Key Takeaways
- A newly negotiated contract between Amazon and the United States Postal Service maintains approximately 80% of current parcel volumes
- USPS avoided a far more severe reduction that would have slashed volumes by two-thirds
- The postal service will handle approximately 1 billion Amazon parcels each year under the updated agreement
- Shares of FedEx (FDX) declined 0.8% to $358.91 while UPS dropped 1% to $97.16 after the announcement
- UPS has a separate plan to reduce Amazon delivery volumes by more than half before the end of 2026
The United States Postal Service and Amazon have reached a new parcel delivery agreement, averting what would have been a catastrophic reduction for the financially struggling mail carrier.
Under the revised terms, USPS will continue handling approximately 1 billion packages annually for Amazon — representing about 80% of its existing volume. This marks a significant improvement from the previously discussed two-thirds volume reduction.
Amazon described the arrangement as an extension of their “longstanding partnership.” The Postal Service has not yet issued a public statement.
Amazon represents USPS’s largest customer relationship, contributing roughly $6 billion to the agency’s approximately $80 billion yearly operating budget. A substantial loss of this revenue stream would have created serious financial challenges. The postal service cautioned last month that it might exhaust its cash reserves by October.
The arrangement still requires official authorization.
Impact on Competing Delivery Services
The announcement sent ripples through competitor stocks. FedEx (FDX) shares slipped 0.8% to close at $358.91, while UPS ended the day down 1% at $97.16.
UPS has independently begun reducing its Amazon delivery commitments. In January 2025, UPS revealed plans with Amazon to decrease volume by over 50% by late 2026. This represents a calculated strategic move to reduce Amazon reliance.
Conversely, FedEx chose to deepen its relationship with Amazon, finalizing a multi-year delivery partnership in May 2025.
Amazon’s Internal Logistics Expansion Moves Forward
Amazon shows no signs of slowing its proprietary delivery infrastructure development. The company announced in April 2025 that it plans to invest over $4 billion to enhance rural delivery capabilities throughout the United States by 2026’s conclusion.
This buildout will proceed — though not at a magnitude that would directly compete with USPS’s comprehensive door-to-door coverage, industry sources indicate.
Meanwhile, USPS continues seeking methods to strengthen its financial position. The agency has requested authorization for a temporary 8% rate increase on priority mail and packages, scheduled to begin April 26. Postmaster General David Steiner has additionally proposed increasing first-class stamp prices to 95 cents from the current 78 cents.
Since 2007, USPS has accumulated $118 billion in net losses, primarily due to the dramatic decline in first-class mail volumes, which have dropped to levels not seen since the late 1960s.
Steiner previously informed Reuters that USPS handles approximately 1.7 billion packages per year for Amazon, making the 1 billion figure in the new agreement a notable decrease — though considerably better than Amazon’s initial proposal.
