Amazon’s Potential USPS Contract Termination: Market Implications and Public Sentiment Analysis

This analysis is based on a December 4, 2025, Reddit thread [0] in the AMZN community, alongside external reports from TechCrunch [1], The Washington Post [2], and other sources, regarding Amazon’s reported consideration of terminating its delivery contract with the U.S. Postal Service (USPS), set to expire in October 2026. The current contract contributes ~7.5% of USPS’s 2025 revenue ($6 billion annually) [2][3], a significant stake given USPS’s reported $9.0 billion fiscal 2025 loss [5]. Amazon’s potential move follows stalled contract negotiations and President Trump’s push to privatize USPS [1][2], with the company already owning extensive logistics assets, including aircraft, Rivian vans, drones, and Zoox autonomous vehicles [0].

Public sentiment on Reddit leans negative, with 69% of engagement scores coming from bearish arguments [0]. The top concern is the unprofitability of last-mile delivery [0], with users questioning Amazon’s ability to replicate USPS’s cost efficiency, especially in rural areas where USPS already serves all locations [0]. A smaller segment of users noted Amazon’s existing, location-dependent delivery network (with branded vans in some areas and gig drivers in others) [0], while a low-engagement bullish argument suggested acquiring FedEx to leverage its infrastructure [0].

1. Location Dependence as a Scaling Barrier
   : Amazon’s current delivery model varies significantly by location (dense urban vs. rural) [0], indicating that scaling to a nationwide network would require uneven investment and could exacerbate cost disparities between regions. This inconsistency suggests that urban areas might see smoother transitions, but rural communities could face service disruptions or price hikes.
2. USPS’s Deepening Financial Vulnerability
   : The potential loss of Amazon’s revenue would intensify USPS’s existing fiscal crisis [5], increasing pressure on the agency amid ongoing privatization discussions [2]. USPS’s universal service obligation, which requires serving all U.S. locations, makes it uniquely positioned to serve rural areas at lower costs than Amazon could replicate independently.
3. Limited Market Confidence in FedEx Acquisition
   : The low engagement for the FedEx acquisition proposal [0] reflects public skepticism about the feasibility and cost of such a large-scale acquisition, as well as concerns about integrating two complex logistics networks.

• Amazon
  : Increased capital expenditure for network expansion, potential profit margin compression due to unprofitable last-mile delivery [0][1], reputational risk from rural delivery delays or price hikes [0], and antitrust scrutiny if it becomes a dominant nationwide postal service [2].
• USPS
  : A ~7.5% revenue decline amid already severe financial losses [5], threatening its ability to maintain universal service obligations.
• Customers
  : Rural consumers may face slower delivery times or higher costs if Amazon’s network fails to match USPS’s reach [0].

• Amazon
  : Greater control over delivery timelines and quality [0], potential efficiency gains from leveraging its existing logistics assets (drones, autonomous vehicles) [0], and reduced reliance on a third-party provider.
• USPS
  : The threat of losing Amazon’s business may accelerate reform discussions to improve operational efficiency and financial sustainability.
• Logistics Industry
  : The situation could drive innovation in last-mile delivery technologies and business models to address cost and accessibility challenges.

Key data points and findings include:

• Amazon’s USPS delivery contract expires in October 2026 and contributes ~7.5% of USPS’s 2025 revenue [2][3].
• USPS reported a $9.0 billion fiscal 2025 loss [5].
• Public sentiment on Reddit leans negative, driven by concerns about last-mile and rural delivery costs [0].
• Amazon has existing logistics assets but faces uneven scaling challenges due to its location-dependent delivery model [0].
• The potential contract termination is unverified by Amazon and USPS [3], and details about Amazon’s proposed delivery network remain limited.

This analysis provides objective context for decision-making and does not constitute investment advice.