Amazon's new USPS deal will see postal deliveries cut by 20 percent
Earlier this year, Amazon threatened to cut US Postal Service deliveries by as much as two thirds . Now, the parties have reached tentative a deal that will see USPS deliveries reduced by 20 percent, The Wall Street Journal reported. While not as drastic as first menaced, the reduced volume will still deal a financial blow to the USPS. "We’re pleased to have reached a new agreement with USPS that furthers our longstanding partnership and will let us continue supporting our customers and communities together," an Amazon spokesperson told the WSJ . Amazon is the USPS's largest customer, accounting for 15 percent of its volume and $6 billion in revenue. A two-thirds cut would have been a disaster for the USPS, but a 20 percent reduction could result in more than $1 billion in lost revenue nonetheless. Amazon would have needed to scramble as well, as it relies heavily on the post office for rural and last-mile deliveries. Amazon's contract with the USPS was set to expire in September 2026, and in October Amazon said it wanted to strike a deal by December 2025. However, the USPS abruptly pulled out of negotiations, according to Amazon, and implemented a new bidding process for last-mile deliveries. "Our goal was to increase our volumes with USPS, not reduce them — until USPS abruptly walked away at the eleventh hour in December," Amazon said at the time. Amazon was reportedly considering expanding its own delivery network if the USPS deal fell through, though the
Amazon's new USPS deal will see postal deliveries cut by 20 percent
Earlier this year, Amazon threatened to drastically reduce its use of the US Postal Service (USPS), potentially cutting deliveries by as much as two-thirds. Now, after months of negotiations, the two giants have reached a tentative agreement that will see USPS deliveries reduced by 20 percent, according to The Wall Street Journal. While this reduction is less severe than the initial threat, it still poses a significant financial challenge for the USPS, which relies heavily on Amazon for a substantial portion of its revenue and volume.
Amazon is the USPS's largest customer, accounting for 15 percent of its total volume and generating $6 billion in revenue. A two-thirds reduction would have been catastrophic for the postal service, but even a 20 percent cut could result in more than $1 billion in lost revenue. This reduction will undoubtedly have a significant impact on the USPS's financial stability, as well as its ability to maintain efficient operations and deliveries across the country.
Despite the reduced volume, Amazon expressed satisfaction with the new agreement. "We’re pleased to have reached a new agreement with USPS that furthers our longstanding partnership and will let us continue supporting our customers and communities together," an Amazon spokesperson told The Wall Street Journal. The company's continued relationship with the USPS is crucial, as Amazon heavily relies on the post office for rural and last-mile deliveries, which are often more challenging and costly to manage independently.
The USPS and Amazon's contract was originally set to expire in September 2026, but in October 2023, Amazon announced its intention to strike a new deal by December 2025. However, the USPS abruptly ended negotiations, according to Amazon, and introduced a new bidding process for last-mile deliveries. In a statement, Amazon said, "Our goal was to increase our volumes with USPS, not reduce them — until USPS abruptly walked away at the eleventh hour in December."
The sudden withdrawal from negotiations led Amazon to consider expanding its own delivery network, with rumors suggesting the company may have even leaked such plans to pressure the USPS into resuming talks. The Postal Service eventually decided to re-engage with Amazon after bids from several of Amazon's rivals fell short of the volume and revenue expectations the USPS had hoped to achieve.
The new agreement between Amazon and the USPS is still subject to approval by the federal Postal Regulatory Commission. If approved, it will mark a significant shift in the relationship between the two companies, as well as a potential turning point in the way Amazon approaches its logistics and delivery strategies.
The USPS has faced mounting pressure in recent years to modernize and adapt to the changing landscape of e-commerce, with Amazon's reduced volume serving as a stark reminder of the challenges the postal service must overcome. Meanwhile, Amazon's decision to settle for a 20 percent reduction in deliveries instead of the initially threatened two-thirds cut suggests that the company is willing to work with the USPS to find a mutually beneficial solution, at least for the time being.
As the USPS and Amazon navigate this new agreement, both parties will need to carefully consider the implications of the reduced volume on their respective operations. For the USPS, the challenge will be to maintain efficiency and financial stability in the face of decreased revenue, while for Amazon, the focus will be on ensuring that its delivery network remains robust and reliable, even with a reduced reliance on the postal service.
In the end, the outcome of this agreement will likely have far-reaching effects on the broader e-commerce landscape, as well as the future of the USPS. As the postal service continues to adapt to the demands of the modern market, Amazon's decision to settle for a 20 percent reduction in deliveries serves as a reminder of the delicate balance between innovation and tradition in the world of logistics and delivery.
