The long-standing relationship between Amazon and the United States Postal Service is in danger of coming to an end after contract talks stalled near the end of 2025. While negotiations continued through the early part of the year, the online retail giant announced that the relationship may come to an official end when the contract expires near the end of 2026.

Amazon claims it worked toward a deal that would have increased package volume and generated billions in revenue for USPS. However, the company says the Postal Service “walked away” late in the process and introduced a new system that changed the terms of the relationship.

The breakdown has the potential to change how Amazon ships its packages, and it could certainly impact the company’s millions of customers in the US.

Amazon May Dramatically Reduce USPS Shipments

As a result of the failed Amazon-USPS negotiations, the company is preparing to dramatically decrease the number of packages it sends through the postal service. Some reports indicate that Amazon’s shipping changes in 2026 could reduce the number of packages sent through the USPS by 67% or more.

That would mark a major shift, considering USPS has historically handled a large share of Amazon’s “last-mile” deliveries, especially in rural and hard-to-reach areas. At its peak, USPS delivered over a billion packages annually for Amazon, making the retailer one of its largest customers.

Amazon has already started adjusting its shipping strategy, scaling back the number of orders it sends through the USPS as it looks for alternatives.

The Dispute Centers on a New Bidding System

One of the key sticking points in the negotiations is USPS’s decision to move away from traditional contract agreements and toward a competitive bidding model for its delivery network. Under the new system, companies like Amazon must submit bids to access USPS’ last-mile delivery infrastructure, which includes more than 18,000 facilities.

Amazon’s leadership has been vocal about its frustration with this new model, arguing that it introduces uncertainty and makes long-term planning more difficult. The company says it submitted a bid but has not received a response, leaving its future role in the USPS network unclear.

However, for USPS, the new model is an effort to stabilize finances and increase revenue. The USPS financial crisis has grown worse in recent years. The agency has reported billions in annual losses and warned that it could run out of cash within the next year without major changes.

Declining first-class mail volumes, rising operational costs, and long-term financial obligations have all contributed to the strain. In response, USPS is exploring new revenue streams, including opening its delivery network to more businesses through competitive bidding.

Potentially losing Amazon’s business, which provides billions of dollars to the postal service each year, could have the opposite effect. However, at least for the time being, the USPS seems resolute in making Amazon bid on last-mile delivery services, just like other companies.

Amazon Is Building Its Own Delivery Network

Amazon has been developing its own delivery network for years, getting the process underway long before the Amazon-USPS negotiations stalled. The company now handles a large portion of its deliveries internally and is continuing to invest heavily in its network.

According to reports, Amazon plans to invest an additional $4 billion in its delivery systems, expanding its reach in rural areas that would typically be handled by the USPS' last-mile delivery system. These changes are designed to give Amazon more control over delivery speed, cost, and the overall customer experience.

What This Means for Customers and the Shipping Industry

The current contract between Amazon and the United States Postal Service is slated to expire on September 30, 2026. Most customers should notice minimal changes between now and then. However, if an agreement or an extension is not reached before then, consumers should expect to see a change in how they receive their Amazon orders.

For the broader logistics industry, this situation highlights a larger trend. Major companies are becoming less dependent on traditional carriers and investing in their own delivery systems, while legacy institutions like USPS are searching for new ways to stay financially viable.

Amazon and USPS have been partners for more than 30 years, a relationship that has been a driving force behind the rise of e-commerce. Whether the two can reach a new agreement or move in separate directions entirely could have lasting implications for how packages are delivered across the United States.

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