Contract timeline and recent reporting

The agreement between Amazon and the United States Postal Service is due to expire in October 2026. Recent media coverage, including reporting by Reuters that cites a Washington Post story, suggests changes may be coming to how the USPS handles Amazon business when that contract is renegotiated.

Outline of the reverse auction plan

USPS Postmaster General David Steiner is reported to be planning a reverse auction early next year. Under the proposal, access to USPS postal facilities could be awarded to the highest bidder rather than being granted directly to Amazon, effectively forcing Amazon to compete with major retailers and regional carriers for facility access.

Amazon's scale within USPS revenue

Amazon is currently the Postal Service's largest customer, generating more than 6 billion dollars in annual revenue and representing roughly 7.5 percent of USPS sales. That level of business gives Amazon significant importance to the agency's financial and network planning.

Amazon's response to auction reports

Amazon has said it continues discussions aimed at extending its long-standing relationship with the Postal Service and increasing its spend, while acknowledging surprise at the reported decision to pursue an auction after nearly a year of negotiations. The company has signaled it is evaluating options to preserve reliable delivery for customers given the potential disruption and added uncertainty for its delivery network.

USPS financial pressures and volume trends

The potential contract change arrives as the Postal Service faces mounting financial losses. The USPS reported a 9.0 billion dollar annual loss in fiscal year 2025, announced last month, with much of the pressure attributed to declines in mail volumes outside of its Shipping and Packages group, particularly First-Class Mail.

ShipMatrix view from Robert Persuit

Robert Persuit, Senior Director of Business Development at ShipMatrix, said Amazon currently holds leverage but is unlikely to make abrupt moves away from the USPS while it remains the cheaper option. He warned that any exit would resemble the gradual reduction seen in the prior UPS/Amazon adjustment, where average daily volume dropped by 1.9 million packages in the comparable quarter, a change that approaches nearly 500 million packages annually.

Persuit said the USPS is at a crossroads, facing both demand erosion from large retailers bringing deliveries in-house and growing supply-side competition. He listed a number of new entrants that are contributing to that competitive pressure.

• DoorDash
• Veho
• Jitsu
• Better Trucks
• About a dozen other newer carriers

He advised the Postal Service to concentrate on its strengths, specifically handling low-value, low-cube shipments that fit in a mailbox.

Perspective from Nate Skiver of LPF Spend Management

Nate Skiver, founder of LPF Spend Management, agrees that Amazon's long-term objective is to internalize its delivery volume, but he does not expect that effort to be completed within the next year. Skiver suggested Amazon might meaningfully reduce its reliance on the USPS in 2026 and secure a materially different contract in terms of volume commitments and USPS rates, while still needing the Postal Service to some extent.

Skiver offered rough figures to illustrate the scale of recent shifts: approximately 1.0 to 1.5 million Amazon packages per day have moved out of UPS's network, and Amazon contracted with FedEx to handle part of that volume. He estimated that the volume Amazon places with the USPS could be four to five times the volume it moved through UPS, but he noted those numbers are off-the-top estimates and not validated.

Skiver also questioned the practical meaning of a reverse auction in this context, noting that the USPS benefits substantially from Amazon's volumes through improved network density and margin contributions, and it would be counterintuitive for the Postal Service to intentionally squeeze its largest customer.

Potential outcomes and next steps

The reported auction plan introduces uncertainty for both parties as they approach 2026 negotiations. Amazon is actively evaluating alternatives to protect its customer deliveries, while the USPS must weigh short-term revenue objectives against the risks of losing guaranteed volume and further accelerating demand shifts to in-house carrier networks and new private entrants.

Stakeholders will be watching early next year for formal steps on any auction process and for further public comments from USPS leadership and Amazon as both prepare for the contract renewal cycle.