The Supreme Court rejected Monday a call from UPS that would have forced the Post to increase the prices charged for the delivery of packages, creating a potential windfall for his partner Amazon.
In United Parcel Service c. In the Postal Regulatory Commission, the judges disagreed with the argument that the postal service – which competes with UPS for delivery – has a pricing model that gives it an advantage.
|UPS||UNITED PARCEL SERVICE INC.||98.52||-0.88||-0.89%|
While the Congress previously regulated postal rates, the Postal Regulatory Commission took over this authority in 1970. This agency is notably required to set floor prices for products on which it faces significant competition in the market, in order to To prevent the Post Office from using revenues derived from its dominant market products (letters) – over which it holds a monopoly – to subsidize its competitive products, such as packaging.
An appellate court had previously determined that the method of determining the price of parcels used by the agency was valid. Next, UPS unsuccessfully asked the Supreme Court to review this decision and clarify or refute a policy that "the courts generally defer to reasonable interpretation by an administrative agency". An ambiguous law that she administers ".
UPS said that she was "disappointed" and that she "would continue to work with the Postal Regulatory Commission to advocate for transparent cost accounting at the USPS."
A spokesman for the Postal Regulatory Commission said the body welcomed this decision, "which confirms the improvements made by the commission to its established costing method".
La Poste has been criticized for its contract with Amazon, where it charges the company prices below its own costs. The deal was criticized by President Trump, who said his policy made "Amazon richer" and himself "dumber and poorer".
"The issues raised by UPS are likely to worsen as USPS becomes more and more a parcel company and less a courier company," said Chris Edwards, director of tax policy studies at the Cato Institute. and publisher of www.DownsizingGovernment.org. FOX Business.
A Citigroup analysis revealed that the USPS actually charged less than needed to ship parcels, which "could expose Amazon to significant price increases from the USPS". could take his business elsewhere. Its volume of deliveries makes it an attractive customer and a huge bargaining power.
Amazon did not return FOX Business's request for comment on the decision.
However, a price increase could still be in store. Trump has asked for a review of Swiss Post's policies as the agency continues to burn red ink. One of the recommendations was to develop a new pricing model that eliminates generalized price caps and suggests charging "market prices" for mail and parcels that are not considered essential postal services. This could result in higher delivery costs.
"Although the USPS has price flexibility in its parcel delivery segment, package prices have not been calculated based on profitability," the report says.
In addition, Edwards noted that although a number of large companies are subject to control for not paying taxes, USPS is a "huge company that pays no federal or state taxes."
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In the meantime, there is speculation that Amazon could possibly play a bigger role in delivering its own packages. CEO of e-commerce giant Jeff Bezos recently inaugurated a $ 1.5 billion airline in Kentucky. Amazon has a 50-year lease on approximately 900 acres at the Cincinnati / Northern Kentucky International Airport, where it will manage its shipments itself to reduce costs and get parcels to customers faster.
The hub can support a fleet of over 100 Prime Air cargo aircraft.