Amazon says USPS 'walked away at the eleventh hour' from delivery deal talks

[midian182]

In brief: Amazon has responded to reports that it plans to dramatically reduce the number of packages it sends through the US Postal Service. The tech giant argues that the real story is how USPS abruptly abandoned negotiations on a new agreement.

Amazon said it spent more than a year working toward a new long-term agreement with USPS before its current contract expires on September 30, 2026.

According to the company, it warned USPS last October that it needed a new deal in place by the end of December because adding alternative delivery capacity for hundreds of millions of packages is not something that can be done overnight.

Amazon claims the Postal Service "abruptly walked away at the eleventh hour" in December, then pivoted to an auction model for access to its last-mile network.

The company says that decision introduced significant uncertainty for long-term planning, especially given how heavily it still relies on USPS for deliveries in rural and remote parts of the country.

Reports say Amazon has already begun reducing postal shipments and is aiming to cut them by at least two-thirds by September, when the current agreement ends. That would be a serious hit for USPS, which Postmaster General David Steiner said could run out of cash within 12 months, or as early as October if required retirement payments come due.

However, Steiner says negotiations are still ongoing. He declined to say how large any reduction might be, citing confidentiality, but admitted he could not say where talks would end. USPS began accepting proposals in January for access to more than 18,000 delivery units and local processing centers as part of an effort to raise funds.

Amazon insists it did not want this outcome. The company says it hoped to increase package volume through USPS, submitted a bid in February, and still wants to continue the partnership, even if at a lower level. It also notes that it spends more than $5 billion annually with the Postal Service and supported the 2022 Postal Service Reform Act.

Amazon has already committed more than $4 billion to expand its US rural delivery network by the end of this year. While USPS says negotiations are still ongoing, Amazon is clearly preparing for a future in which it has to handle far more deliveries itself.

Center image credit: Tareq Ismail

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Amazon says USPS 'walked away at the eleventh hour' from delivery deal talks

 

[Theinsanegamer]

USPS mismanagement is their biggest foe. The delivery workers here still complain about amazon packages, apparently not realizing that is job security in a world where physical mail is largely obsolete.

 

[Skully]

I have no idea of what was actually discussed between the two sides behind closed doors, but if I take this article at face value, USPS better get their act together. If Amazon goes another way USPS will be begging Amazon to take them back a year from now.

 

[Jarenien]

Like Amazon needs the Postal Service, they can just keep using their own stuff for much cheaper. I honestly can't remember the last time a postal worker delivered anything from amazon to me, even on a Sunday.

 

[TommyBoyFL]

Like Amazon needs the Postal Service, they can just keep using their own stuff for much cheaper. I honestly can't remember the last time a postal worker delivered anything from amazon to me, even on a Sunday.

For the millions of people who live in the middle of nowhere it would cost a fortune for Amazon to deliver to them. Its not cost effective for them to build warehouses and buy vans and pay drivers to deliver only a few packages a day. The USPS already has the infrastructure in place to do this.

That's what this is all about.

 

[Neatfeatguy]

Adding more stress to the already overworked USPS mail delivery folks would suck for them in terms of the overburden of more packages. I see USPS workers in my town working all 7 days of the week during all hours of the wee morning to 9pm at night and they can't keep up with what they currently have.

There has to be a proper balance between the two companies to make this work out. Too much work means the postal workers fall behind, not enough means they lose out on steady work. Right now, from what I see, I think the USPS is kind of at the brim of the cup with work since I hear they're still short staffed with not enough bodies wanting to work the jobs.

I think the USPS has the upper hand on this current stalemate of a contract negotiations. They have the infrastructure setup, Amazon needs it to help keep their dominance on the online sales and people happy with their 2-day delivery promise with Prime. Right now it just comes down to a game of cat and mouse, hopefully USPS can find a way to gain a bit of an upper hand and make things more beneficial for them and keep working with Amazon.

Sure, Amazon doesn't have to keep with USPS, but a massive change in shipping standards could be a huge money sink for them. They'd have to contract with UPS or FedEx all this extra work, adjust pricing and so on or they have to invest in their own fleet and expand, which would cost even more.

 

[Theinsanegamer]

Adding more stress to the already overworked USPS mail delivery folks would suck for them in terms of the overburden of more packages. I see USPS workers in my town working all 7 days of the week during all hours of the wee morning to 9pm at night and they can't keep up with what they currently have.

There has to be a proper balance between the two companies to make this work out. Too much work means the postal workers fall behind, not enough means they lose out on steady work. Right now, from what I see, I think the USPS is kind of at the brim of the cup with work since I hear they're still short staffed with not enough bodies wanting to work the jobs.

I think the USPS has the upper hand on this current stalemate of a contract negotiations. They have the infrastructure setup, Amazon needs it to help keep their dominance on the online sales and people happy with their 2-day delivery promise with Prime. Right now it just comes down to a game of cat and mouse, hopefully USPS can find a way to gain a bit of an upper hand and make things more beneficial for them and keep working with Amazon.

Sure, Amazon doesn't have to keep with USPS, but a massive change in shipping standards could be a huge money sink for them. They'd have to contract with UPS or FedEx all this extra work, adjust pricing and so on or they have to invest in their own fleet and expand, which would cost even more.

You don't gain the upper hand by abruptly walking away from negotiations. All you do is drive Amazon to build out their own delivery network and felt your postal service in the process. It says a lot about the USPS that they cant find employees meanwhile Amazon has no shortage of drivers to work with.

But once the billions of dollars worth of packages disappear and postal workers start getting laid off or get pay and hour cuts, were going to start hearing about how unfair Amazon is and how they hate unions and blah blah blah.

 

[SRB]

The main problem is that the previous mode of operation at the post office was to negotiate for their service at a loss. All of these companies jumped at this and even with the services fully booked, the post office lost money anyway. NOW they want to change business as usual and pay for expenses. Much needed, but long overdue. These other companies have the problem that they were used to the post office being far cheaper than they could do it for, and I would wager Amazon has NO idea what that number will actually wind up costing. They were happy to take over the crowded urban routes that could be profitable, and shift the money losing routes to the post office.

Looks like reality set in for everyone.

 

[Neatfeatguy]

You don't gain the upper hand by abruptly walking away from negotiations. All you do is drive Amazon to build out their own delivery network and felt your postal service in the process. It says a lot about the USPS that they cant find employees meanwhile Amazon has no shortage of drivers to work with.

But once the billions of dollars worth of packages disappear and postal workers start getting laid off or get pay and hour cuts, were going to start hearing about how unfair Amazon is and how they hate unions and blah blah blah.

You have to remember, we only have one part of the story; we're missing many parts. Simply believing that USPS just walked away we can only draw conclusions, maybe you're right, maybe you're not.

I'm hoping USPS does know they have the upper hand and they play their cards right. Maybe walking away is part of their ploy.

 

[Kashim]

You have to remember, we only have one part of the story; we're missing many parts. Simply believing that USPS just walked away we can only draw conclusions, maybe you're right, maybe you're not.

I'm hoping USPS does know they have the upper hand and they play their cards right. Maybe walking away is part of their ploy.

Ah yes, every Trump appointed federal worker including the clowns running the USPS is playing 4D chess, we're just too stupid to understand it. USPS walked away from Amazon negotiations as part of a clever ploy to extract a better contract in the long run. Yeah, that must be it. Now watch me as I roll my eyes.

 

[maxxcool7421]

The USPS has been miss-managed for 40 years now. LET IT DIE and STOP bailing it out.

 

[Theinsanegamer]

The USPS has been miss-managed for 40 years now. LET IT DIE and STOP bailing it out.

Let it operate as a private business instead of a sudo government entity that has to fund itself but comply with insane federal requirements.

Remove the stupid "fund retirement 30 years in advanced" BS the feds force them to do, and they're profitable.

 

[BobHome]

You have to remember, we only have one part of the story; we're missing many parts. Simply believing that USPS just walked away we can only draw conclusions, maybe you're right, maybe you're not.

I'm hoping USPS does know they have the upper hand and they play their cards right. Maybe walking away is part of their ploy.

Yeah, this story reminded me of streaming contracts, we usually only hear one side. Here's what Amazon does Not want:
"Sidney, MT (59270) — 195.2 miles daily, delivering to 305 boxes." and not every box get mail every day, of course. And if only 1 in 5 (10?) addresses got a Amazon package... that's a lot of miles and gas for just a handful of deliveries.

People sheltered in cities have no real concept of how sparsely populated a lot of areas in America are, like between the Rockies and ol' Miss. And that's a huge chunk of our real estate. Try driving there some summertime--and not using the major highways. You might even get to visit a ghost town or two. Or get to explore an abandoned mine. (my longest trip out there was 7000 miles (11000 km).

 

[Rumiku]

And nothing of value was lost.

It's 2026. I purchased a home inside a gated community. Larger community. There are a few streets which comprise mostly of AirBnB's. So, I bought a BnB house as my main home. Postmaster, even upon showing we own the home as a primary home, has refused to add us to the delivery route. We are two houses away from one house that does get delivery. And granted, though never said by the postmaster, there could be some arbitrary rule they have I cannot find that allows this. Now I must purchase a mailbox from UPS store to get snail mail. Amazon, on occasions, send things through USPS, despite me being careful, that should come to my door through Amazon, UPS or FedEx but instead becomes undeliverable from the handoff to USPS.

So I welcome this reduction.

But I've rarely had a "good" delivery route in all my homes I've owned so with USPS, so quite frankly, it is all self-inflicted and I have zero love loss for this poorly managed service.

 

[brucek]

Too bad they're having trouble playing nicely together, because it makes good sense to leverage a single last-leg delivery network in rural areas with large geography and low volume.

But I don't see how anyone has Amazon over a barrel. Unlike USPS which by law has to serve everyone, the Amazon store can simply say sorry it currently doesn't have service in Tumbleweed, North Dakota. That won't make any real difference to it's real profit which is AWS anyway. Eventually someone in Tumbleweed will ask Amazon for the route including driving all the way to the nearest warehouse and Amazon can pass on whatever that service costs them with a markup. Or just not bother.

 

[onebignerd]

U.S.P.S is a hopelessly broken agency unable to shift out of their obsolete ways. They lose billions a year but refuse to make the necessary changes they are able to do without Congress, just keep postponing.

Let them dig their grave, good riddance I say!!

 

[joe2025]

You think UPS or FedEx will deliver your mail for less than the USPS ?

 

[Win7user]

Amazon hires brown and black people exclusively. They're bias against white people!! And, these so-called Amazon drivers just drop the package anywhere they feel like, too often right where anyone can it., or steal it! Blank Amazon...

 

[Endymio]

You think UPS or FedEx will deliver your mail for less than the USPS ?

Yes -- when you count how much taxpayers help fund the USPS.

$5.6B/year from 2007 to 2016
$10B in 2020.
$15B in zero-interest Treasury loans, which are unlikely to ever be repaid
$120B in federally-insured unfunded pension liability, which taxpayers will pay if and when USPS goes belly up.

Considering most people get about 1 piece of mail a month that isn't junk advertising, that works out to rather expensive per parcel.

 

[Hecate91]

You think UPS or FedEx will deliver your mail for less than the USPS ?

No, but at least they'd deliver mail faster and be consistently on time.