Amazon Could Slash Postal Service Package Volume by Two-Thirds

The tech giant has begun to scale back the volume of packages it ships via the postal service (USPS) with the goal of reducing that number by at least two-thirds before its contract expires this fall, The Wall Street Journal (WSJ) reported Tuesday (March 17), citing sources familiar with the matter.

A spokesperson for Amazon told PYMNTS said it is misleading to suggest the company wanted to reduce it volumes with the postal service, and that it actually wished to increase the amount of packages it shipped.

“We negotiated with them in good faith for over a year to try and reach a deal that would bring them billions in revenue and believed we were heading toward an agreement, when the USPS abruptly walked away at the 11th hour and introduced the auction concept,” the spokesperson said.

“While we’ve submitted a bid and hope to continue our partnership, even at a reduced level, we now have to prepare to meet our customers’ delivery needs regardless of the outcome of the auction.”

Sources with knowledge of the matter told PYMNTS that the USPS decision to introduce an auction led to uncertainty for Amazon around available capacity and pricing, leaving the company with no long-term visibility  to plan for the having to reallocate hundreds of millions of packages late in the contracting cycle. This left Amazon to build alternative capacity.

According to the WSJ report, the post office shipped more than a billion packages for Amazon in 2025, accounting for 15% of all USPS deliveries nationwide. This has offered some stability to the post office, which has operated at a loss for much of the last two decades, the WSJ added.

USPS has expanded and upgraded its parcel delivery system in recent years, the report continued, replacing equipment designed for letter mail with new machines to process boxes. Those facilities could end up being underused if a decline in volume from Amazon is not handled properly, the WSJ argued.

Sources told the newspaper that Amazon revealed its plan to USPS during the bidding process for its last-mile delivery service, with the Postal Service soliciting bids from Amazon and other businesses for the first time.

A report by Reuters on the possible cuts included a comment from Postmaster General David Steiner, who said the postal service is still in negotiations with Amazon.

“I couldn’t ​tell you where that’s going to end,” Steiner told Reuters.

PYMNTS has contacted USPS for comment but has not yet gotten a reply.

News that Amazon was considering exiting its relationship with USPS first surfaced in December of last year, though a spokesperson for the company told this publication at the time that it was committed to working with USPS. As PYMNTS wrote soon after, Amazon’s potential exit could have profound consequences.

“The Postal Service relies heavily on parcel delivery revenue to offset the steep decline in traditional letter mail,” that report said. “Without Amazon, many of the Postal Service’s existing ‘coopetition’ arrangements in which legacy carriers like UPS or FedEx hand off last-mile delivery to USPS could unravel.”

But for Amazon, the equation is relatively more straightforward, that report added. In the last several years it has invested billions into expanding its own fulfillment centers, sorting hubs, electric delivery vehicles and a network of gig-based drivers.

“Equipped with density, scale, and proprietary infrastructure, Amazon now believes it can deliver at a lower ‘all-in’ cost than shipping via the Postal Service,” PYMNTS added, noting that Amazon Logistics handled nearly as many packages as USPS in 2024.