to do this. Horrible customer service and deteriorating airline/pax relationships also work in our favor to deter young people from wanting to do this. Supply dwindles, demand goes up.

What's crazy to me is how all this delivery exists when you already have a mail carrier going to each address every week day and Saturdays. In what sane world do you drive three more trucks to a subset of those same addresses?

And we are hearing now from Trump and republicans that even though the carrier is ALREADY going to each door EVERY weekday and saturdays it's not cost effective for USPS to deliver amazon packages. Instead my mail is filled 80% with junk mail which pays a 16 cents a piece? I leave it to these business wizards that this makes any kind of sense, but I don't get it at all.

Why not have amazon deliver to local postal center, and throw the packages onto the USPS trucks there that hit every address every day for smaller / lower value items. You get the Amazon backend logistics with the low cost of a delivery route that stops at every house ALREADY. If Trump is right and the USPS can't make money on more real volume (not junk mail) on a network that goes to every house already then something is seriously wrong at USPS.

lots of Amazon stuff delivered by the postal service already....

FDX has a postal contract until 2024. So isn’t amazon still shipping via FDX while trying to distance itself from UPS/FDX? MDs fly lots of postal service on the weekends.

Not the same shipping concerns as FedEx is not the shipping agent the USPS is. And I'm pretty sure the concern Amazon has with FDX and UPS is the 2nd day and overnight shipping not Pri Mail.

Trump is against Amazon because CEO Jeff Bezos also owns Washington Post

period, the end.

Winner winner chicken dinner:D its that simple.

A very jealous child.

>Became president even though the media, Hollywood, Pop Culture, and in fact most of the world was against him.
>Single handedly ended two political dynasties.
>Crippled the Democratic Party in one night.

All this was done by a man who decided to pick up politics as a hobby. Pretty impressive if I may say so.

Bozo the clown spewing the same hateful messages at that exact moment could have also been elected. It's all timing. America is all about hate. You spread hate, you're in.

Pretty simply really.

Other threads have been shut down after they turned into Left vs Right nonsense.

It's well known that Trump and Bezos don't like each other. Let's try to keep the discussion on the rails.

FedEx operates the air mail backbone to USPS. Basically USPS itself is just the last-mile portion of the delivery system and everything else is contracted out. Amazon transports its goods directly to the regional post office via UPS, FedEx or its own airplanes/trucks. The whole Prime Air thing is to get away from using the UPS/FedEx network and then let different entities compete regionally for the last-mile. Its no surprise that the ground portion of UPS and FedEx's business is a loss leader (they lose money on that portion) to support the lucrative air mail and warehousing business. That's precisely the juicy profit center that Amazon is aiming for while leaving UPS, FedEx, and USPS to fight for the scraps (ground delivery).

Said the petulant child spewing hate of his own.

Did you read your post before you sent it? Or did you have to send it so you could learn what was in it?

Saying UPS and FDX lose money on Ground service is incredibly naive.

Is it less profitable than air? Sure...but a loss leader? LOL no...

Care to clarify or back up that statement? Fedex annul report showed Ground having a 12.7% operating margin in 2017.

Can't stop myself any longer so pull the trigger on an unwrapped vokey wedge. Dicks is nearly twice what I found on ebay. Arrives UPS that same week, leave a nice feedback message & smiles all around. AMZN wants in on this action obviously. When they come in lower, they'll get it.

That includes the long haul trucking, I’m referring to the last mile delivery. It’s a massive cost that’s only supported by the rest of the ground/air network. The guys driving the FedEx trucks around town are nothing without the larger transportation network to back it up. For instance, amazon has started using USPS for last mile in a lot of markets simply because they negotiated lower rates than what FedEx and ups could do in those specific regions.

Amazon now wants in on that same air/ground network that makes all the money for UPS and FedEx. They will even do last mile where they feel they can do it better but not necessarily need to do it everywhere. UPS, FedEx and USPS will have to compete for business in each market and it won’t matter how good their worldwide network is since amazon can pick and chose which company is cheapest for each segment and region. They aren’t trying to compete against them, but to subjugate them.

Yea, but that’s not what you originally stated. Anyways, “Last mile” is the highest cost segment for any delivery company. Hence why each company provides different options. Fedex also has a lower cost option that utilizes the post office and also partnered with Walgreens for pickup.

Amazon isn’t the only one looking at lowering costs.

Sounds like an esteemed trump voter feeling some buyers remorse.

Carry on.

Back to original point here.

Amazon is going to make sure it has some of its own capacity to reach its customers, especially given it's whole 2 day prime delivery thing.

Having trump threaten to stop its ability to use the postal service will further encourage it to just have some additional control in this space but I don't think that's only driver, but it will want to reduce risk / volatility, and politicians generally increase risks. They are also reacting to UPS (which may have capacity constraints etc).

Every major corp does this, apple locks up supplies / factories etc as well to reduce disruption. For amazon, distribution is a key skill they bring.

Given amazon continues to grow, that seems to be more air freight period until they figure out alternatives. They will be busy trying to go low cost, but until lots of automation comes (which they are for SURE chasing), my own view is in near term the flood / growth of ecommerce and shortened expectations on delivery times lifts ACMI and other (UPS etc) boats despite Amazon efforts to drive down costs.

Maybe not USPS though if they get out of ecommerce delivery if what trump says is true. That would be a HUGE boon to some local delivery driver networks if someone could get a lock on last mile package delivery outside of USPS. We just need one truck going to each address in most cases (in addition to existing UPS / Fedex service which already has needed scale).

A likely outcome. At least for now. Tariff and anti-trust rhetoric aside, AMZN has been trading at levels many consider too high.

Does USPS survive in its present form? Absent unwavering lobby muscle, tough to see how.

For sake I hope your right.

Ive been in this since deregulation in 78 and have seen the tide come and go "many" times. I remember when upgrades at the majors were measured in months.

What Trump is saying is complete bull****.

And he must know it, being a Wharton grad and all.

There is a simple explanation, which still goes over the head of most people, sadly, and it is this: Doing a per-package profit/loss calculation involves a lot of moving parts, which one can estimate however one wants, and in the $1.46 per Amazon package loss, the "cost" side is purposefully-skewed.

Here's the reality. The Postal Service has an enormous overhead, because pension costs of long-retired government employees were not absorbed by the government when the service was privatized (as is fairly typical), but rather dumped on the new company. This is billions of dollars per year. Absent that, the USPS makes money. Plain and simple.

So a better way of putting it, frankly, is not that the USPS "loses money", but rather that its profits (and then some) all go to paying off the former Post Office's pension and health care liabilities.

The USPS also has very high fixed costs, because it maintains all sorts of facilities that are oversized/inefficient for what their actual use is today. Go into any early-to-mid-20th-century Post Office building. Many are beautiful. All of them are too big for what they are needed for today, and have operating inefficiencies (electric/heating/etc.). But try to sell one off to a real estate developer and replace it with something the size of a FedEx Ship Center, and the howls will be heard all the way to Washington, D.C. Do that, though, and you can make a significant dent in the USPS's operating overhead. But since we won't be doing that, those overhead costs are also allocated (by some very complex methodology) to the "cost" of delivering one Amazon package (and, frankly, any other package that uses the USPS Workshare (parcel direct) program like Amazon does).

Now let's talk about what most people think Trump is talking about when he talks about a $1.46 loss per package. What he is falsely implying is that the marginal cost of delivering that package is $1.46 more than the operating cost of delivering it. In other words, if you didn't deliver it, the Postal Service would lose $1.46 less. WRONG. In fact, all the e-commerce deliveries are a HUGE BOON to the USPS. On an operating cost basis, they are VERY PROFITABLE. For a small addition in manpower and facilities to process them, they drive a huge amount of revenue to the USPS. Revenue that then is used to offset the high facilities overhead of the USPS as well as pay off the pension obligations.

Bottom line is that most people in government understand that Amazon and e-commerce have essentially saved the USPS, by utilizing facilities that they were going to maintain in any event, and put off the day of reckoning for when the taxpayers will either walk away from their pension obligation or choose to absorb all or part of it.

In sum: But for its pension obligations, the USPS makes money. Individual e-commmerce packages are hugely-profitable on an operating basis for the USPS. More of them means a smaller loss for the USPS, fewer of them means a larger loss. Eliminate them, and we will be back to talking about whether getting our mail on essentially the same schedule as our trash pickup should be where we are going.

Trump, as usual, is trying to negotiate something and taking an extreme position based on bull****.

^^^ Bezos’ family attorney and close, intimate partner has spoken.

So in other words.....USPS still loses money delivering for Amazon. You cannot separate out its pension costs. They exist, period. The postal service gave Amazon extremely cheap rates while still knowing that they were going to lose BILLIONS this year alone. The rest of us taxpayers get to make up the shortfall and STILL we will watch our postal rates go up while Amazon is locked into a multi year sweetheart deal.

Amazon has a sweetheart deal with USPS that is better than almost everyone else. Almost.

Foreign packages are charged even LESS. Every wonder how you can order something from China on Ebay for a dollar or two and they include free shipping all the way from China? Foreigners pay less to the USPS for shipping than U.S. Citizens. In the case of China (and a few others)....they pay pennies while we pay dollars! Literally, they pay as little as 5 cents for packages due to a treaty made long ago.

AMAZON WISHES IT HAD THAT DEAL!

So why doesn't old Jeff and Amazon take the poor belegured USPS off the hands of the taxpayer and just charge the government for delivery services since Trump and his ilk want to privatize everything else. I mean who doesn't love a government contract?!

Amazon could afford it and those pesky pension payments could be funded like every other pension (underfunded) or even replaced with an awesome 401k or a Variable Benefit plan:rolleyes: Everyone wins and Trump can Shut his lying piehole!

PS
Amazon has deals with FEDEX, UPS, and USPS and none of them were complaining about the business. So I guess this is more "fake News"

Actually he's being factual. The USPS is prohibited by law from negotiating an individual contract at a loss.

They make money off Amazon.

Mango Mussolini lied.

The US Chamber of Commerce called him out.

As usual his sycophants at Fox and in the WH are working overtime trying to obfuscate and misdirect.

Actually the Donald needs some money for his defense.

What would be the best way to do that? Do something that would dramatically affect the stock price of a company, then he could short it! Instant pile of money.

The welcome side effect are all the political implications including skewering the WP, and making like he is protecting the Post Office and all the affiliated jobs.

And you all still think it's not all about him.

^^^Followed shortly thereafter by the Trump hyperloyalist

If the USPS stopped the Amazon contract today, their net loss would be higher than it is now.

They guy who posted about the age 65 medical/retirement costs killing the USPS is spot on. I read the exact same thing by industry analysts on conservative financial media websites.

Our medical costs keep going higher and higher, seriously outpacing inflation. If nothing is done, medical costs alone will bankrupt the USA. Also, the rise in defense spending by itself will bankrupt the USA. And the rise in SS costs, by itself, will also bankrupt the USA.
We need to control all three of the above costs to fix our long term budget in the USA.

A bankruptcy hat-trick. I'm impressed.

Which is why the PIC of the executive branch is no conservative and party operatives who dare carry a centrist message are writing their own political obituary.

Well, no, that's not how it works. Selling more units (Widgets, Package deliveries, whatever) at a price which exceeds your variable costs but not a proportionate share of your fixed costs actually results in your losing less money, not losing more money. Quick hypothetical example:

Fixed costs are $10,000 month, variable costs of production are $5.00 per unit (of whatever, widgets, package deliveries, doesn't matter) revenue is $8.000 per unit.

If you deliver 0 packages per month, your losses are $10,000/ month


If you deliver 2,000 packages per month, your losses are $4,000/month

If you deliver 3,333 packages per month, you break even.

And if you deliver 5,000 packages per month, your *profit* is $5,000 per month.

All else being equal, adding sales which exceed your per unit variable costs but do not exceed your per unit total costs still improves the bottom line, whether it means increasing profit, decreasing loss or changing it from losing money to gaining money.


Obviously, real life is more complex than that, but you're not even getting the underlying simplified concept correctly.

2.7B net loss 2017 v. 2.8B for 2016. 11 straight loss years and counting. 121B in unfunded liabilities according to the GAO.

https://about.usps.com/news/national...7/pr17_069.htm

I think you misunderstood the not-very-clear wording of that press release. It was a $2.7BB net loss in 2017, a decrease of $2.8BB from the prior year's loss of $5.5 BB. So they actually cut their net loss in half. Package volume contributed to a slowing in loss of total revenue. They actually have been trying to manage costs more aggressively than in the past, but are still saddled with costs outside their control (e.g. pensions and retiree health care).

The wording was weird, but what I'm saying is borne out in the tables later on in the document.

You're correct. My mistake, thanks.

Poking around it looks like these types of Amazon deals bring in $6B plus per year for USPS. That is much much higher than I expected.

Imagining if the post office get's out of this business to stop losing tons of money (per Trump) this seems less an air cargo benefit than a last mile / local delivery company benefit...

Totally agree.

But let's face it... Trump does NOT want to get out of this deal. For god's sake, it's worth $6B! What Trump wants to do is make this deal better for the gov't. What's better than a $6B deal? An $8B deal! And I'm not even against that... Amazon can afford to pay more, USPS has the facilities they want and need, and everyone will still be happy.

How to get that deal? It's all in Trump's book. Or, just read the tweets quoted in this thread. This is how Trump makes a deal.