Amazon is preparing plans to significantly expand its in-house delivery network as negotiations with the U.S. Postal Service over a new shipping agreement have stalled, according to a report in The Washington Post.

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The move could reshape the U.S. parcel market and deal a major financial blow to USPS, which relies heavily on Amazon for package volume and revenue. Amazon ships billions of packages through the Postal Service each year and is its largest customer by revenue.

According to the Post, Amazon provides more than $6 billion a year to USPS, accounting for roughly 7.5 percent of the agency’s total revenue in 2025. Amazon had been seeking a new four-year contract extension under a negotiated service agreement that would have locked in shipping rates and higher volume commitments. Those formal talks have now largely ended without a deal.

Instead, USPS plans to hold a reverse auction in early 2026 to sell access to its mail facilities to the highest bidder. That would force Amazon to compete directly with other national retailers and regional delivery firms for postal capacity. In response, Amazon is now preparing plans to pull the bulk of its packages from USPS by the end of 2026.

The current shipping agreement between the two sides expires on Oct. 1, 2026.

Postmaster General David Steiner and Amazon Chief Executive Officer Andy Jassy met virtually in mid-November, and people familiar with the talks said Amazon still hopes a deal could emerge. But those same sources cautioned that alternative delivery plans are now actively being developed.

In a statement, Amazon spokesperson Steve Kelly called the Postal Service a “long-standing and trusted partner,” adding that Amazon remains committed to working with USPS and is evaluating options to make sure it can continue delivering for customers. USPS declined to comment on the negotiations.

Industry analysts warn that no private shipper could replace Amazon’s volume.

“There’s no business out there that can replace Amazon for the Postal Service,” Leo Raymond, Managing Director at Mailers Hub, told the Post.

Amazon has steadily expanded its own last-mile network in recent years, relying heavily on independent contractors and gig drivers. The company already operates one of the largest parcel delivery networks in the U.S. and continues to reduce its reliance on UPS, FedEx, and USPS.