UPS will become the primary air cargo provider for the United States Postal Service. The Atlanta shipping company said Monday that it had received an air cargo contract from the US Postal Service that significantly expands an existing partnership between the two, the AP reports. UPS will move the majority of air cargo in the US for the Postal Service following a transition period, according to UPS. Financial terms of the deal were not disclosed. USPS' current air cargo contract with FedEx Corp. is set to expire in late September. The agency said in a statement that its contract with UPS will be for a minimum of 5½ years.
FedEx said in a regulatory filing that it wasn't able to reach an agreement on mutually beneficial terms to extend its contract with USPS. The company said that negotiations ended on Friday, after extensive talks. FedEx Express will continue to provide air transportation services domestically and to Puerto Rico until the contract expires on Sept. 29. UPS' contract with USPS takes effect the next day. During FedEx's third-quarter conference call on March 21, Chief Customer Officer Brie Carere said that the company had provided its services to USPS for more than two decades and that the two sides were still in negotiations.
In recent years, USPS has focused increasingly on lowering costs, and one avenue is through transitioning from air freight to ground transportation. In February, USPS Postmaster General Louis DeJoy said that USPS is looking to reduce its overall transportation costs by $3 billion over the next two years, which includes $1 billion cost savings already achieved in air freight. While USPS is looking to move more to ground shipments as a cost-saving tactic, air cargo shipments have been rising globally. (More US Postal Service stories.)
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