A recent change in how the US Postal Service handles shipping partners appears to have forced Amazon to make alternative plans. The company reportedly plans to cut the number of packages it ships through USPS by at least two-thirds later this year. It says the decision came after USPS ended negotiations “at the eleventh hour” in favor of a new bidding process.

On Tuesday, the Wall Street Journal reported that Amazon plans to reduce the shipments it hands off to USPS. Last year, the company accounted for nearly 15 percent of the Postal Service’s package deliveries. Cutting that by nearly two-thirds diminishes one of the USPS’s most reliable sources of revenue. In fiscal 2025, the agency reported a net loss of $9 billion.

Amazon’s current contract with USPS ends on September 30. In a public response to the WSJ story, the company said it notified USPS in October 2025 that it would need to complete a new deal by December. “You can’t add capacity for hundreds of millions of packages overnight — it requires major capital investment, long-term infrastructure planning, hiring, and logistics coordination,” Amazon wrote.

According to Amazon, USPS then pulled the plug on negotiations at the last second. “We negotiated with [USPS] in good faith for more than a year to reach a deal that would bring them billions in revenue and believed we were heading toward an agreement,” Amazon wrote in a statement. “Our goal was to increase our volumes with USPS, not reduce them — until USPS abruptly walked away at the eleventh hour in December.”

That’s when Postmaster General David Steiner implemented a new bidding process for last-mile deliveries, replacing a long-established one where USPS negotiated with shipping partners individually. He described the move as “a fair bidding process that enables the marketplace to find the best mix of local shipping attributes for the best volume-driven pricing.” Steiner was appointed to the post in May 2025, following the departure of former head Louis DeJoy.

Amazon said it submitted a bid in February using the new system but hasn’t heard back. “This creates significant uncertainty for our long-term network planning,” the company said. “Despite this, we participated in good faith and submitted a bid in February 2026. We’ve received no response.”

USPS plans to announce the bidding results in Q2 2026. Contracts are expected to be finalized by Q3. Despite apparently moving forward with the contingency plan, Amazon said it’s still “ready to continue this partnership.”

As for Postmaster Steiner, he spent Tuesday asking Congress to loosen USPS regulations and let him raise prices. Warning that the agency will “run out of cash” in about a year, he told a House subcommittee that he wants to raise the agency’s current $15 billion debt cap. He also asked for the ability to increase postage prices and reform its retiree pension obligations.