Internal document reveals Amazon's secret contingency plan for life without the US Postal Service
· Business Insider
Victor J. Blue/Bloomberg via Getty Images
- Amazon developed Project Aurelian as USPS contract negotiations became strained.
- Amazon's own delivery service aims to reach 95% of ZIP codes, covering 99.9% of US demand: document
- The plan includes new delivery warehouses and local partnerships to reduce carrier dependency.
Amazon's negotiations with the US Postal Service became so strained last year that the company started preparing for a future without one of its most important delivery partners.
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The internal contingency plan, called Project Aurelian, explored how Amazon could continue serving customers if a new USPS contract fell apart, according to an official planning document reviewed by Business Insider and people familiar with the project.
Amazon and USPS ultimately reached a deal in April. But the planning exercise has reshaped Amazon's future delivery strategy.
The e-commerce giant now aims to expand its network to about 39,400 US ZIP codes by 2029, about 95% of total ZIP codes and enough to cover 99.9% of US customer demand, the document shows. Under this new "dual coverage" approach, Amazon wants every addressable ZIP code served by both its own delivery network and at least one third-party carrier, giving it two ways to reach customers.
It's Amazon's most ambitious effort yet to reach customers through its own delivery network in nearly every corner of the country. This protects the company if delivery partners change their plans, and gives it more leverage in future negotiations.
An Amazon spokesperson said the projections in its document are preliminary and could change, adding that the document reflected the views of a "limited group."
"We're always forecasting across our operations, and we routinely produce and revise many versions of planning documents," the spokesperson said. "That said, no one should be surprised that Amazon works to build redundancy into its logistics network to ensure continuity of service for customers." USPS declined to comment.
A high-stakes USPS negotiation
Project Aurelian began with a simple but consequential question: What would Amazon do if it no longer had USPS?
The company has historically been the Postal Service's largest customer, while USPS gives Amazon delivery reach in rural and remote parts of the country where its own network is thinner.
The negotiations became publicly contentious. Amazon said the Postal Service walked away from talks in December at "the eleventh hour", creating "significant uncertainty."
The new agreement, reached in April, set a minimum volume of 1.27 billion Amazon packages, 19% below the prior agreement's minimum, according to the internal document obtained by Business Insider.
But the Project Aurelian analysis exposed a vulnerability that remained even after the companies struck a deal.
Amazon identified what it called the "structural fragility of external carrier dependency" during the USPS contract renegotiation. If an outside carrier abruptly changes its volume or contract terms, areas without an Amazon delivery alternative can face immediate service problems with "no mitigation lever available," according to the document.
An Amazon delivery person organizing packages in Queens, New York.Lindsey Nicholson/UCG/Universal Images Group via Getty Images
How Amazon gets to nearly 40,000 ZIP codes
Amazon's plan to reach the rest of the country partly relies on building more conventional delivery stations. These are the final facilities in the shipping process that receive packaged items from fulfillment centers before sorting and staging them for drivers to deliver to customers.
But there's a lot more to the plan, which rests on three main pieces.
First, Amazon plans to open 165 core delivery stations between 2027 and 2029, including 50 in new areas. This part of the expansion would add roughly 3,300 ZIP codes where Amazon can offer dedicated van delivery. It's also pursuing Project Mercury, a plan to build more than 1,000 same-day fulfillment centers and put popular inventory within 10 miles of most Prime customers, as Business Insider previously reported exclusively.
The second piece is Hub Delivery, which pays local businesses, particularly in rural areas, to deliver Amazon packages. Amazon expects the program to add roughly 4,500 ZIP codes with minimal new capital spending. Project Aurelian identified it as Amazon's most attractive option, based on cost and customer experience, in areas where a dedicated delivery station was not economical, according to the document.
Lastly, Amazon plans to lower the minimum number of packages a ZIP code must generate before it will offer its own delivery service there, from 50 a day to eventually no minimum at all. That would allow existing delivery stations to add nearby, low-volume ZIP codes to their routes without requiring new buildings, the document states.
Together, those approaches would expand Amazon's delivery footprint from 23,700 ZIP codes today to 26,500 in 2027 and roughly 39,400 by 2029. Amazon's document describes the end goal as reaching "all addressable ZIPs."
For comparison, USPS says there are roughly 41,600 ZIP codes nationwide, though that figure includes specialized ZIP codes assigned to individual organizations and others that are not typical residential delivery territories.
Amazon's own network is also expected to carry a larger share of its packages. Its internal forecast projects first-party delivery rising to 88.7% of US packages by 2029, as Business Insider previously reported exclusively.
Amazon still needs USPS
For all of Amazon's expansion, it is not preparing to cut USPS out.
Amazon's current US Postal Service contract expires in September 2029, according to the planning document. The company assumes the partnership will be renewed, citing "mutual dependency" between Amazon and USPS.
The economics help explain why. Without a renewal, Amazon estimates its network would need to absorb an additional 5.2 million packages in an average peak week, build dozens of new delivery sites, and spend about $323 million in additional capital, according to the document.
Amazon is nevertheless investing heavily to ensure it has alternatives. Its broader US last-mile delivery plan calls for $17.6 billion in building-related spending in 2027 and 2028, $7 billion more than its previous forecast. That figure includes projects beyond the Aurelian-driven expansion.
The strategy is not to eliminate outside carriers, but to make Amazon less dependent on any one of them. Project Aurelian found that the cost of an unexpected carrier disruption could exceed the ongoing expense of growing an Amazon-controlled delivery network.
"We'll continue to invest in our last-mile network and to partner with carriers like UPS, FedEx, and USPS to deliver for customers," the Amazon spokesperson told Business Insider.
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