Amazon Considering Cutting Ties with USPS

By Toni McQuilken

Several sources recently reported that Amazon is considering cutting it’s considerable ties with the United States Postal Service (USPS).

Amazon’s contract with the USPS, which has had a partnership with the agency for 30 years, is set to expire next year. Today, Amazon accounts for about $6 billion in revenue, which 7-8% of the USPS’ total revenue, making it one of the largest single customers.

According to reports, Postmaster General David Steiner is planning to hold a reverse auction, opening up access to postal resources to the highest bidder. This means Amazon would be in direct competition with other retailers and shippers for who gets access to which services first.

In a statement to Reuters, Amazon noted, "We've continued to discuss ways to extend our partnership that would increase our spend with them, and we look forward to hearing more from them soon with the goal of extending our relationship that started more than 30 years ago. We were surprised to hear they want to run an auction after nearly a year of negotiations, so we still have a lot to work through."

At the same time, Amazon has spent the last few years increasing its own delivery network. According to Engadget, “Amazon has invested heavily in shipping logistics, buying its own Boeing planes, debuting electric delivery vans and slowly building out a drone delivery network. Last year, Amazon handled over 6.3 billion parcels, a 7 percent increase over the previous year, according to the Pitney Bowes parcel shipping index. USPS, for its part, handled roughly 6.9 billion, just a 3 percent increase over 2023. That is to say that Amazon's shipping network can already handle over 90 percent of the volume of the US Postal Service (at least by sheer numbers).”

Given the struggles the USPS has had in recent years with profitability — it posted a $9.5 billion loss last year — losing Amazon entirely as a customer could be a death blow for the agency, which has already been drawing sharp criticism and scrutiny from lawmakers on both sides of the aisle.

What does this mean for direct mail printers, and others who rely on the USPS? Short term, nothing will really change, but if Amazon and USPS can’t come to a mutual agreement, it could mean the postal service faces 2027 and beyond with a much tighter belt, which in turn will further impact service across the board. Rates, which have been steadily increasing at a breakneck pace the past few years, will likely see even greater jumps, and it is likely we would see a revival of calls to eliminate Saturday delivery. It would also reignite the debate about allowing a private entity to take over postal services in the United States.

It is certainly something everyone should be keeping a close eye on. As the USPS continues to struggle with finding a path to compete in a modern landscape, it remains a public service that shouldn’t be allowed to vanish. Losing one of it’s single largest customers entirely would not be a promising sign, so lets all hope the two entities are able to find common ground in the coming weeks and months.