USPS and Amazon are in a growing dispute that threatens future package deliveries, especially in rural areas, as their major contract is nearing expiration.
Contract Dispute Impacts Delivery Services
The contract between USPS and Amazon will expire in October, and negotiations have become contentious. USPS currently provides “last mile” delivery in rural areas for Amazon, while keeping FedEx and UPS from doing so.
This partnership generates approximately $6 billion for USPS, which is about 7.5% of its overall revenue. However, some argue that this contract is financially detrimental for USPS, particularly during high-demand periods like Prime Days and the holiday season, which can overwhelm their facilities and delay other mail services.
Postmaster General Considers New Bidding Process
In December, the new Postmaster General, David Steiner, suggested a “reverse auction” to foster competition for rural delivery services. This would allow access to USPS’s network to be sold to the highest bidder, potentially increasing revenue.
Amazon officials were surprised by this proposal, expressing concerns about the contract renewal. They noted their desire to maintain the partnership that has existed for over 30 years but acknowledged the need for further discussions.
Future of Deliveries in Rural Areas
Amazon has allocated $4 billion to expand its rural delivery service, which is currently more established in metropolitan areas. However, it has relied on USPS for rural deliveries until now.
If the contract is not renewed, areas in Central Colorado may initially lack coverage. Although Amazon announced plans for a distribution center near Buena Vista and is expanding facilities in Denver and Colorado Springs, these won’t be ready before the October deadline.
