In just 14 months, America’s oldest institution meets its reckoning. Amazon—the company that generates over $6 billion annually for USPS, representing 7.5% of its entire revenue—is threatening to walk.
“We were taken aback to learn they wish to conduct an auction following nearly a year of discussions,” Amazon stated on December 4, signaling a historic rupture.
With USPS hemorrhaging $9 billion yearly and facing an 80% mail volume collapse, losing its largest customer could trigger 75,000 to 100,000 job losses nationwide. What happens when America’s postal system loses the revenue keeping it alive? Everything.
What Is Happening Between Amazon and USPS?
For three decades, Amazon quietly relied on USPS as mail volumes collapsed. On November 14, CEO Andy Jassy met virtually with new Postmaster General David Steiner to discuss contract renewal, but talks stalled.
USPS announced a reverse auction in early 2026, forcing Amazon to compete with other retailers. “We were taken aback,” Amazon said, according to Reuters on December 4, 2025.
The $9 Billion Loss Driving Decisions
USPS reported a $9.0 billion net loss for fiscal 2025, according to the U.S. Postal Service on November 14. Cumulative losses since 2007 now exceed $100 billion.
Amazon’s $6 billion revenue stream kept USPS parcel operations afloat. Without it, survival becomes impossible, highlighting the fragility of the 30-year partnership.
Who Is David Steiner and Why It Matters
David Steiner became Postmaster General in July 2025, after appointment in May. CNN reported on May 9, 2025, that Steiner previously sat on FedEx’s board, a direct USPS competitor.
He ended “sweetheart deals” with Amazon and implemented competitive bidding. Steiner accelerated a 50,000-position workforce reduction plan, inherited from Louis DeJoy, according to Government Executive on August 3, 2022.
Amazon’s Revenue: The Percentage That Counts
Amazon delivers about 6.3 billion parcels annually, representing 18-20% of USPS parcel revenue, according to Pitney Bowes on July 2, 2025. USPS Shipping and Packages revenue totaled $32.58 billion in fiscal 2025.
Losing Amazon’s $6 billion stream would devastate USPS, forcing facility closures. The scale of dependency is undeniable.
How Amazon Became USPS’s Rival
Amazon Logistics handled 6.3 billion parcels in 2024, nearly matching USPS’s 6.9 billion, Pitney Bowes reported July 2, 2025. Its market share puts it in second place for parcel volume.
Amazon built planes, trucks, EVs, and drone trials over a decade. Reuters on December 4, 2025, projects it could surpass USPS in parcel volume by 2028.
The 80% Mail Volume Collapse
Since 1997, first-class mail has declined 80%, according to Government Executive. Digital communication and electronic billing eroded traditional mail revenue.
USPS must deliver mail six days weekly at regulated rates. Losing Amazon threatens the subsidy that parcel revenue provides, leaving the Postal Service financially exposed.
“We Were Surprised By the Auction Plan”
Amazon expressed shock at USPS’s auction plan. “We have continued discussing ways to expand our partnership that would increase our spending with them. We were surprised to hear they want to run an auction after nearly a year of negotiations,” Inc., December 4, 2025.
Amazon had begun building a $4 billion rural expansion, creating 100,000 jobs by year-end.
The Reverse Auction Strategy
Steiner’s reverse auction, announced for early 2026, aims to open USPS facilities to highest bidders. Reuters on December 4, reports the goal is multiple revenue streams.
The flaw: no customer can replace Amazon’s $6 billion contribution. Steiner’s message is clear: “You’re not special anymore. Compete or leave.”
Rural America’s Dependence on USPS
About 51.5 million rural Americans rely exclusively on USPS, according to Save the Postoffice. UPS and FedEx cannot economically serve these areas.
Amazon’s $4 billion rural expansion targets 4,000 communities, leaving the most remote areas USPS-dependent. Christopher W. Shaw, Quartz, August 5, 2025: “[Amazon] will not go to the most money-losing routes.”
How Many Postal Jobs Are at Risk?
USPS planned 50,000 job cuts through consolidations, Government Executive, August 3, 2022. Losing Amazon could trigger 25,000-50,000 more reductions.
Combined cuts total 75,000-100,000 positions, about 11-15% of the 650,000-person workforce. The workforce threat shows how much Amazon sustains USPS’s financial health.
The 14-Month Deadline Approaches
Amazon-USPS contract expires October 1, 2026. The reverse auction is planned for early 2026.
Amazon’s rural delivery expansion completes this year. Timelines align, signaling both parties are preparing for potential separation despite ongoing negotiations.
Small Businesses Caught in the Middle
Affordable USPS rates allow small retailers to compete nationally, Christopher W. Shaw, Quartz, August 5, 2025. Losing USPS forces merchants to rely on Amazon or costlier UPS/FedEx.
The collapse could consolidate delivery entirely under Amazon, reshaping retail logistics in rural and urban America.
The $6 Billion Question Steiner Faces
Can USPS replace Amazon? Logistics experts told Wiregrass Daily News on December 3, 2025, no customer exists that could replace Amazon.
Elena Patel, Brookings Institution, warned losing Amazon is a “fundamental threat.” Steiner’s reverse auction assumes demand exceeds capacity—a gamble with generational consequences.
Amazon’s 100,000-Job Rural Expansion
Amazon announced $4 billion to expand rural delivery infrastructure, creating 100,000 positions in 4,000 communities.
CEO Andy Jassy told Mashable on June 24: “We’re investing to serve our rural customers even better.” This is strategic positioning, not a reactive move.
NALC Warns of Conflict of Interest
The National Association of Letter Carriers objected to Steiner. Newsweek, March 14, 2025: “His appointment is a bold move towards transferring America’s mail system to corporate interests,” said President Brian Renfroe.
Private shipping companies have long sought to eliminate USPS from parcels. Steiner’s FedEx background raised legitimate concerns about allegiance.
What Complete Separation Could Look Like
A full Amazon exit would wipe out more than $6 billion in revenue and 28% of USPS’s parcel volume. The consequences could be severe: 20,000–30,000 facility closures, 75,000–100,000 job cuts, service slowdowns, and a potential federal bailout ranging from $50 billion to $100 billion.
Cumulative losses over three years could reach $15–20 billion. Yet, despite these high stakes, negotiations between Amazon and USPS continue.
Three Paths Forward for USPS
USPS faces three main options. Scenario 1: Status quo extension, 25–30% probability, maintaining $5–6 billion in revenue. Scenario 2: Partial separation, 35–40%, leaving $2.5–3.5 billion in revenue and triggering 30,000–50,000 job cuts. Scenario 3: Complete separation, 25–30%, losing $6 billion and 75,000–100,000 jobs.
A fourth, less likely path: Congressional intervention, 5–10% probability—could preserve the partnership and limit fallout.
Trump’s Privatization Threat Looms
In February this year, President Trump proposed merging USPS with the Commerce Department, calling the service “a tremendous loser for this country,” according to Reuters on December 4, 2025.
Privatization fears pushed USPS toward commercial strategies like reverse auctions. Steiner’s attempt to appear profitable may have accelerated the very outcome he hoped to avoid.
The Countdown to Auction
Early 2026 will mark the launch of USPS’s reverse auction, forcing Amazon to decide whether to compete or fully exit. Reuters, December 4, 2025, projects Amazon could surpass USPS in total parcel volume by 2028—or even sooner if the partnership ends.
This isn’t just a contract dispute; it’s a showdown over who controls America’s delivery network.
Why This Matters for Your Mailbox
Rural delivery could slow or vanish. Small business shipping costs may rise 20-40% using UPS or FedEx. USPS layoffs loom.
Congress faces potential $50-100 billion bailout. Amazon’s independence is ready if it accepts infrastructure costs. The next 14 months will shape whether delivery remains universal or fragments under private networks.
SOURCES
U.S. Postal Service Fiscal Year 2025 Results announcement (November 14, 2025)
Reuters reporting on Amazon-USPS negotiations (December 4, 2025)
Government Executive article on USPS workforce reduction plans (August 3, 2022)
Newsweek coverage of David Steiner appointment and union concerns (March 14, 2025)
Pitney Bowes Parcel Shipping Index data on Amazon Logistics volumes
Save the Postoffice analysis of USPS Delivering for America consolidations
Quartz investigative reporting on rural delivery implications (August 5, 2025)