The United States Postal Service (USPS) has selected United Parcel Service (UPS) as its new primary air cargo provider.
USPS’s new long-term contract with UPS effectively brings its existing partnership with FedEx, which stretches back over 20 years, to an end.
The new contact with UPS, announced on April 1, 2024, is scheduled to begin on September 30, 2024, for a five-and-a-half-year minimum base term.
FedEx confirmed in a SEC filing that its agreement with USPS will expire on September 29, 2024, after a decision was reached on March 29, 2024, following extensive discussions.
“FedEx and the United States Postal Service have had a long and productive relationship for more than 20 years. Over time, our respective strategies have shifted as we transform our networks and operations for the future,” a spokesperson for FedEx said.
FedEx had made clear its desire to continue the contract with the USPS but that the companies were unable to reach “mutually agreeable terms”.
The USPS said that its “requirements were reevaluated” due to “dramatic changes” in the industry since its 10-year Delivering for America plan was initiated in March 2021.
“A core strategy of the Postal Service’s Delivering for America plan is to optimize and improve the efficiency of both national and local transportation. Our objective in this area is to reduce our overall transportation cost by $3 billion over the next two years, including $1 billion in airfreight cost savings already achieved,” read a statement following the new deal.
The USPS added: “Finalizing this agreement is a key step toward achieving our operational and financial sustainability goals.”
According to UPS the contract is effective immediately and “greatly expands” its existing relationship with the USPS.
“Together UPS and USPS have developed an innovative solution that is mutually beneficial and complements our unique, reliable and efficient integrated network,” UPS Chief Executive Officer Carol Tomé said.
Following a transition period, UPS will become the USPS’s primary air cargo provider and move the majority of USPS air cargo in the US.
