Amazon’s new deal with USPS is a huge story in the shipping space.
And while it’s been covered extensively by major news outlets, very few of those stories seem to focus on how this will impact sellers and shipping fees.
Even if your business doesn’t sell anything on Amazon, you need to pay attention to this story if you’re relying on USPS for shipping. Here’s why.
What Happened
Amazon has been using USPS for 30+ years, and the US Postal Service generates over $6 billion in annual revenue from Amazon orders. The contract between these two partners was set to expire on September 30, 2026, and Amazon was negotiating directly with the Postmaster General on a new contract.
According to Amazon, USPS walked away from the renewal agreement in December 2025. And then failed to respond in February 2026 when Amazon submitted a bid.
So in mid-March, Amazon threatened to pull two-thirds of its shipping volume from USPS. This would have been catastrophic news for the US Postal Service, as they were on track to run out of cash as early as October.
Fast forward to now, and the two sides finally agreed to new terms. Amazon will maintain 80% of its current package volume with USPS. While it’s still a 20% reduction, it’s far better than the initial 67% reduction that was threatened last month.
Amazon Didn’t Do This Out of Good Will
I think it’s worth addressing that Amazon definitely didn’t do this deal to save the Postal Service or anything like that. They’re one of the most valuable companies in the world, and everything they do is aligned with profit.
This was a business decision.
While Amazon has been aggressively building its own delivery network for years, USPS remains the best option for rural coverage at scale, cost-wise. No other private carrier can match this at a comparable rate.
The 20% reduction represents what Amazon can handle either themselves or through another carrier.
Amazon had every incentive to keep this partnership intact. But they’re still going to optimize whenever possible.
How This Impacts Amazon FBA Sellers
If your business sells on Amazon and relies on Amazon to fulfill orders, I think this deal is good news for you.
While you can have control over which carrier ultimately delivers packages, the lowest-cost carrier is always selected by default, and that’s exactly what most sellers want.
Amazon maintaining its relationship with USPS means your rates will likely stay in the same ballpark for the foreseeable future for any packages utilizing the postal service for delivery. While the pricing deals of the new deal haven’t been publicly released, reports indicate that rates will stay the same despite the volume reduction.
It’s worth noting USPS announced an 8% fuel surcharge fee for the first time ever. Though it’s unclear whether that will be levied on Amazon or for what amount. I imagine a deal of this size would contain surcharge caps favoring Amazon.
Without the deal, your costs almost certainly would have gone up if Amazon needed to rely on FedEx, UPS, or its own delivery drivers for rural deliveries.
Affect on Merchants Shipping via USPS
USPS narrowly avoided a worst-case scenario. But a 20% reduction on $6 billion is still a significant number, especially for an organization that’s been operating a deficit for decades.
Losing some revenue from Amazon may not seem like a big deal, but it could definitely have a trickle-down effect on USPS pricing.
The actual losses from the 20% cut could be a bigger problem than the average person realizes. That’s because the Postal Service thrives on scale. With fewer packages from Amazon moving through its parcel infrastructure, their fixed costs remain the same.
Any package that Amazon is shifting away from USPS will likely be cheaper. Likely the denser, urban locations, which was easier and more cost-effective for USPS, too.
So USPS is now left with packages for more costly rural deliveries.
This is a big deal for small and mid-sized sellers with lots of rural customers. USPS is the only practical option here for reasonable rates. And if they decide to hike their pricing, you may have to absorb those costs because it will still be the cheapest option on the market.
No rate increases from USPS have been announced just yet. But it could definitely happen.
What You Can Do to Prepare
Right now this is all just headlines. The deal itself is tentative and still needs to be approved by the Postal Regulatory Commission.
That said, it’s better to be proactive than reactive when it comes to your shipping costs. Here’s what you can do:
- Continue to monitor the story as more details emerge from the deal.
- See if you can read between the lines on how these changes can impact your rates.
- Run a parcel audit to identify optimization opportunities that can save you money on shipping costs.
- Do a cost comparison to see if it’s worth using regional carriers to save money on urban deliveries.
If the deal falls through, it’s likely bad news for both Amazon FBA sellers and merchants using USPS independently. And even if the deal gets signed off by the PRC, merchants shipping with USPS (not via Amazon) still may have exposure to higher fees if the Postal Service decides to increase rates.
This is a great time to take a closer look at your shipping costs as a whole. There’s a good chance those invoices are filled with surcharges and other line items that are inflating your overall costs.
If you need help identifying overages and negotiating better terms with your carrier, contact our team here at the Cost Guards for a free audit.