Amazon, USPS Reach Tentative Deal Preserving 80% of Deliveries, Averting Threatened Two-Thirds Cut

Amazon and the U.S. Postal Service reached a tentative agreement on April 6 that preserves approximately 80 percent of Amazon's existing postal deliveries. Under the deal, Amazon will continue shipping more than one billion packages annually through the postal network, according to Reuters. Amazon spokesperson Terrence Clark confirmed the agreement. At 20 percent, the volume reduction is far smaller than the roughly two-thirds cut Amazon had threatened in March. But the reduction remains significant for a postal service that reported a $9.0 billion net loss in fiscal year 2025, though its actual revenue impact will depend on pricing terms not yet disclosed. Postmaster General David Steiner has warned that USPS faces severe cash constraints, with projections that cash could run out as early as late 2026 or early 2027. USPS did not immediately comment on the agreement, according to Reuters. Before taking effect, the deal requires approval by the Postal Regulatory Commission. ## A Critical Revenue Stream Under Pressure Amazon is USPS's largest customer. Reuters reports the relationship generates approximately $6 billion in annual revenue for the postal service, though Amazon has stated a lower figure of $5 billion. Neither figure has been independently verified against USPS financial disclosures, which do not break out individual customer revenue. USPS reported $80.5 billion in total operating revenue for fiscal year 2025. At either $5 billion or $6 billion, Amazon's contribution represents a significant share. In the first quarter of fiscal year 2026, the postal service posted a $1.3 billion net loss, a sharp reversal from $144 million in net income during the same quarter a year earlier. Retaining 80 percent of Amazon's volume preserves the majority of this revenue stream, but a 20 percent volume cut paired with higher per-package rates could produce a different revenue outcome than simple arithmetic suggests. Since 2007, USPS has accumulated approximately $118 billion in net losses, according to Government Accountability Office testimony. ## Six Months of Negotiation Six months of contentious negotiation preceded the April 6 agreement. In October 2025, Amazon notified USPS it needed a renewed contract by the end of December, according to the company's public account. Amazon's current USPS agreement expires September 30, 2026, according to the company. Instead of renewing, USPS ended negotiations in December 2025. Amazon characterized the move as an abrupt last-minute withdrawal, though the postal service has not publicly shared its account of the breakdown. On December 17, 2025, USPS announced a competitive bid solicitation for access to its last-mile delivery network. More than 18,000 destination delivery units serving over 170 million addresses fell within the solicitation's scope. Steiner described it as a fair bidding process designed to find the best mix of local shipping attributes at volume-driven pricing. That same month, Steiner told Reuters that USPS delivered approximately 1.7 billion packages annually for Amazon. Against that baseline, retaining more than one billion packages is consistent with the stated 80 percent retention. Amazon submitted a bid under the new auction process in February 2026 and stated it received no response, according to the company's public account. USPS has not commented on that claim. By March, Amazon had escalated to threatening a roughly two-thirds reduction in USPS deliveries. ## Why USPS Re-Engaged Directly USPS's decision to strike a deal with Amazon after launching the competitive solicitation suggests rival bids did not match Amazon's volume. Benzinga and Engadget reported that other bidders failed to meet volume and revenue targets, though USPS has not confirmed those accounts. More than 1,200 companies and individuals requested access to the bid portal, according to Steiner's February 2026 Board of Governors remarks. Despite that level of interest, no publicly reported alternative matched Amazon's scale. Whether the competitive bidding process will continue alongside the Amazon agreement remains an open question. Originally, the solicitation targeted winner notifications in the second quarter of 2026 and service commencement in the third quarter. Any final Amazon-USPS agreement must clear the Postal Regulatory Commission, which reviews negotiated service agreements under federal postal law. Commissioners could approve, modify, or reject the terms, and no timeline for review has been disclosed. ## USPS's Multi-Front Financial Strategy Preserving Amazon's volume is part of a broader effort to stabilize USPS finances under Steiner. An 8 percent temporary price increase on Priority Mail Express, Priority Mail, USPS Ground Advantage, and Parcel Select takes effect April 26, 2026, running through January 17, 2027. Reuters also reports that Steiner has proposed raising the first-class stamp price from 78 cents to 95 cents. Steiner was appointed the 76th Postmaster General in May 2025 and took office in July, following Louis DeJoy's resignation that March. He previously led Waste Management for 12 years and served on the FedEx board of directors. First-Class and Marketing Mail volumes have fallen approximately 50 percent since 2007, according to GAO testimony. Package revenue is the counterweight, and Amazon is USPS's largest source of it. ## Amazon's Growing Delivery Network Amazon's logistics infrastructure continues to expand, strengthening its negotiating position. In April 2025, the company announced a $4 billion investment to build over 200 rural delivery stations by the end of 2026, covering more than 13,000 zip codes across 1.2 million square miles. That expansion gives Amazon alternatives to USPS for a growing share of deliveries. But Amazon's network does not yet match the postal service's comprehensive geographic reach. Benzinga reports Amazon relies on USPS for 30 to 40 percent of last-mile deliveries in rural areas, though this figure has not been independently verified. Amazon's expanding network could shift leverage in future negotiations. For now, each side still depends heavily on the other. ## What Remains Unknown Whether this tentative deal holds, and what it means for USPS finances, depends on details not yet disclosed. Pricing, duration, and volume guarantees have not been made public. These terms should become available when the deal is filed with the Postal Regulatory Commission. As of April 7, 2026, USPS has not publicly confirmed or commented on the agreement. Without the postal service's perspective, the deal narrative rests primarily on Amazon's statements and Reuters reporting. No review timeline has been disclosed by the PRC. Approval is not guaranteed, and the commission has authority to modify terms. How the 20 percent volume reduction will be distributed geographically and operationally is also unclear. Concentrated reductions in specific regions could disproportionately affect rural service or USPS route economics in ways an aggregate volume figure does not capture.