Amazon Deepens USPS Woes, Slashing Shipments by Two-Thirds

Edgen Stock·Mar 17 2026, 21:55

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Key Takeaways

Amazon announced on March 18 its plan to slash its use of the U.S. Postal Service for package delivery by at least two-thirds by the fall. This move comes as Amazon has already surpassed USPS as the largest U.S. parcel carrier and could exacerbate the postal service's severe financial crisis, which includes over $109 billion in losses since 2007.

Amazon's Strategic Shift: The company plans to cut its USPS package volume by more than 66%, leveraging its own logistics network which became the nation's largest in 2025.
USPS Under Pressure: The move deals a major blow to the USPS, which has lost over $109 billion since 2007 and faces potential insolvency by 2027 as its package volume continues to decline.
Limited Upside for Rivals: Competitors like UPS are unlikely to see a major benefit, as they have been actively reducing their own low-margin Amazon volume to improve profitability, suggesting Amazon will absorb the volume itself.

Amazon to Slash USPS Volume by Over 66%

On March 18, Amazon announced a plan to significantly reduce its reliance on the U.S. Postal Service, aiming to cut its package volume sent through the federal agency by at least two-thirds by the fall. The strategic shift is designed to lower Amazon's operational costs and further consolidate its control over its logistics pipeline, cementing its position as a dominant force in the parcel delivery market.

Move Exacerbates USPS's $109 Billion Financial Crisis

The decision strikes a significant blow to the USPS, which is already in a precarious financial state. The federal agency lost its position as the top U.S. parcel carrier to Amazon in 2025, when its own volume declined by 8.3% to 6.6 billion packages while Amazon's grew 9.8% to 6.7 billion. Having accumulated over $109 billion in losses since 2007, the USPS now faces an accelerated path toward potential insolvency, with projections showing it could run out of cash by 2027. Amazon's volume reduction represents a substantial loss of critical revenue for the struggling service.

Rivals Focus on Margins as Amazon's Network Grows

While a reduction in USPS volume might initially suggest an opportunity for competitors like UPS and FedEx, market dynamics indicate a different outcome. UPS has been deliberately shedding its low-margin Amazon business, cutting 1 million packages per day in 2025 with further reductions planned for mid-2026. This strategy, aimed at boosting profitability, signals that the volume diverted from USPS will likely be absorbed by Amazon's own rapidly expanding delivery network. For rivals, this move reinforces Amazon's role as a powerful competitor that increasingly handles its own logistics, rather than a client providing new business.