Amazon to slash USPS deliveries by two-thirds – what it means for your packages and delivery costs?
Amazon is preparing to significantly reduce the number of packages it routes through the United States Postal Service (USPS); It’s a change that could reshape the economics of last-mile delivery in the United States and create ripple effects for businesses and consumers alike.
Big change in Amazon’s delivery strategy
Amazon, historically the Postal Service’s largest customer, aims to reduce its reliance on USPS by two-thirds by the fall, when its current delivery contract expires. The company has already begun reducing the volume of packages it distributes to the agency, according to people familiar with the matter.
The magnitude of the change is quite large. USPS handled more than a billion Amazon packages last year, accounting for nearly 15 percent of total package deliveries nationwide. These volumes have provided a reliable revenue stream for the institution, which has been financially strapped for much of the last two decades.
Financial troubles may deepen for USPS
Amazon’s potential job loss comes at a sensitive time for USPS. The agency reported a net loss of $9 billion in fiscal 2025, continuing its long-running pattern of deficits.
In recent years, USPS has invested heavily in improving its package infrastructure, expanding facilities, and installing modern equipment designed to meet growing e-commerce demand. These investments were partially justified by high-volume customers like Amazon.
The sharp decline in parcel volume is now raising concerns about underutilisation. Facilities built to process large quantities of packages may operate below capacity, while costly new machines may not deliver the expected returns. To offset the impact, USPS may have to take further cost-cutting measures or seek new commercial partnerships.
Inside the secret tender process
This shift appears to be linked to a broader strategic overhaul within the USPS. Under the direction of Postmaster General David Steiner, the agency has launched a competitive bidding process for “last mile” delivery services, the segment in which shipments complete the final leg for retailers and logistics firms.
As part of this process, Amazon notified USPS of its intention to reduce volumes. The bidding exercise marks a departure from past practices, representing the first time the agency has formally sought competitive bids for such services.
The initiative is designed to provide a clearer understanding of the market value of USPS’ last-mile capabilities and potentially open the door to a more diverse customer base, Steiner said.
Why is Amazon withdrawing?
Amazon’s decision reflects its long-term goal to build a vertically integrated logistics network. Over the past decade, the company has invested heavily in its delivery infrastructure, including warehouses, planes, delivery vans and independent contractor networks.
Reducing reliance on USPS allows Amazon to streamline operations, control delivery speeds, and potentially reduce long-term costs. It also reduces dependence on external partners during peak seasons when demand can strain traditional carriers.
Amazon is preparing to significantly reduce the number of packages it routes through the United States Postal Service (USPS); It’s a change that could reshape the economics of last-mile delivery in the United States and create ripple effects for businesses and consumers alike.
What does this mean for Amazon consumers?
The immediate impact for consumers may be slight, but not insignificant.
Delivery speed: Amazon’s on-premises network can provide 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 areas, potentially leading to slower deliveries or reliance on alternative carriers.
Shipping costs: Amazon may absorb costs in the short term, but broader changes in the delivery ecosystem could ultimately impact pricing across the industry.
The immediate impact for consumers may be slight, but not insignificant.
Delivery speed: Amazon’s on-premises network can provide 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 areas, potentially leading to slower deliveries or reliance on alternative carriers.
Shipping costs: Amazon may absorb costs in the short term, but broader changes in the delivery ecosystem could ultimately impact pricing across the industry.
