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GAIN CONSULTING

USPS-Amazon Contract Drama: What the 2026 Reverse Auction Threat Really Means for Your Supply Chain

  • Kelsea Ansfield
  • 4 days ago
  • 3 min read

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The relationship between Amazon and the United States Postal Service—once the quiet backbone of U.S. e-commerce last-mile delivery—is suddenly making headlines. With the current contract set to expire in October 2026, Postmaster General David Steiner is floating a “reverse auction” that would force Amazon to compete with other retailers and regional carriers for access to USPS facilities and capacity.


Amazon’s response was swift and pointed: “We were surprised… we’re evaluating all of our options.”


Translation: The world’s largest e-commerce shipper just put the USPS on notice.

At Gain Consulting, we’ve been modeling the fallout from similar carrier divorces (UPS/Amazon 2024–2025 anyone?). Here’s what this latest twist actually means for shippers, carriers, and last-mile costs heading into 2026 and beyond.


The Stakes in One Table

Player

Annual Revenue from Amazon

% of Total Revenue

Daily Amazon Packages (est.)

USPS

>$6 billion

~7.5%

8–10 million

UPS (pre-2025 divorce)

~$6–7 billion

~6–7%

~5 million

FedEx (current)

~$2–3 billion (growing)

~3%

~2–3 million

Amazon is not just the USPS’s biggest customer—it’s the margin lifeline that helps subsidize universal service obligations while the rest of First-Class Mail collapses.


Why the Reverse Auction Threat Changes Everything

  1. USPS is bleeding cash FY2025 closed with a $9.0 billion net loss—exacerbated by UPS pulling SurePost/Mail Innovations earlier this year. That move alone ripped hundreds of millions out of USPS coffers and left massive non-peak overcapacity (88 million daily packages sortable vs. actual demand far below that).

  2. Amazon holds the leverage—but walking away is painful Amazon has spent a decade building its own last-mile network (DSPs, Rivian vans, micro-hubs). Yet fully absorbing another 8–10 million daily packages overnight would be exponentially more disruptive than the UPS glide-down (1.9 million packages/day removed from UPS in a single quarter). Amazon knows this. USPS knows this.

  3. The “reverse auction” is probably a negotiation tactic Industry experts (ShipMatrix, LPF Spend Management) largely agree: actually auctioning Amazon’s volume to the highest bidder makes little operational sense. USPS needs Amazon’s density far more than Amazon needs any single carrier. This smells like a high-stakes bluff to extract higher rates or minimum volume commitments in the 2026 contract.


Three Scenarios for 2026–and How They Impact You

Scenario

Likelihood

USPS Rates for Commercial Parcels

Amazon’s Move

Winner

Loser

1. New Contract, Higher Rates

65%

+12–18% on Ground Advantage/Priority

Amazon grudgingly accepts; slows insourcing

USPS (short term)

All other shippers (rate creep)

2. Gradual Amazon “Glide-Down”

30%

+8–12% initially, then higher

2–4 million packages/day shift to Amazon Logistics/FedEx over 18–24 months

Amazon (long term)

USPS + regional carriers

3. Full Break (unlikely)

5%

+25–40% emergency increases

Amazon accelerates own network; contracts heavily with FedEx/UPS

FedEx + private fleets

USPS viability

What Shippers Should Do Right Now

  1. Lock 2026 parcel contracts early If Scenario 1 plays out, every commercial shipper will face contagion increases on Ground Advantage and Priority Mail the moment Amazon signs a richer deal.

  2. Model a 15–25% USPS rate hike into your 2026 budget That’s the range we’re seeing in client simulations regardless of which scenario wins.

  3. Accelerate regional carrier diversification New entrants (Veho, Jitsu, Better Trucks, AxleHire, OnTrac) are scaling fast and still hungry for volume. A hybrid model blending USPS for rural/low-value with regionals for metro can blunt 8–12% of the coming increases.

  4. Revisit minimum volume commitments If USPS forces Amazon into commitments, they’ll likely push the same on larger shippers. Know your leverage before the RFP lands.


The Bigger Picture

The USPS built massive capacity betting that e-commerce growth would never stop. Now the two biggest drivers of that growth—Amazon and Walmart—are systematically insourcing the profitable metro volume and leaving USPS with mailboxes, rural routes, and overbuilt sorting centers.


Postmaster General Steiner’s reverse-auction gambit is the sound of an agency trying to avoid becoming the next Sears of delivery: still enormous, but increasingly irrelevant to the parcels that actually make money.

Amazon won’t walk away tomorrow. But every percentage point they shift to their own vans is one less reason for the rest of us to keep paying tomorrow’s higher rates.

At Gain Consulting, we’re helping shippers run the exact scenarios above—quantifying exposure to USPS rate creep and building exit ramps before the 2026 contract is even signed.


The auction may never happen. The rate increases almost certainly will.

Don’t wait for the gavel to fall. Contact us today for a complimentary 2026 USPS Exposure Assessment—we’ll show you exactly how much this drama is going to cost you, and how to make someone else pay for it instead.


Sources: Logistics Management, Reuters, ShipMatrix, LPF Spend Management – December 5, 2025

 
 
 
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