Amazon’s break with the Postal Service would show how far its logistics empire has come

Amazon is reportedly preparing to slash the number of packages it hands to the U.S. Postal Service, a move that could squeeze an already fragile government mail network while underscoring a bigger business truth: the company that once depended on America’s last-mile infrastructure increasingly wants to be its own last mile.

Amazon plans to sharply reduce the number of packages it sends through the U.S. Postal Service after the two sides failed to agree on new business terms, according to a Reuters report on Amazon’s planned USPS cut. Reuters said Amazon could cut USPS volumes by at least two-thirds by September 2026, when the current contract expires. The reported change is not a minor routing tweak. It is a sign that one of the country’s biggest retailers believes it is now strong enough to pull a large chunk of business away from one of the country’s oldest delivery networks.

That matters because the relationship is enormous. Reuters reported that Amazon currently uses USPS to handle about 1.7 billion parcels a year, and that the Postal Service’s last-mile network spans more than 18,000 facilities. If Amazon really cuts that volume by at least two-thirds, simple arithmetic suggests USPS-handled Amazon parcels would drop to roughly 567 million a year. That would not end the relationship, but it would shrink it from a major artery to something closer to a side road.

The timing could hardly be worse for the Postal Service. In a separate Reuters report on USPS’s cash warning to Congress, Postmaster General David Steiner said the agency faces a serious financial crisis and could run out of cash in less than a year without major reforms. Reuters also reported that USPS has accumulated $118 billion in net losses since 2007 as first-class mail volume has withered, while the agency’s statutory borrowing cap is already maxed out. Lose a chunk of Amazon volume on top of that, and the Postal Service’s business model starts to look even more like a ship trying to row with one oar and a leak.

The irony is that Amazon’s growing independence has been years in the making. In April 2025, the company announced in an official Amazon post on its $4 billion rural delivery expansion that it would invest more than $4 billion to expand its rural delivery network, grow that footprint to more than 200 delivery stations, and add capacity to deliver over 1 billion more packages each year across 13,000 ZIP codes. In other words, Amazon was not merely reacting to a bad negotiation. It had already been building the physical muscles needed to rely less on outside carriers, especially in rural America where last-mile delivery is expensive and operationally awkward.

That is what makes this story bigger than a contract dispute. It is really about vertical integration. Amazon began as a company that rode on top of other people’s infrastructure. Now it is trying to decide how much infrastructure it still needs to rent. The more delivery stations, vans, contractors, and route density Amazon controls itself, the less it has to depend on USPS, UPS, or anyone else to complete the final handoff to a customer’s porch. For investors, that can look like efficiency and bargaining power. For the Postal Service, it looks like one more reminder that scale without pricing freedom is a rough way to run a national network.

There is still a chance the split ends up smaller than feared. Reuters reported that Amazon submitted a bid in USPS’s competitive process and still hopes to preserve a reduced partnership. But even that softer outcome would point in the same direction. Amazon is no longer negotiating from dependence. It is negotiating from optionality. And when one side in a logistics marriage suddenly has more exit doors, the other side usually discovers how much of the household budget depended on the arrangement.

The business lesson here is not subtle. Amazon’s logistics network has matured enough that it can start deciding which outside relationships are strategic and which are merely convenient. USPS, meanwhile, is being forced to confront a future in which one of its biggest package customers may not need it the way it once did. If that happens, the fallout will not just be measured in parcels. It will be measured in leverage, pricing power, and the widening gap between a private company built for speed and a public service still asking Congress for permission to breathe.