Amazon plans to reduce its package volume shipped through the US Postal Service by two-thirds as its billion-dollar contract expires this fall. This move threatens USPS's financial stability, as Amazon accounted for 15% of its deliveries and generated $6 billion annually. USPS faces significant losses due to declining letter mail revenue and rising costs, while Amazon expands its own delivery capabilities.
The US Postal Service (USPS) is facing a worsening financial crisis as Amazon plans to significantly reduce the volume of packages it ships through the government agency. According to a report by the Wall Street Journal, Amazon intends to cut the number of packages it sends via USPS by two-thirds when its current contract expires this fall.
Amazon has been a major client of the USPS, with about 15% of the packages delivered by the postal service last year coming from the e-commerce giant. The contract between Amazon and USPS reportedly generates $6 billion annually for the postal service. This contract is set to expire in October.
Amazon disclosed its plan to reduce USPS shipments during a bidding process for the postal service's last mile delivery service. The last mile delivery refers to the final step of deliveries carried out by USPS, which is particularly important for reaching customers in rural and remote areas.
If Amazon declines to renew or reduce its bid for USPS's last mile delivery services, the company could explore other options such as:
USPS is a self-funded agency and has reported significant financial losses in recent years. It posted losses of $9 billion in 2025, following a $9.5 billion loss the previous year. Several factors contribute to these losses, including reductions in transportation and workers compensation expenses, as well as increased operating revenues.
A critical challenge for USPS is its dependence on letter mail revenue, which is protected by a legal monopoly. However, letter mail volumes have declined sharply, eroding this revenue base. This decline has created a crumbling financial foundation for the postal service, according to nonprofit research firm Brookings.
Amazon delivered 6.7 billion packages last year, surpassing traditional carriers UPS and FedEx in delivery volumes. According to the Pitney Bowes parcel shipping index report, Amazon is on pace to top USPS volumes by 2028, with an estimated 8.4 billion parcels.
The last mile of mail delivery is generally the most expensive part of the shipping process. It can account for up to 52% of a shipment's total cost, according to the Association for Supply Chain Management. Amazon's reliance on USPS for last mile delivery has been crucial, especially for reaching customers in less accessible areas.
Amazon's plan to reduce its USPS shipments by two-thirds threatens to accelerate the postal service's fiscal crisis. Losing a major client that accounts for a significant portion of its package volume and revenue could exacerbate USPS's financial struggles.
The postal service will need to explore new strategies to stabilize its finances, possibly by diversifying its client base, improving operational efficiencies, or seeking legislative support to address its declining letter mail revenue.
Amazon's decision to cut back on USPS shipments highlights the challenges facing the US Postal Service in a rapidly evolving delivery landscape. As Amazon expands its own delivery capabilities and explores alternative carriers, USPS must confront its financial vulnerabilities and adapt to maintain its critical role in the nation's mail and package delivery system.
For more detailed information, readers are encouraged to consult the original Wall Street Journal report and related analyses.
