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