Key Takeaways
- A new delivery partnership between Amazon and USPS maintains approximately 80% of current package volumes
- USPS avoids the severe two-thirds volume reduction Amazon had previously considered
- Approximately 1 billion packages will be delivered annually by USPS for Amazon moving forward
- Stock prices fell for competitors: FedEx (FDX) down 0.8% to $358.91, UPS declining 1% to $97.16
- UPS continues its own strategic reduction of Amazon deliveries, targeting over 50% cuts by late 2026
The U.S. Postal Service has secured a critical new partnership agreement with Amazon, avoiding what industry analysts feared could have been a crippling financial setback for the struggling government agency.
Under the newly negotiated terms, USPS will continue handling approximately 1 billion Amazon packages each year — representing roughly 80% of the current delivery relationship. This represents a significant improvement from earlier reports suggesting Amazon might slash volumes by two-thirds.
In a statement, Amazon characterized the arrangement as an extension of their “longstanding partnership.” USPS representatives have not yet issued public comments.
The postal service relies heavily on Amazon as its largest commercial client, generating approximately $6 billion in revenue against the agency’s total $80 billion annual operating budget. Such a dramatic loss would have compounded existing financial pressures. The postal service warned investors last month that it faces potential insolvency as soon as October without intervention.
Final ratification of the agreement remains pending.
Impact on Competing Delivery Services
Investors in rival logistics companies reacted negatively to the announcement. FedEx (FDX) shares declined 0.8% to close at $358.91, while UPS stock fell 1% to finish at $97.16.
UPS has been deliberately reducing its Amazon-related business. The company announced in January 2025 a strategic initiative with Amazon to decrease delivery volumes by more than half by the second half of 2026. This represents a conscious pivot away from Amazon reliance.
Conversely, FedEx pursued the opposite strategy, finalizing a multiyear Amazon delivery contract in May 2025.
Amazon Maintains In-House Logistics Expansion
Despite the USPS agreement, Amazon shows no signs of slowing its proprietary delivery infrastructure development. The e-commerce giant announced in April 2025 plans to invest over $4 billion expanding rural delivery capabilities throughout the United States by year-end 2026.
These expansion efforts will proceed as planned — though not at a level that would directly compete with USPS’s comprehensive nationwide delivery footprint, according to industry sources.
Meanwhile, USPS continues seeking financial recovery strategies. The agency has requested authorization for a temporary 8% rate increase on priority mail and package services, scheduled to take effect April 26. Postmaster General David Steiner has additionally proposed raising first-class postage stamp prices from the current 78 cents to 95 cents.
Since 2007, USPS has accumulated $118 billion in cumulative net losses, primarily driven by the precipitous decline in first-class mail volume, which has dropped to levels not seen since the late 1960s.
Steiner previously disclosed to Reuters that USPS currently delivers approximately 1.7 billion packages per year for Amazon, making the new 1 billion package threshold a notable decrease — yet substantially better than the more aggressive cuts Amazon had initially considered.
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