Amazon cuts USPS volume by 20% in new deal, averting major revenue loss for Postal Service
Summary
The United States Postal Service and Amazon have agreed a new contract under which USPS will handle about 80% of Amazon’s current deliveries — roughly 1.7 billion packages and about $6 billion in annual revenue. That represents a 20% reduction from present volumes, far less than earlier reports that suggested cuts might be much larger.
Industry commentators say the deal averts an immediate, severe revenue hit for the Postal Service and preserves USPS’s role in rural and low-density last-mile delivery, while Amazon keeps flexibility as it continues to build its own network.
Key Points
- New deal: USPS will handle ~80% of current Amazon deliveries — about 1.7 billion packages and ~$6 billion per year.
- Reduction size: Agreement represents a 20% cut vs current volumes; previous reports suggested a potential two-thirds reduction.
- Amazon network build: Amazon is still investing in expanding its delivery network (a $4bn investment announced in 2025 to grow capacity through 2026).
- USPS measures: The Postal Service is opening access to 18,000+ Delivery Destination Units (DDUs) to shippers via a solicitation process to improve participation and bidding for deliveries into postal network points.
- Financial stakes: Retaining Amazon volume protects a major revenue stream for USPS amid warnings it could run out of cash by 2027 without changes.
- Strategic impact: The deal maintains USPS as a competitive third option alongside UPS and FedEx — important for last-mile pricing and network density, particularly in rural areas.
- Expert reaction: Analysts call the agreement an ‘existential win’ for USPS and a pragmatic, cost-aware choice for Amazon, which balances insourcing with use of a low-cost partner for certain geographies.
Context and relevance
This agreement lands at a critical moment for US parcel logistics and the Postal Service’s finances. Over the past decade-plus, declines in first-class mail have eroded USPS revenues, making parcel contracts with large shippers like Amazon essential.
For supply-chain and logistics professionals, the deal matters because it affects parcel volumes, pricing dynamics, network planning and carrier bargaining power. If Amazon had shifted a substantially larger share away from USPS, it would have forced rapid adjustments across last-mile capacity, pricing and rural service economics.
Author style
Punchy: This is a high-stakes, practical outcome — not a dramatic breakup. The story is big for anyone tracking parcel economics, last-mile strategy or USPS solvency. Read the detail if you work in carrier relations, last-mile planning, or any role that depends on parcel capacity and pricing: the knock-on effects will matter to contracts and network decisions in the months ahead.
Why should I read this?
Quick and dirty — Amazon didn’t ditch the Post Office. USPS keeps most of the business, which buys them time and keeps last-mile competition alive. If you care about delivery costs, rural coverage, or how parcel networks will shift next year, this saves you the hassle of chasing rumours: the worst-case drop didn’t happen — for now.