Amazon is preparing to significantly reduce the number of parcels it routes through the US Postal Service (USPS), a shift that could reshape the economics of last-mile delivery in the United States and have ripple effects for businesses and consumers alike.
A major shift in Amazon’s delivery strategy
Amazon, historically the Postal Service’s largest customer, is seeking to cut its reliance on USPS by as much as two-thirds by the autumn, when its current delivery contract expires. The company has already begun reducing the volume of packages it hands off to the agency, according to people familiar with the matter.
The scale of the shift is substantial. USPS handled more than one billion Amazon packages last year, accounting for roughly 15 per cent of its total parcel deliveries nationwide. These volumes have provided a dependable revenue stream for the agency, which has struggled financially for much of the past two decades.
Financial strain for USPS could deepen
The potential loss of Amazon’s business comes at a delicate moment for USPS. The agency reported a net loss of $9 billion in fiscal 2025, continuing a long-running pattern of deficits.
In recent years, USPS has invested heavily in upgrading its parcel infrastructure, expanding facilities and installing modern equipment designed to handle growing e-commerce demand. Those investments were, in part, justified by high-volume clients such as Amazon.
A sharp drop in parcel volume now raises concerns about under-utilisation. Facilities built to process large quantities of packages could operate below capacity, while costly new machinery may not deliver expected returns. To offset the impact, USPS may be forced to pursue further cost-cutting measures or seek new commercial partnerships.
Inside the confidential bidding process
The shift appears to be linked to a broader strategic overhaul within USPS. Under Postmaster General David Steiner, the agency has initiated a competitive bidding process for its “last-mile” delivery services—the segment in which it completes the final leg of shipments for retailers and logistics firms.
As part of this process, Amazon informed USPS of its intention to scale back volumes. The bidding exercise marks a departure from past practice, representing the first time the agency has formally sought competitive offers for such services.
Steiner has indicated that the initiative is designed to establish a clearer understanding of the market value of USPS’s last-mile capabilities, potentially opening the door to a more diversified client base.
Why Amazon is pulling back
Amazon’s decision reflects its long-term ambition to build a vertically integrated logistics network. Over the past decade, the company has invested heavily in its own delivery infrastructure, including warehouses, aircraft, delivery vans and independent contractor networks.
Reducing dependence on USPS allows Amazon to streamline operations, control delivery speeds and potentially lower long-term costs. It also reduces reliance on external partners during peak seasons, when demand can strain traditional carriers.
Amazon is preparing to significantly reduce the number of parcels it routes through the US Postal Service (USPS), a shift that could reshape the economics of last-mile delivery in the United States and have ripple effects for businesses and consumers alike.
What this means for Amazon consumers
For consumers, the immediate impact may be subtle—but not insignificant.
Delivery speed: Amazon’s in-house network could enable faster and more predictable delivery times in urban and suburban areas.
Rural deliveries: USPS has historically been crucial for reaching remote locations. A reduced role could complicate logistics in less accessible regions, potentially leading to slower deliveries or reliance on alternative carriers.
Shipping costs: While Amazon may absorb costs in the short term, broader shifts in the delivery ecosystem could eventually influence pricing across the industry.
For consumers, the immediate impact may be subtle, but not insignificant.
Delivery speed: Amazon’s in-house network could enable faster and more predictable delivery times in urban and suburban areas.
Rural deliveries: USPS has historically been crucial for reaching remote locations. A reduced role could complicate logistics in less accessible regions, potentially leading to slower deliveries or reliance on alternative carriers.
Shipping costs: While Amazon may absorb costs in the short term, broader shifts in the delivery ecosystem could eventually influence pricing across the industry.