Postal Service secures billion-package lifeline from Amazon
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Amazon.com Inc. has reached a new agreement with the U.S. Postal Service, providing a lifeline to the beleaguered government agency and securing delivery for customers in rural America.
Under the deal, Amazon will retain about 80% of its existing deliveries with the Postal Service, or more than 1 billion packages per year, according to a person familiar with the matter.
“We’re pleased to have reached a new agreement with USPS that furthers our longstanding partnership and will let us continue supporting our customers and communities together,” Amazon spokesperson Terrence Clark said in a statement.
The Postal Service did not immediately respond to a request for comment.
Securing a deal with Amazon ensures that the Postal Service maintains most of the business from its largest customer, a safety net for the agency as it seeks to stem heavy financial losses year after year.
Financial terms of the agreement, which was earlier reported by Reuters, were not immediately available.
Shoring up the mail carrier’s finances is a critical priority for Postmaster General David Steiner, who has warned the agency could run out of cash as soon as early next year.
Steiner has asked Congress to raise the agency’s borrowing limit and auctioned off access to its delivery facilities for use by private-sector shippers. Amazon said it participated when bidding opened in February.
The Postal Service agreement also comes as Amazon works to speed up deliveries in rural America, where it relies on a combination of its own contract delivery drivers and the Postal Service.
Amazon last year disclosed a $4-billion investment in speeding up delivery times in rural areas, a push that includes recruiting business owners in small towns to be part-time parcel carriers to earn extra money.
By the end of this year, it expects to have 200 rural delivery stations where packages are staged for the final leg of delivery to customers’ doorsteps.
Soper and LaPara write for Bloomberg.
