Amazon Reaffirms USPS Logistics Partnership

Amazon said Monday (April 6) that it has reached a new deal with the United States Postal Service (USPS), under which the postal agency will continue to make 80% of the package deliveries it currently handles for the retailer, Reuters reported.

In March, Amazon threatened to cut two-thirds or more of the package deliveries currently made by USPS, according to the report. Under the new arrangement, Amazon said it will continue expanding its delivery capabilities but will stop short of the reach offered by USPS, Reuters reported.

“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,” Amazon told Reuters.

Deal terms and regulatory approval

The Wall Street Journal reported Monday that Amazon and USPS reached a deal, adding that it is tentative and must be approved by the Postal Regulatory Commission.

How much of USPS delivery is tied to Amazon

According to the report, 15% of the packages delivered by USPS come from Amazon. The reporting also said Amazon has been expanding its one- and two-day delivery services in rural areas, but it still relies on USPS for many rural deliveries.

Background: Amazon’s March threat and USPS auction

In March, it was reported that Amazon revealed plans to reduce the number of packages it ships via USPS during the bidding process for USPS’s last-mile delivery services. The postal service solicited bids from Amazon and other businesses for the first time.

Sources with knowledge of the matter told PYMNTS at the time that the USPS decision to introduce an auction created uncertainty for Amazon around available capacity and pricing, leaving the company with no long-term visibility to plan for potentially having to reallocate hundreds of millions of packages late in the contracting cycle. The sources said this prompted Amazon to build alternative capacity.

The USPS had announced about three months earlier, in December, that it planned to make its last-mile delivery service available to shippers of all sizes and would soon begin accepting bids. Previously, USPS had offered only a limited number of very large customers delivery service direct from its 18,000 delivery destination units (DDUs).