Dec 4 (Reuters) – Amazon.com is planning to end its long-standing tie-up with the U.S. Postal Service as the ecommerce giant prepares to expand its nationwide delivery network, the Washington Post reported on Thursday, citing three people with knowledge of the matter.
The online retailer has long been USPS’ top customer, providing more than $6 billion in annual revenue in 2025, the report said. Losing its business would be a major blow to the independent government agency that has been hit by an 80% decline in first-class mail volume since 1997.
For Amazon, building out its delivery network would bolster its standing in a parcel industry where it is already a major player thanks to its sprawling warehouse network and a largely non-union workforce that has allowed it to control costs.
Last year, Amazon Logistics handled 6.3 billion parcels, just behind top player USPS’ 6.9 billion, according to Pitney Bowes’ parcel shipping index. The company is expected to overtake USPS in parcels by 2028, the data showed, a milestone it could hit sooner if the tie-up ends.
The retailer plans to pull the billions of packages it sends through USPS by the end of 2026, although the plans are not final and could change, the Washington Post report said.
AMAZON’S DELIVERY NETWORK EXPANSION
The company has already pledged more than $4 billion in April to expand its U.S. rural delivery network by the end of next year.
“Amazon has been building its distribution capabilities for several years and now has minimal reliance on other logistics companies,” said D.A. Davidson analyst Gil Luria, adding that the company was in a position to be “almost entirely self-reliant”.
Still, the expansion of the delivery network will require more resources at a time when Amazon is pouring tens of billions of dollars on data centers to stay competitive in the artificial intelligence race.
Reuters could not immediately verify the report. Amazon said it wants to reach an agreement with USPS, while the agency did not immediately respond to a Reuters request for comment.
TOUGH TALKS
The plans to end the tie-up follow talks between Amazon and USPS over “negotiated service agreements” – contracts that lock in rates and speed deliveries for the agency’s biggest customers – which largely ended without a new deal, the report said.
Those agreements have largely favored big companies over individual retailers and small businesses, but Postmaster General David Steiner, appointed earlier this year, has said he wants to democratize them by opening them up to smaller-scale customers, the report added.
He plans to run a reverse auction early next year, offering access to postal facilities to the highest bidder rather than directly to Amazon, a proposal that largely ended the talks that had been under way since February, the report said.
Steiner met virtually with Amazon CEO Andy Jassy on November 14, according to the report.
USPS, which posted a $9.5 billion loss last year as electronic communications erode mail volumes and private rivals expand their footprint, has also drawn the attention of U.S. President Donald Trump.
Trump said in February he was considering merging USPS – which he called “a tremendous loser for this country” – with the Commerce Department, a move Democrats said would violate federal law.
“USPS needs Amazon a lot more than Amazon needs USPS,” said New York-based ecommerce analyst Juozas Kaziukenas. “Amazon has all the cards in their hands in this case.”
(Reporting by Zaheer Kachwala in Bengaluru, additional reporting by Arnav Mishra, Helen Reid and Ruchika Khanna; Editing by Shailesh Kuber and Leroy Leo)
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