By Food Trade News Team
The long-running partnership between Amazon and the financially troubled USPS appears to be fraying after Amazon disclosed this week that it is exploring alternatives.
For more than a decade, the United States Postal Service has struggled with declining mail volumes, rising operating costs, and intensifying competition. The agency posted a $9 billion loss in fiscal year 2025.
Amazon (NYSE: AMZN) has been one of USPS’s most important partners for nearly 30 years. It is the agency’s largest customer, relying on the postal network for universal processing and delivery. The relationship is valued at more than $6 billion and represents roughly 7.5% of USPS revenue.
USPS plays a key role in Amazon’s logistics, particularly in rural regions and the critical “last mile” to the customer’s doorstep. At the same time, Amazon has built out a vast parallel logistics system of trucks, aircraft, and distribution hubs – directly competing with the postal service on speed and coverage.
Their current contract expires in October 2026. The Washington Post reported that Postmaster General David Steiner – appointed in July of this year – plans to hold an auction for access to postal facilities rather than negotiate directly with Amazon.
Shifting to an open auction could intensify competition, forcing Amazon to bid against national retailers and other shippers. It could also encourage Amazon to accelerate its logistics buildout, further eroding USPS’s financial stability.
Amazon has already been pursuing ways to decrease reliance on USPS while expanding its own delivery network. The company aims to offer same-day or next-day service in more than 1,000 cities and towns, expects to triple its logistics footprint by 2026, and announced a $4 billion investment in rural delivery earlier this year.
Negotiations appear stalled, particularly around renewal rates. It is unclear whether Steiner is using the threat of open bidding to strengthen USPS’s position – or whether this high-stakes game of chicken risks pushing Amazon to sever ties entirely.
