Several sources recently reported that Amazon is considering cutting its considerable ties with the United States Postal Service (USPS).
Amazon’s contract with the USPS, which has had a partnership with the agency for 30 years, is set to expire next year. Today, Amazon accounts for about $6 billion in revenue, which 7-8% of the USPS’ total revenue, making it one of the largest single customers.
According to reports, Postmaster General David Steiner is planning to hold a reverse auction, opening up access to postal resources to the highest bidder. This means Amazon would be in direct competition with other retailers and shippers for who gets access to which services first.
In a statement to Reuters, Amazon noted, “We’ve continued to discuss ways to extend our partnership that would increase our spend with them, and we look forward to hearing more from them soon with the goal of extending our relationship that started more than 30 years ago. We were surprised to hear they want to run an auction after nearly a year of negotiations, so we still have a lot to work through.”
At the same time, Amazon has spent the last few years increasing its own delivery network. According to Engadget, “Amazon has invested heavily in shipping logistics, buying its own Boeing planes, debuting electric delivery vans and slowly building out a drone delivery network. Last year, Amazon handled over 6.3 billion parcels, a 7 percent increase over the previous year, according to the Pitney Bowes parcel shipping index. USPS, for its part, handled roughly 6.9 billion, just a 3 percent increase over 2023. That is to say that Amazon’s shipping network can already handle over 90 percent of the volume of the US Postal Service (at least by sheer numbers).”
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