Amazon Cuts Two-Thirds of USPS Shipments, Eyes UPS and FedEx Alternatives
Amazon will cut at least two-thirds of its USPS parcel volume—more than one billion annual packages representing nearly 15% of USPS throughput—before its fall contract expires. The auction-based contract shift compels Amazon to secure alternative delivery arrangements with UPS, FedEx or its own network by late Q3.
1. Volume Reduction Plan
Amazon plans to slash at least two-thirds of its parcel volume sent via the U.S. Postal Service before the current contract expires this fall. Last year, Amazon accounted for over one billion USPS deliveries—about 15% of the agency’s total package throughput.
2. Auction Timeline Pressure
USPS shifted large-shipper negotiations into a competitive open-bid process with winners announced by midyear and binding agreements locked in late Q3. This tight timeline leaves Amazon with limited runway to reconfigure its shipping network ahead of an October cutoff.
3. Alternative Delivery Strategies
Amazon has submitted a bid for a scaled-back USPS arrangement but is preparing to reroute displaced volume through UPS, FedEx or its own logistics network. The company may also accelerate investments in its in-house last-mile delivery capabilities to cover gaps.
4. Rural Delivery Impact
In rural areas, USPS handles 30%–40% of Amazon’s deliveries and often serves routes without alternatives. A sharp reduction in USPS volume will force Amazon to develop tailored solutions to maintain service standards in low-density regions.