WSJ - Amazon Plans Drastic Cut in Packages Sent Via Already-Struggling Postal Service

Selling on Amazon
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The e-commerce giant wants to reduce its postal volume by at least two-thirds by this fall

03/17/26

Amazon is planning to sharply cut the number of packages it ships through the U.S. Postal Service, a move that could cost the agency millions of dollars in much-needed revenue.

The e-commerce giant, long the Postal Service’s biggest customer, has already begun ratcheting down its postal volume and wants to reduce it by at least two-thirds by this fall, when its current contract with the agency expires, according to people familiar with the matter.

USPS delivered more than a billion packages for Amazon last year, close to 15% of all the packages that the Postal Service delivered in the country. Amazon’s guaranteed volumes have been a source of stability for the agency, which has operated at a loss for most of the past two decades. In fiscal 2025, it reported a net loss of $9 billion.

The Postal Service has expanded its parcel-delivery capacity in recent years, building bigger facilities and buying new machines to process boxes, which replaced aging equipment that focused on letter mail. If the decline in volumes from Amazon isn’t adequately managed, the new equipment and facilities could end up being underutilized. The Postal Service may also have to find more ways to cut costs.

According to people familiar with the matter, Amazon disclosed the plan to the Postal Service in a confidential bidding process for its so-called last-mile delivery service, in which USPS handles the last leg of delivery for businesses. Under new Postmaster General David Steiner, the Postal Service solicited bids from Amazon and other businesses for the service for the first time. Steiner has said the bidding will help the quasigovernmental agency determine the true market value of the last-mile service.

Amazon’s existing contract with the Postal Service expires in October. Results of the last-mile bidding competition will be released in the second quarter, and contracts will be finalized by the end of the third quarter. That left Amazon concerned that it would have little time to make changes to its network if its bid weren’t accepted, the people said.

If Amazon’s bid is rejected by the Postal Service, it could attempt to raise its bid, seek other carriers to handle its final-mile deliveries, invest more in building out its own delivery network or some combination of those options. The final-mile deliveries are typically the costliest part of supply chains, and in rural areas, costs go up due to the lack of density. Amazon and other businesses typically rely on the Postal Service to deliver parcels to harder-to-reach areas.

USPS currently delivers approximately 15% of Amazon packages. That number reaches 30% to 40% in rural areas.

Amazon has already been expanding its one- to two-day delivery capabilities in rural areas but has said previously that it isn’t trying itself to deliver to 100% of its customers in the U.S.

The Postal Service’s losses stem in part from its mandate to deliver to more than 170 million addresses six days a week. The six-day-a-week statutory obligation leads to 71% of delivery routes being financially underwater, the agency has said. Roughly three in five post offices don’t cover the cost of their operations.

Businesses that bring in bulk volumes typically get a rate discount from the Postal Service. The biggest shippers have negotiated directly with the agency for contracts with even bigger discounts. Until this year, those large contracts have been negotiated individually.

In February, more than 20 companies submitted bids to have the Postal Service bring packages from 18,000 local post offices and delivery hubs to their final destinations, Steiner said in an interview last month. Each bid includes a projection of the number of packages they expect to ship through the Postal Service, and the price they are willing to pay for this access.

During a congressional hearing Tuesday, Steiner said the Postal Service was on pace to “run out of cash” in about a year—and asked lawmakers to consider lifting regulatory restrictions on the Postal Service’s ability to raise prices for stamps and other services.

“I am a firm believer that the market should set the rates. And the market isn’t setting the rates,” said Steiner.

Steiner is asking Congress to raise the Postal Service’s $15 billion debt limit, a number that was established more than three decades ago, to allow reforms to its pension payments and to modify regulations that limit its ability to raise prices.

Amazon now handles a substantial chunk of its own deliveries. It delivered 6.7 billion packages last year, while the Postal Service delivered 6.6 billion, according to data from ShipMatrix, a parcel-analytics firm. It was the first year Amazon’s parcel volumes exceeded the Postal Service’s volumes. Amazon had already overtaken the parcel volumes of United Parcel Service and FedEx in recent years.

Both FedEx and UPS, which have historically delivered vast volumes of Amazon parcels to people’s homes, have cut back the number of packages they deliver for the e-commerce giant to focus on more profitable parcels

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Amazon never fails to demonstrate that, at its core, it is little more than a Sociopathic Greed Machine - pelf is the name of its game.

The United States Postal Service never fails to demonstrate that, at its core, it is little more than a badly-bloated bureaucratically-driven & dictated nightmare, sagging ever and again under its own weight(s).

We sellers pay the price when two paradigms like these intersect - more often than not, nowadaze, to our pocketbook’s pain.

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Missing is the $$$ amount generated by 3P sellers using USPS through Amazon. Should Amazon back away from FBA orders that use USPS as last mile, we wonder if USPS would still grant the discount pricing the 3P sellers have using Amazon Buy Shipping …

We would have to decide whether or not paying full USPS commercial pricing on Amazon to have Claims Protection would be worth the extra cost. Especially now that USPS Click N Ship is giving a lower price from the current discounted price given to Amazon (if you haven’t noticed … USPS Click N Ship is $0.05 cheaper to most zone 5 addresses than Amazon pricing right now).

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When the WSJ and other media covered the announcement of the bidding for USPS capacity, they postulated it was an attempt by USPS to reduce its reliance on Amazon.

I suspect that reporting was probably accurate.

Which does not mean that the major thrust of this article is not accurate. Amazon reacts, and Amazon is extremely effective in mobilizing the gig economy. Most of Amazon use of USPS has been in rural areas in recent years. The side effects of the redirection to labor in rural America to the delivering for Amazon could be extremely interesting, and not necessarily a positive change.

If the Post Office were truly private and was not required to deliver to the entire country, it probably wouldn’t. If it didn’t Amazon would abandon it completely.

Sometimes things can be f-ed up beyond repair.

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Unlike some other tech companies, I’m not aware that Amazon has ever claimed to be anything else. They’ve always been upfront that maximizing profit is top priority (well, maybe “upfront” isn’t the best word; they obfuscate on a level that could make DT envious. But they admit it)

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Of course it was…That way nobody knows if it was in the USPS’s best interests.

Yup. As soon as airlines were de-regulated they simply stopped going to small and medium sized cities. Then we had to turn around an “subsidize” airlines so they would service those same communities.
Another rural/small welfare grift program in the making. If it is profitable they will do it on their own, and then demand a maker state/community use taxpayer dollars to make the smaller rural routes profitable too. It’s all a grift being put into the pie, ready to be baked.

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A friend of mine works as a driver that transports mail between sorting centers and local post offices in the dead of night.

No one who deals with any aspect of them likes Amazon. The people they employ don’t like them either, and it shows in their lack of work ethic.

He is constantly annoyed at Amazon drivers, who unload pallets of “pallet-wrapped” boxes, but allow the boxes to fall off the pallets in great avalanches, (due to sloppy stacking and feeble wrapping) and simply leave the mess blocking the sole loading dock. To roll his wheeled baskets of USPS mail from his truck to the inside locked area of the post office, he must often pick up the pile of packages that have fallen off one or more pallets, put them in an empty wheeled basket, move them aside, and then try to move aside some of the pallets (still hemorrhaging packages) to clear a path to the door that he MUST put the mail inside, and lock inside. He may not leave any US Mail on the dock, but Amazon is somehow allowed to “dump and go”.

The post office staff at each PO is sick of Amazon and their haphazard practices, but they are forced to accept whatever Amazon does, and “make the best of it” - there is no way to even send back packages delivered to the wrong post office - those are rerouted at USPS expense.

Yes, losing Amazon’s business might be a revenue blow to the USPS, but given the problems of “consolidation”, this may reduce volumes to a level that will allow for better service metrics on the mail that they still handle, one example being the UPS/USPS hand-off where the local post office does the “last mile”, and UPS does the long haul. UPS drivers push their pallets well aside, says my friend, and they clean up any mess they encounter or create.

So, the fear and loathing extends to the furthest reaches of Amazon’s tentacles, even to tiny rural post offices run by literal “sweet little old ladies” who leave baked goods for my friend as if he were some sort of Santa Claus.

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Why should anyone like Amazon?

Look at the attitudes of the Amazon seller community which we are a part of.

I have loathed all large bureaucracies since I was a teenager. Thanks to the internet and social media, the voices of those who hate bureaucracies and any large organization are louder, but the bulk of the public continues to support large bureaucracies with their money and their votes.

I will no longer be on this planet when and if there is a change in the public’s actions to abandon Amazon or the USPS with its mandate to serve all of the country.

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Many who support large bureaucracies do so because of economies of scale which are paramount to modern society. Let us not pretend any of the modern things that enable us to be more than simple peasant farmers, would have come to fruition without large corporations or governments. A simple John Deere tractor takes thousands of people to assemble, enabling food production across the planet, and it would not exist here without either bureaucracy.

You never know. Greed is a powerful thing. Financial markets have taken down many a economic corporate mastodon in the past. Money as speech may be what takes down the USPS.

Ya, well so are anti-vaccine/vaccine autism, flat earth, faked moon landings, Scientology, etc people. The key thing I learned from social media is louder does not mean correct. Like many others, my father in his later years was swayed by television because the “History” channel had episodes about aliens. “…But it’s the history channel” he would say. :man_facepalming:
The advantage you and I had in previous decades, was that it was easy to spot the Area 51/alien abduction people because of the foil hats, now we have to find their farcebook page. :laughing:

It has always been easier to sell fear and hate, than hope and teamwork. The rage bait clicks-for-profits social media will tell anyone anything to get that click and be our downfall as a society and foreign actors will beat us the only way possible, by having us beat ourselves.

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