The Post Office Could Run Out of Money in 2027. Heres the Rescue Plan

USPS Opens Its Delivery Network to Bidders

The U.S. Postal Service just made a big bet to stay alive.

On December 17, 2025, the agency announced it will let retailers and shippers bid for access to its last-mile delivery network starting in early 2026.

Postmaster General David Steiner, who took over in July, says USPS could be out of cash by early 2027 at its current pace.

The agency lost $9 billion last year alone, and first-class mail has dropped to levels not seen since 1967.

What happens next will determine whether the 250-year-old institution survives.

USPS Opens 18,000 Delivery Stations

Starting in late January or early February 2026, shippers large and small can bid for access to more than 18,000 USPS delivery destination units across the country.

Winners will be able to drop packages at local postal facilities and have carriers deliver them the same day or the next.

The goal is to bring in billions in new revenue by selling access to a network the Postal Service already operates. Contracts should be finalized by mid-2026, with deliveries starting in the third quarter.

The Agency Lost $118 Billion Since 2007

The Postal Service has been bleeding money for almost two decades. Net losses since 2007 total $118 billion, according to the Government Accountability Office.

The biggest reason is the collapse of first-class mail, which used to be the agency’s cash cow. Volume has dropped by more than half since its peak in 2001 as Americans switched to email and online bill pay.

Package delivery has grown, but not enough to cover the gap.

Amazon Contract Expires October 2026

Amazon is the Postal Service’s biggest customer, generating over $6 billion in revenue in 2025. But their contract ends in October 2026, and talks have stalled.

Amazon originally wanted a four-year extension. The company is now considering whether to expand its own delivery network instead of renewing.

Then USPS announced the auction plan, and Amazon said it was caught off guard after nearly a year of negotiations.

Why Last-Mile Delivery Is So Valuable

The last mile is the most expensive part of any delivery. Getting a package from a warehouse to a regional hub is relatively cheap.

Getting it from that hub to someone’s front door is where costs pile up.

USPS has an advantage no private carrier can match: it already goes to every address in the country, six days a week.

That’s 170 million homes, businesses, and P.O. boxes, including rural areas where FedEx and UPS often refuse to go.

Only Half the Capacity Gets Used

USPS currently handles about 1.7 billion last-mile deliveries per year through its delivery destination units.

But the network can handle 3.5 to 4 billion. That means the Postal Service has massive unused capacity sitting idle every day.

Steiner wants to fill those empty trucks and routes with packages from other companies willing to pay for the service.

More packages on existing routes means more revenue without adding costs.

Steiner Replaced DeJoy in July 2025

David Steiner became the 76th Postmaster General on July 15, 2025, after the Trump administration pushed out his predecessor, Louis DeJoy.

Steiner spent 12 years running Waste Management, where he transformed the company’s operations and finances.

He also sat on FedEx’s board until taking the USPS job.

In his first interview as Postmaster General, Steiner said the agency had to act fast because it does not have the luxury of time.

The $15 Billion Debt Cap Hasn’t Changed

Congress set a $15 billion limit on how much the Postal Service can borrow from the Treasury.

That cap was established in the 1970s and has never been adjusted for inflation. USPS hit the ceiling years ago and has been stuck there ever since.

Steiner wants lawmakers to raise the limit so the agency can borrow more to fund infrastructure upgrades. Without that change, USPS cannot access the capital markets that private companies rely on.

The 2022 Reform Gave Paper Relief

Congress passed the Postal Service Reform Act in 2022, which provided about $57 billion in financial relief.

Most of that came from canceling a requirement that USPS prepay decades of retiree health benefits, something no other agency has to do.

But the relief was mostly on paper. It wiped out debt the agency had already stopped paying, so it did nothing to improve day-to-day cash flow.

The losses kept piling up.

UPS Came Back After Walking Away

UPS dropped its last-mile partnership with USPS in January 2025 after disagreements over pricing.

The company decided to deliver economy packages on its own instead. But under Steiner’s leadership, UPS returned to the table.

The two sides are now finalizing a new deal for USPS to handle last-mile delivery for UPS Ground Saver shipments, with service expected to resume in January 2026.

The reversal shows how valuable the postal network remains.

Steiner Says USPS Built Amazon

The Postmaster General is not shy about the Postal Service’s role in Amazon’s rise.

He says USPS delivers Amazon packages to American homes 1.7 billion times a year, and that there is no doubt the company would not be what it is today without the Postal Service.

Steiner wants to keep the relationship going but insists on a fair price. If Amazon walks, USPS will need those new bidders more than ever.

The Clock Runs Out in 2027

At current spending rates, USPS will exhaust its cash reserves within 12 to 24 months. That puts the deadline somewhere in early 2027.

If Congress does not raise the borrowing cap, and if the last-mile auction does not bring in enough new revenue, the agency will face hard choices.

Cutting Saturday delivery. Closing post offices. Raising prices even higher. For now, Steiner is betting everything on growth.

The alternative, he says, is not an option.

This article was created with AI assistance and human editing.

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