The U.S. Postal Service announced plans to auction access to its prized last-mile delivery network starting early 2026—just as its lucrative partnership with Amazon hangs in the balance.
The cash-strapped agency, fresh off a $9 billion loss in fiscal 2025, hopes this bidding process will bring in billions more by letting retailers and shippers drop pre-sorted packages directly into its 18,000 local facilities.
Losing Amazon’s roughly $6 billion annual contribution would sting deeply, especially when the Postal Service warns it could run out of cash by early 2027 without fresh revenue.
Experts note the strategy makes sense on paper—leveraging excess capacity built during the e-commerce boom—but flirting with other suitors risks sending the agency’s biggest benefactor packing.
Package volumes already slipped nearly 6% last year, a gentle reminder that even the parcel party’s slowdown can leave a hangover.
The Postal Service has long relied on Amazon for a financial lifeline. That contract, born over 30 years ago, now pumps in about 7.5% of the agency’s operating revenue.
Yet with first-class mail volumes continuing their steady dive into digital oblivion, leaders see no choice but to diversify.
Postmaster General David Steiner, in a candid chat, admitted cost cuts alone won’t suffice. The agency boasts a “precarious cash position,” he said, projecting depletion within 12 to 24 months.
Universal service obligation keeps carriers trekking to every remote doorstep at uniform rates—a noble mandate that turns rural routes into pricey propositions.
Amazon loves this setup for those final legs to far-flung customers, where building its own network would cost a fortune.
But now, USPS wants to open those doors wider. Bids start in late January or early February, with new agreements kicking in mid-2026.
Amazon spokesman Steve Kelly expressed polite shock. After nearly a year of talks aimed at extending the deal—and possibly increasing spend—the auction idea landed like an unexpected bill.
The company is now “evaluating all options” to keep deliveries humming for customers.
Brookings Institute expert Elena Patel calls the plan operationally sound. Spreading bulk packages across more players could stabilize finances.
She cautions, though, that pushing smaller shippers might unravel the Amazon thread entirely. Not ideal when negotiations already feel delicate.
Parcel volumes remain up dramatically from two decades ago—nearly 500% growth. Still, recent dips highlight how quickly tides turn in online shopping.
The irony lies in the universal mandate fueling both the appeal and the ache. It draws giants like Amazon while draining funds on unprofitable stretches.
Steiner hopes Amazon joins the bidding fray. Opening access could monetize unused capacity from recent modernizations.
Critics wonder if this auction resembles a garage sale for the family silver. Necessary, perhaps, but with the risk of the best buyer walking away.
As holidays approach, carriers will hustle billions of packages regardless. The real question lingers: will this bold pivot secure the future, or accelerate a costly breakup?
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