US Postal Service Plan to Raise Revenue Could Risk Losing Amazon as Its Biggest Customer

The U.S. Postal Service is considering a major shift in how it raises revenue, a move that could help address its growing financial losses but also threaten its most important customer relationship with Amazon.

USPS has faced worsening financial challenges as traditional mail volume continues to decline. The agency reported losing about $9 billion in the 12 months ending in September, and postal officials have warned that without significant changes, cash reserves could run out within the next two years.

For years, Amazon has been a key bright spot for USPS finances. The e-commerce giant reportedly brings in about $6 billion annually by relying on the Postal Service for last-mile delivery, particularly to rural or hard-to-reach locations. That partnership works well because USPS is legally required to provide universal service, delivering mail and packages anywhere in the country at the same price.

To raise additional revenue, USPS now plans to open its distribution network to more retailers and shippers by accepting bids for bulk, pre-sorted package deliveries. While postal officials see this as a necessary step to stabilize finances, Amazon has signaled concern over the change in direction.

Amazon said it has been negotiating with USPS for nearly a year to extend their partnership and was surprised by the plan to run an auction. The company says it is now evaluating other delivery options to ensure reliable service for customers, raising the possibility that it could scale back its use of USPS.

Experts say the strategy makes operational sense but comes with real risks. While adding more customers could bring in new revenue, losing or significantly reducing Amazon’s business would be a major financial setback. USPS has already seen package volumes dip nearly 6 percent in the most recent fiscal year, even though overall parcel volume remains far higher than it was two decades ago.

Some analysts argue that the deeper issue is the Postal Service’s universal service obligation, which remains essential but increasingly difficult to fund in an era dominated by digital communication. They say congressional funding may ultimately be necessary to preserve nationwide mail delivery while allowing USPS to modernize.

For now, USPS faces a delicate balancing act: finding new sources of revenue without driving away the customer that has helped keep it afloat.

Credit: CNN Newsource
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