UPS becomes US Postal Service’s primary air cargo provider

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UPS will become the United States Postal Service’s (USPS) primary air cargo provider, bringing to an end the agency’s more than 20 year partnership with FedEx.

“Together UPS and USPS have developed an innovative solution that is mutually beneficial and complements our unique, reliable and efficient integrated network,” UPS CEO Carol Tomé said in a press release

The financial details of the deal between UPS and the USPS has not been revealed but it is believed to be “significant.

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The USPS has been the largest customer for FedEx’s air express segment, despite the postal service moving away from transporting letters and packages by airfreight to road.

FedEx will continue to provide domestic transportation services by air for the USPS, until 29th September, when the current contract expires.

“The parties were unable to reach agreement on mutually beneficial terms to extend the contract, and negotiations concluded on 29th March, 2024, following extensive discussions,” FedEx said in a regulatory filing.

FedEx blamed the lack of an agreement on USPS’s proposed “strategic changes to its operations to reduce its reliance on the air network of FedEx Express,” which the carrier felt would have adverse effects on their operations and financial condition.

UPS’ shares rose 1.8% before the stock market opened, while FedEx’s stock fell more than 2%.