President Donald Trump late Thursday night issued an executive order to set up a task force to study the United States Postal Service, after the president accused Amazon.com Inc. (AMZN - Get Report) of taking advantage the organization.
The task force, which will be chaired by Treasury Secretary Steve Mnuchin The Hill reported, will evaluate the operations and finances of USPS, including the postal service's role in a competitive market, business model, costs and pricing, CNBC reported.
"The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout," Trump said in the executive order.
USPS has incurred "$65 billion of cumulative losses since the 2007-2009 recession," according to the executive order, and has been unable to make payments for its retiree health benefit obligations.
"It shall be the policy of my Administration that the United States postal system operate under a sustainable business model to provide necessary mail services to citizens and businesses, and to compete fairly in commercial markets," the order said.
The task force has 120 days to deliver recommendations on how USPS can be reformed.
Action Alerts PLUS holding Amazon was not directly mentioned in the order, but Trump has criticized the online retailer's deal with USPS, saying in a series of tweets that the company doesn't pay its share of postage.
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!— Donald J. Trump (@realDonaldTrump) March 29, 2018
I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don't have a clue (or do they?)!— Donald J. Trump (@realDonaldTrump) April 3, 2018
More than 60% of Amazon's U.S. shipments are carried out through USPS, one expert polled by Jefferies analysts suggested, meaning Amazon may be more exposed than its competition should the Postal Service have to raise rates given "aging infrastructure." But these cost and capacity headwinds aren't unique to Amazon; rather, they afflict the entire industry, Jefferies analysts wrote.
For now, it seems Amazon's relationship with the Postal Service "likely comes at favorable terms," analysts said, and is probably done at an incremental cost break-even. But Jefferies noted that "the truth is no one outside of the USPS knows if, and what [percentage] of, fixed costs are also covered."
Amazon shares rose 1.5% up on Thursday at $1,448.50.