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Small businesses and consumers, especially in rural parts of the country, could face higher shipping costs and less reliable delivery service as the result of a recent deal between Amazon and the U.S. Postal Service which would have Amazon sending fewer of its packages through the USPS.
The changes in a recently proposed agreement, which still requires approval from the Postal Regulatory Commission, would see Amazon cut roughly 20% of the packages it ships through the service — about 200 million shipments a year — as it shifts more deliveries into its own network. That shift would leave USPS spreading the cost of its nationwide delivery network across fewer packages, putting pressure on both pricing and service.
“When a large shipper like Amazon moves volume away, it requires either increasing rates for other customers or cutting back on service levels to reduce costs,” said Satish Jindel, president of ShipMatrix, a shipping consultancy and analytics provider. Those impacts would likely show up first in places that are already more expensive to serve, he said.
The underlying economics of delivery make a divide in delivery service based on location unavoidable and likely to become more visible, said Manish Kapoor, the founder and CEO of Growth Catalyst Group, a company that specializes in supply chain consulting and fulfillment and delivery.
