Key takeaways
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- Amazon plans to cut USPS package volume by at least two-thirds by this fall, when its current contract expires.
- USPS delivered more than 1 billion Amazon packages last year, about 15% of its total package volume.
- The move could cost USPS billions in revenue and leave recent parcel investments underused.
- Amazon’s growing self-delivery network is reducing its dependence on traditional carriers, including USPS, UPS, and FedEx.
What Happened?
Amazon is planning a major reduction in the number of packages it routes through the US Postal Service, with the goal of cutting that volume by at least two-thirds by the fall. The change comes as USPS runs a new competitive bidding process for its last-mile delivery business instead of simply renewing Amazon’s current contract.
Amazon said it had expected to expand its relationship with USPS and was surprised by the auction process. Because the current contract expires in October and the bidding outcome may come late, Amazon is preparing alternative logistics options now, including shifting more deliveries to its own network or other carriers.
Why It Matters
This is a big deal because Amazon has been one of USPS’s most important parcel customers and a rare source of dependable volume for an agency that continues to lose money. USPS reported a $9 billion net loss in fiscal 2025, and Amazon parcels have helped justify years of investment in package-sorting equipment, larger facilities, and delivery capacity.
If Amazon pulls back sharply, USPS could face a double hit: lower revenue and underutilized infrastructure. That would intensify pressure on the agency to cut costs, raise prices, or seek more support from Congress. It also underscores a broader shift in the parcel industry: Amazon is no longer just a large customer of delivery networks — it is becoming a national logistics competitor in its own right.
What’s Next?
The next key milestone is the result of USPS’s bidding process, which will determine whether Amazon keeps some level of postal volume or moves even more aggressively elsewhere. Investors and industry watchers should pay attention to how much USPS can replace lost Amazon volume, whether Congress gives the Postal Service more pricing or borrowing flexibility, and how quickly Amazon expands its rural delivery capabilities.
The bigger picture is that USPS is becoming more exposed to customer concentration risk just as Amazon gains more control over its own last-mile economics.
