Key Highlights
- A fresh parcel delivery agreement between Amazon and USPS preserves approximately 80% of current package volumes
- The new terms represent a significantly better scenario for USPS compared to the previously discussed two-thirds reduction
- Under the revised arrangement, USPS will handle roughly 1 billion Amazon packages each year
- Following the announcement, FedEx (FDX) declined 0.8% to $358.91 while UPS dropped 1% to $97.16
- UPS has separately committed to reducing its Amazon delivery capacity by more than half before the end of 2026
The U.S. Postal Service and Amazon have reached a new package delivery agreement, averting what might have been a catastrophic financial setback for the struggling mail agency.
Under the new terms, USPS will continue handling approximately 1 billion packages annually for Amazon — representing about 80% of existing volume. This marks a substantial improvement from earlier discussions about reducing volume by two-thirds.
Amazon described the arrangement as an extension of their “longstanding partnership.” The Postal Service has not yet issued a formal statement.
Amazon represents USPS’s largest client, contributing approximately $6 billion to the agency’s $80 billion yearly budget. The loss of this revenue stream would have created severe financial strain. Last month, USPS issued warnings that it could exhaust its available cash reserves by October.
The arrangement awaits official authorization.
Impact on FedEx and UPS
Competing carriers experienced market pressure following the announcement. FedEx (FDX) shares decreased 0.8% to close at $358.91, while UPS stock fell 1% to finish at $97.16.
UPS has been actively reducing its Amazon delivery commitments. In January 2025, the shipping giant announced plans to decrease Amazon-related volume by over 50% by late 2026. This represents a calculated move to reduce reliance on Amazon business.
Conversely, FedEx pursued the opposite strategy — establishing a multi-year delivery partnership with Amazon in May 2025.
Amazon Maintains In-House Logistics Expansion
Amazon shows no signs of slowing its proprietary delivery network development. In April 2025, the e-commerce giant announced plans to invest over $4 billion in expanding rural delivery capabilities throughout the United States by late 2026.
This expansion strategy will proceed — though not at a level that would comprehensively compete with USPS’s nationwide address coverage, according to informed sources.
Meanwhile, USPS continues seeking solutions to stabilize its financial position. The agency is pursuing authorization for an interim 8% rate increase on priority mail and package services, scheduled to take effect April 26. Postmaster General David Steiner has additionally proposed increasing first-class stamp prices from 78 cents to 95 cents.
Since 2007, USPS has accumulated $118 billion in net losses, primarily attributed to the dramatic decline in first-class mail volume, which has dropped to levels not seen since the late 1960s.
Steiner previously disclosed to Reuters that USPS handles approximately 1.7 billion packages for Amazon yearly, indicating that the 1 billion figure in the new agreement represents a notable decrease — though considerably less severe than Amazon’s initial proposals.
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