A major shift in the relationship between Amazon and the United States Postal Service is underway, with the e-commerce giant planning to drastically reduce its reliance on the agency for deliveries. According to a report, Amazon intends to cut the volume of packages it ships through USPS by at least two-thirds later this year. This decision follows a breakdown in contract negotiations and a new bidding process implemented by the Postal Service. Amazon has been a colossal partner for USPS, accounting for nearly 15 percent of its package deliveries last year. This move to slash volume by such a significant margin strikes at a vital revenue stream for the financially struggling Postal Service, which reported a net loss of 9 billion dollars in the last fiscal year. The current contract between the two entities expires on September 30. In a public statement, Amazon explained that it had informed USPS back in October of the need to secure a new agreement by December to allow for proper planning. The company emphasized that scaling delivery operations requires major capital investment and long-term logistics coordination that cannot be arranged overnight. Amazon claims that after more than a year of good-faith negotiations, the Postal Service abruptly ended talks in December. The company stated its goal was actually to increase volume with USPS, not reduce it, until the agency walked away at the last minute. This shift coincided with a new policy from Postmaster General David Steiner, who took over the role in May. Steiner replaced the traditional one-on-one negotiation process with a new open bidding system for last-mile delivery access. He described this as a fair process to find the best pricing through market competition. Amazon says it submitted a bid under this new system in February but has received no response, creating uncertainty for its network planning. The Postal Service plans to announce the results of this bidding process in the second quarter of 2026, with contracts finalized by the third quarter. Despite moving forward with its contingency plan to reduce dependence on USPS, Amazon stated it remains ready to continue the partnership. Meanwhile, Postmaster General Steiner was on Capitol Hill warning lawmakers that the Postal Service is in dire financial straits. He told a House subcommittee that the agency will run out of cash in about a year. To address this, he asked Congress to loosen regulations, allow for postage price increases, and reform retiree pension obligations, while also seeking to raise the agency’s debt cap. The situation highlights the precarious financial position of the USPS and the evolving logistics strategies of major retailers like Amazon, which is building its own delivery network. The outcome of the new bidding process and the potential loss of Amazon’s volume will have significant implications for the future of postal operations and service.
