- 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…