Amazon has announced a deal with the U.S. Postal Service to cut around 20% of its package delivery volumes with the agency.

According to Reuters, the deal represents a significant reprieve for USPS, which relies on Amazon for roughly $6 billion annually in revenue, and has warned in recent months that it could run out of cash by October. Previous reports also indicated that Amazon was initially considering a two-thirds reduction in delivery volumes with USPS, after the agency was said to have abruptly walked away from negotiations on a new contract to pursue a wider auction for its delivery services last December.

In an April 7 post to LinkedIn, Amazon senior public policy manager John Rosato explained how Amazon's decision to step away from talks "introduced real uncertainty" into the company's network planning, while significantly straining trust with USPS. With a deal now in place, USPS and Amazon now have "an opportunity to rebuild," he added.

"This is a strong outcome for both organizations," Rosato said. "It preserves a critical, multi-decade relationship while giving each side greater certainty to plan and operate."

The agreement, which still requires approval from the Postal Regulatory Commission, comes as USPS has been grappling with mounting financial pressures, having accumulated roughly $118 billion in net losses since 2007. At a recent hearing in Congress, Postmaster General David Steiner detailed how the agency is at a critical juncture, and claimed that less than a year from now, it will be unable to deliver the mail if the status quo is maintained.

"We are a self-financed, independent establishment of the Executive Branch that generally does not receive tax dollars for operating expenses, and we are confronting a severe financial crisis driven by revenue decline and statutory and regulatory constraints that limit our ability to respond," Steiner said.

USPS primarily relies on stamps and service fees for its funding, and has reported a financial shortfall in nearly every fiscal year since 2006, when Congress passed a law requiring the agency to fully fund worker retirement health care benefits for the next 75 years. Prior to that, the agency had largely operated in the black, with the retirement health care funding mandate creating an immediate and lasting strain on its finances that it's never fully recovered from.