The Postal Service’s Last-Mile Strategy Is a Dead End

As the US Postal Service moves forward with an auction for parcel companies to bid on its last-mile delivery capacity, Amazon.com Inc. is preparing in case it needs to pull out of the process and instead deliver those packages on its own.

This Amazon brushback pitch during negotiations shouldn’t come as a surprise. The e-commerce giant is a tough bargainer because it backs up the talk with action. Amazon is expanding its own delivery network, including a $4 billion investment to provide same-day and next-day service to small US towns.

Amazon is seeking to reduce volume it sends to the Postal Service by two-thirds by this fall, when its contract expires, depriving the Postal Service of billions of dollars in revenue, according to a Wall Street Journal report.

Still, this wouldn’t be the first time that a large company has picked up its marbles and gone home after squabbling with the Postal Service. In 2021, FedEx Corp. completed an effort to bring in-house the packages that it had been handing off to the Postal Service for last-mile delivery but has since returned. United Parcel Service Inc. similarly walked away during a contract dispute in early 2025; it returned about a year later.