Amazon, USPS strike a deal - showing they still need each other despite threats of big delivery cuts

By Bill Peters

The agreement arrives as Amazon continues to expand its warehouse network and focus on same-day deliveries

Amazon's stock is up nearly 25% over the past 12 months.

Amazon.com said Monday that it had reached an agreement with the U.S. Postal Service that preserves most of the deliveries the e-commerce giant makes through the mail agency, after earlier threats of far bigger cuts to its package volumes.

The deal between the company and the USPS, which has struggled with losses over recent years, will keep roughly 80% of Amazon's previous delivery volumes with the Postal Service, according to reports.

Reuters and the Wall Street Journal reported the news earlier in the day, citing sources familiar with the matter.

The agreement arrives as Amazon (AMZN) continues to expand its warehouse network and fine-tune the deliveries it does itself, with a bigger focus on same-day shipments and quicker last-mile service. But the deal signals that Amazon still likely needs the USPS, particularly for deliveries in rural areas, the Journal noted - adding that the Postal Service still handles the final stretch of a lot of Amazon's deliveries.

The Journal noted that postal regulators still needed to approve the deal.

Amazon - which is the USPS's biggest customer, accounting for 1 billion packages shipped annually - had threatened to slash its deliveries through the Postal Service by two-thirds or more, Reuters reported.

Amazon had planned to rely more on its own delivery infrastructure for packages, Reuters said, adding that the company had taken issue with USPS's plans to put its last-mile delivery coverage up for auction. Cutting the Postal Service out of those deliveries represented what Reuters called an "existential threat" to the USPS.

"We're pleased to have reached a new agreement with USPS that furthers our longstanding partnership and will let us continue supporting our customers and communities together," Terrence Clark, an Amazon spokesperson, said in a statement.

Amazon said the deal followed more than a year's worth of negotiations. But it declined to offer additional information about how the agreement came together.

The USPS did not immediately respond to a request for comment. The agency reported a $9 billion loss during its last fiscal year.

Shares of Amazon were 0.1% lower after hours Monday, after finishing 1.4% higher during regular trading. The stock is up 24.7% over the past 12 months.

Other companies have recalibrated their relationships with Amazon. Last year, United Parcel Service (UPS) said it would cut its business with Amazon by more than 50%, in an effort to focus on higher-margin deliveries.

UPS shares finished 1% lower Monday, and were down fractionally after hours. FedEx's stock (FDX) ended the day 0.8% lower, and was down 1.3% after the close.

-Bill Peters

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04-06-26 1822ET