Amazon is reportedly exploring the possibility of severing ties with the U.S. Postal Service (USPS) as part of its strategy to bolster its shipping infrastructure, according to a report by The Washington Post. Currently, Amazon allocates over $6 billion annually to USPS, which accounts for nearly 8% of the agency’s total revenue—a significant increase from approximately $4 billion in 2019.
In recent years, the e-commerce giant has made substantial investments in logistics, including acquiring Boeing aircraft, introducing electric delivery vans, and developing a drone delivery network. In 2022 alone, Amazon processed over 6.3 billion packages, marking a 7% rise from the previous year, as highlighted by the Pitney Bowes parcel shipping index. Conversely, the USPS handled about 6.9 billion packages, with only a 3% increase.
The growing efficiency of Amazon’s fulfillment network allows it to manage 90% of the parcel volume compared to USPS. Meanwhile, USPS faces significant financial challenges, reporting annual losses in the billions. Stalled negotiations between the two entities and the Postal Service’s continual fare hikes could compel Amazon to fully transition away from relying on USPS.
As USPS struggles to modernize—evidenced by setbacks in its electrification efforts—private companies like Amazon and Walmart continue to invest heavily in pioneering speedy delivery solutions. The shift towards privately owned delivery services raises concerns about the sustainability of USPS, a vital public institution.
Key points to consider:
– Amazon spending on USPS increased from $4 billion in 2019 to over $6 billion annually.
– Amazon processed over 6.3 billion packages in 2022.
– USPS’s package handling growth is only 3% compared to Amazon’s 7%.
– Ongoing financial difficulties at USPS may influence Amazon’s decision-making.
