Cash Flow Collision Course
The Amazon – USPS partnership dates back 30 years, to when the USPS delivered Amazon’s first packages in and around Seattle. The current Amazon – USPS agreement expires on September 30, 2026, and it is straining under the pressure of Amazon’s volume and the USPS’s profitability problems.
The USPS lost $9 billion in FY 2025, and they have accumulated $118 billion in net losses since 2007.
The dire reality is that they may run out of the cash required to operate by October 2026, days after the end of the current Amazon contract. The USPS and Amazon seem to be on a collision course. Making matters worse, as of 2026, USPS has hit its statutory borrowing limit and can no longer take on additional debt.
Amazon has signaled that they would prefer not to be dependent on the USPS. In late 2025, Amazon announced a plan to invest $4 billion into rural delivery capabilities. The news was generally interpreted as a shot across the bow of the USPS.
The USPS has to deliver to all 169 million addresses in the United States, 6 days a week, at “uniform and affordable prices.” Profit doesn’t enter into the picture, even if they are supposed to generate it.
Shippers like Amazon have been able to leverage the fact that the USPS has to go to avoid carrying the cost of going themselves. Instead, Amazon is able to focus on building their network in more densely populated areas that are more cost effective to serve.
The USPS may have seen their willingness to cover these expensive areas as a moat around their value as a shipper more generally, but Amazon’s investment announcement suggests that the moat wasn’t as deep as the USPS thought. What they needed to do was create a fairly priced market for their final mile services.
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