Amazon is 'more prepared than ever' to deliver packages without the post office

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Amazon is gearing up to do without the United States Postal Service if it were forced to, D.A. Davidson told clients Thursday.
Currently, 91% of the company's packages pass through the post office.

Amazon, in the crosshairs of President Donald Trump’s Twitter ire, is more prepared than ever to deliver packages without the United States Postal Service.

"We believe Amazon is more prepared than ever to move on from its arrangement with the USPS if it had to,” D.A. Davidson analyst Tom Forte said in a note to clients Thursday. "Given its increasing first-party logistics assets (including its air freight effort, trucking capabilities, and Prime Now short-time shipping efforts)."

Trump has repeatedly lashed out against the e-commerce giant for not paying its fair share to USPS for delivering its packages. Neither the agency nor the company have disclosed the rates Amazon pays for parcel delivery, but it likely gets a discount given its volume.

To be sure, however, Amazon would have to make significant investments in its delivery infrastructure in order to leave the USPS completely. Only 9%, or 116 million, packages are delivered by carriers other than the post office, logistics consultant Marc Wulfraat estimated earlier this month. He says its unlikely Amazon can increase that number to the required 62% anytime soon, especially as UPS and FedEx struggle with their own capacity issues.

"The most significant matter, in our view, is its contract with the USPS, which we have described as a sweetheart deal, because it is very unlikely that Amazon could forge one with similar economics with FedEx and/or UPS, or, even, regional carriers, such as LaserShip (for the Northeast) and OnTrac (for the West)," Forte said.

Amazon is scheduled to report earnings next Thursday, April 26. Analysts polled by Bloomberg expect the company to have earned $3.09 per share on revenues of $49.94 billion. They also expect company leadership to be asked about the ongoing attacks by Trump, though CEO Jeff Bezos didn’t mention criticisms in his letter to shareholders Wednesday.

"On the call, we will be listening for management’s responses to President Trump’s much publicized criticism of the company (including its sweetheart deal with the USPS)," Forte said.

Shares of Amazon are up 2% Thursday after Bezos' letter to shareholders released Wednesday disclosed for the first time there are a whopping 100 million paying Prime customers.