Amazon May End 30-Year Partnership With USPS and Build Its Own Postal Service

A $6 Billion Breakup Looms

Amazon and the U.S. Postal Service have been partners since Jeff Bezos packed books in a Seattle garage and dropped them at his local post office in 1994.

Now that relationship is on the verge of collapse.

Contract negotiations have stalled, Amazon is building its own nationwide delivery network, and USPS is bleeding billions.

The postal workers who deliver your packages are caught in the middle, and what happens next could reshape how mail reaches every corner of America.

Amazon Pays USPS $6 Billion a Year

Amazon is the Postal Service’s biggest customer by far.

The company pays USPS more than $6 billion annually for package delivery, which accounts for roughly 7.5 percent of the agency’s $80 billion in operating revenue.

Most of that money comes from “last-mile” delivery in rural areas and small towns where UPS and FedEx won’t go.

Losing Amazon would blow a hole in an already sinking budget.

The Deal Began With Sunday Delivery

The formal partnership took off in 2013 when Amazon and USPS signed a landmark contract for Sunday deliveries.

It was the first time the Postal Service had delivered packages seven days a week, and it helped make Amazon Prime’s two-day shipping promise possible.

The deal gave USPS a lifeline as letter mail declined, and it gave Amazon access to 167 million addresses that no private carrier could reach.

Contract Talks Have Fallen Apart

Amazon’s current contract expires in October 2026, and the two sides have been negotiating since early 2024.

Those talks have now largely concluded with no deal.

The sticking point is a plan by Postmaster General David Steiner to hold a “reverse auction” in early 2026, where companies would bid for access to USPS delivery capacity instead of Amazon getting a direct renewal.

Amazon Says It Was Blindsided

Amazon released a statement saying it was “surprised” by the auction plan after nearly a year of negotiations. The company said it had been discussing ways to extend and even increase its spending with USPS.

CEO Andy Jassy met virtually with Steiner in mid-November, and Amazon says it still hopes to reach an agreement.

But the company is now “evaluating all options.

Amazon Built Its Own Delivery Empire

Amazon hasn’t been waiting around. The company announced a $4 billion investment to triple its rural delivery network by the end of 2026.

That means more than 200 new delivery stations, coverage across 13,000 zip codes, and over a billion additional packages delivered each year.

Amazon says the expansion will create 100,000 new jobs in warehouses and delivery routes across small-town America.

Rural Towns Depend on USPS

For millions of Americans living outside cities, USPS is the only delivery option.

Private carriers like FedEx and UPS often refuse to serve remote areas because the cost per package is too high.

The Postal Service is legally required to deliver to every address in the country, which is why Amazon leaned on them for hard-to-reach customers.

If Amazon pulls out, USPS loses volume but keeps the obligation.

Postal Workers Are Already Struggling

Rural mail carriers have been sounding alarms for years.

Workers in Minnesota, Tennessee, and Mississippi have reported 12-hour days, six-day weeks, and pay cuts as high as $20,000 under a new compensation formula.

In some offices, carriers say they’ve been told to prioritize Amazon packages over regular mail. One rural carrier in Knoxville said her daily package count dropped from 300 to 60 after Amazon opened its own local station.

USPS Lost $9 Billion Last Year

The Postal Service posted a $9 billion net loss in fiscal year 2025, on top of $9. 5 billion in losses the year before.

Letter mail keeps declining, pension obligations keep rising, and the agency’s 10-year turnaround plan hasn’t stopped the bleeding.

About 10,500 employees took early retirement buyouts this year. The workforce has shrunk to around 528,000 career employees, down from over 600,000 a decade ago.

Trump and Musk Want to Privatize

The Trump administration has made no secret of its interest in privatizing USPS.

Elon Musk, head of the Department of Government Efficiency, has publicly called for selling off the Postal Service.

In March 2025, former Postmaster General Louis DeJoy signed an agreement to let DOGE help find “efficiencies” at USPS.

A Wells Fargo memo leaked earlier this year outlined a plan to sell off the profitable package business and cut union jobs.

What Happens If Amazon Walks Away

If Amazon ends the partnership, USPS would lose its biggest source of package revenue while still being required to deliver to every address in America. Rural service could deteriorate.

Stamp prices could rise even faster. And hundreds of thousands of postal workers could face job cuts or worse conditions.

Amazon, meanwhile, would control its own delivery destiny, with a network that already handles more than six billion packages a year.

Amazon and USPS have until October 2026 to figure this out.