ATLANTA — UPS will become the primary air cargo provider for the U.S. Postal Service (USPS), replacing FedEx Corp. Following a transition period, UPS will move the majority of air cargo in the U.S. for the postal service, according to UPS.
The Atlanta shipping company said April 1 that it had received an air cargo contract from the U.S. Postal Service that significantly expands an existing partnership between the two. Financial terms of the deal were not disclosed.
The USPS’s 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 five and a half 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 negotiations ended on March 29 after extensive talks.
FedEx Express will continue to provide air transportation services domestically and to Puerto Rico until the contract expires Sept. 29. UPS’s contract with USPS takes effect the next day.
During FedEx’s third-quarter conference call on March 21, Chief Customer Officer Brie Carere said the company had provided its services to USPS for more than two decades and that the two sides were still in negotiations.
USPS announced a four-year extension of its air cargo network contract with FedEx in 2020. The mail and delivery service said that the contract provided for domestic air transportation for U.S. Mail, Priority Mail and Priority Mail Express.
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 the 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 the USPS is looking to move more to ground shipments as a cost-saving tactic, air cargo shipments have been rising globally. Last month the International Air Transport Association said total demand for air cargo, which is measured in cargo ton-kilometers, climbed 18.4% in January compared with the prior-year period. That’s the highest annual growth in the figure since the summer of 2021.
Shares of United Parcel Service Inc. dipped slightly in afternoon trading April 1, while FedEx’s stock declined nearly 3%.
By Michelle Chapman, Associated Press Business Writer
The Associated Press is an independent global news organization dedicated to factual reporting. Founded in 1846, AP today remains the most trusted source of fast, accurate, unbiased news in all formats and the essential provider of the technology and services vital to the news business. The Trucker Media Group is subscriber of The Associated Press has been granted the license to use this content on TheTrucker.com and The Trucker newspaper in accordance with its Content License Agreement with The Associated Press.
