Amazon-USPS Partnership Uncertainty: How U.S. Parcel Market Could Be Reshaped

In the U.S. parcel logistics system, few partnerships are as foundational as the one between Amazon and the United States Postal Service (USPS). After nearly 30 years of cooperation and an annual value exceeding $6 billion, this relationship is entering a critical phase of uncertainty.

With USPS introducing a competitive bidding mechanism for its last-mile delivery network, the change could not only alter Amazon’s fulfillment structure but also reshape the balance of power in the U.S. parcel market.

Why a $6 Billion Contract Matters

USPS has long been Amazon’s most important single shipping partner in the U.S. In the context of declining traditional mail volumes, Amazon’s parcel shipments have become a core growth driver for USPS’s parcel business.

Amazon generates over $6 billion in annual revenue for USPS.
This revenue accounts for a substantial portion of USPS parcel business.
USPS is particularly critical for delivery to remote areas and residential last-mile destinations.

Any disruption in this partnership would affect not just individual shipping routes but the underlying logic of the U.S. parcel network.

USPS Launches Last-Mile Competitive Bidding

The trigger for this shift is USPS’s plan to introduce a reverse auction-style bidding process for its last-mile delivery network. Carriers that can deliver services at the lowest cost under defined standards will have higher chances of winning contracts.

This contrasts sharply with Amazon’s previous expectation of customized, deep integration, signaling a rebalancing of power in the partnership.

USPS’s strategic goals behind this move include:

Reducing dependency on a single major customer.
Increasing pricing negotiation power for last-mile services.
Turning its last-mile network into an open, platform-style asset.

However, this also risks accelerating Amazon’s push toward self-built delivery capacity.

Can Amazon Handle the Capacity Independently?

Amazon has publicly expressed willingness to negotiate but is privately evaluating the feasibility of ending USPS partnership.

In fact, Amazon has already built a large-scale delivery network:

In 2024, Amazon delivered approximately 6.3 billion parcels in the U.S. via its own network.
This network includes nationwide sorting centers, delivery stations, and linehaul capacity.
Industry experts refer to it as a “shadow USPS system.”

Yet the key question remains: Can Amazon fully absorb the volume if USPS reduces its services? Most likely, not instantly.

Amazon’s options include:

Rapidly building new last-mile stations (high capital investment)
Relying more on UPS or regional carriers (cost and control limitations)
Adopting a hybrid model to gradually shift parcel flows

Such changes may trigger the largest parcel routing reconstruction in recent U.S. history.

USPS Opens Last-Mile Network: Implications

USPS is not passive. Amid negotiation uncertainty, it is actively:

Opening its last-mile facilities to more large and mid-size retailers
Increasing commercial utilization of local delivery networks
Positioning last-mile delivery as a core competitive asset

This could:

Pressure UPS residential delivery
Create new last-mile options for e-commerce and 3PL providers
Shift parcel pricing dynamics previously dominated by a few giants

From an industry perspective, this is not just a customer replacement—it is a structural transformation of USPS’s business model.

The Next-Generation U.S. Logistics Network

The most realistic outcome may not be a complete breakup but rather:

Amazon expanding its own delivery capacity
USPS transitioning from a “single-customer model” to an “open last-mile platform”
The U.S. parcel market entering a new era of multi-carrier competition

Regardless of negotiation results, Amazon must ensure sufficient capacity to maintain its same-day and next-day delivery promises.

For the industry, this $6 billion-level negotiation serves as a crucial window to observe the future structure of U.S. parcel logistics.

About Goodship56

Goodship56 specializes in China-U.S. cross-border logistics solutions, covering air, ocean, DDP, FBA first-mile, and U.S. domestic delivery. As the U.S. parcel network evolves, we provide customers with stable and flexible shipping options to adapt to market changes.