Amazon is preparing to end a partnership that has run since 2013 with the U.S. Postal Service after contract talks have apparently stalled, according to several reports.
The potential breakup would unravel a 30-year-old marriage that helped fuel the ascendance of e-commerce and remake how Americans get their packages.
What’s Behind the Breakdown in USPS-Amazon Talks
Amazon’s contract with the Postal Service is set to expire in October 2026. People briefed on the talks said Amazon wanted to extend that contract for another four years to help lock in its capacity and pricing, while USPS had a new idea: Why not put some of that capacity out for auction, forcing interested parties to bid against one another for access? The dispute was first reported by The Washington Post, and a company representative told The Verge that Amazon is now “exploring all options” to maintain delivery speed and reliability.
In the meantime, as discussions drag on, Amazon has looked at back-up plans that could accelerate a split as soon as next year, demonstrating it’s ready to handle volumes in-house or route them through other shipping firms if no agreement emerges. That stance provides Amazon with leverage in negotiations, but it also highlights how much its in-house logistics network has grown.
Billions at Stake for the U.S. Postal Service
USPS would see a sizable revenue stream disappear were Amazon to leave. The e-commerce giant has been estimated to spend more than $6 billion a year on USPS services, about 7.5% of Postal Service revenue, based on figures cited in reporting and agency disclosures. USPS returned to losses following a one-time accounting benefit in 2022; losing its largest parcel customer could increase financial pressure just as it is pursuing its new Delivering for America modernization plan.
Mail volumes have been moving from letters to packages, and USPS has relied on products like Ground Advantage and Parcel Select to price-compete in the last mile. An abrupt Amazon departure would challenge that approach, especially in rural areas, where the USPS’s universal service mandate effectively makes it the de facto last-mile provider for many shippers.
Amazon’s Logistics Muscle Is Raring to Go
Amazon has been quietly creating one of the country’s largest parcel networks. According to the Pitney Bowes Parcel Shipping Index, Amazon processed 6.3 billion packages in 2024, behind only USPS at 6.9 billion. By 2028, the index forecasts Amazon could surpass USPS, carrying about 8.4 billion packages compared to USPS’s 8.3 billion. The momentum came on the back of years of investment in regionalized fulfillment, sortation centers, delivery stations, Amazon Air and its Delivery Service Partner program.
In a real-world scenario, Amazon might take additional last-mile volume on its own routes within dense metros, rely on regionals such as OnTrac and GLS where efficient, and lean on national carriers for overflow or lanes that are particularly challenging. The company has also been building out Amazon Shipping that serves third-party merchants unconnected to the Prime ecosystem, and aligning “Buy with Prime” program design to concentrate volume around same-day and next-day nodes.
What Shoppers and Sellers May Find Different
From a consumer perspective, the near-term aim should be continuity: Prime delivery hitting its marks, including on weekends. If Amazon pulls back from USPS, performance could also be spotty by ZIP code as routes are rejiggered. Urban communities, meanwhile, may experience minimal change, and remote towns — where the Postal Service has been essential to doorstep delivery — could have different carriers or revised delivery windows in place before the transition.
There could be updates to shipping labels, cutoff times and rate cards inside Fulfillment by Amazon and Amazon Shipping for marketplace sellers. Any widespread rerouting effort also begs questions of surcharges and DIM pricing, especially on light packages that previously traveled through USPS’s cost-effective products.
Competitive and Regulatory Ripples Across Parcel Delivery
A fracture would send shock waves through the parcel market. UPS and regional carriers could compete for chunks of the freed-up volume, but Amazon’s usual play is to use internal capacity first. FedEx offers a cautionary parallel: It cut its dependence on the USPS — and retooled its economy offering to bring more last-mile in-house — giving it more control but making it responsible for those higher fixed costs.
A significant customer loss could trigger further pricing action subject to review by the Postal Regulatory Commission (PRC) or behavioral change — including, perhaps, a shift of its package network toward lanes with stronger economics — on USPS’s part. Policymakers will be interested in any effects on universal service and rural delivery, whose role is increasingly unique, however much it competes with e-commerce.
The Bottom Line on Amazon and USPS Negotiation Stalemate
Nothing is final. Amazon says it’s open to an extension and the USPS is still at the table. But the fact that a company as large as Amazon could even consider a split is itself an indication of how the balance has changed, with Amazon possessing enough scale to strike out on its own and with USPS having to find ways to maintain income while still providing service throughout the country. The result of those negotiations will influence parcel pricing, delivery speed and carrier strategy across the U.S. for years to come.
