Topline
UPS announced Monday that it will become the primary air cargo provider for the United States Postal Service, in what it called a “significant partnership expansion,” replacing FedEx after the company failed to negotiate terms to extend its own contract.
Key Facts
UPS said it was awarded a “significant air cargo contract” from USPS, that makes the shipping chain the primary air cargo provider for the postal service after a transition period.
The company statement did not indicate specific financial terms of the contract, and UPS spokesperson Glenn Zaccara told Forbes the company does not have more information to share at this time beyond the press release.
Negotiations to extend FedEx’s contract concluded on March 29 after the two parties were “unable to reach agreement on mutually beneficial terms” for an extension, according to a April 1 SEC filing from the company.
FedEx’s contract is set to expire on Sept. 29, and the company will provide its air cargo services throughout the U.S. and Puerto Rico through its expiration date, according to the SEC filing.
Key Background
UPS is one of the world’s largest package delivery companies, and reported $91 billion in revenue in 2023, according to its website. FedEx, UPS’s direct competitor, reported $90.2 billion in revenue for 2023, but its full-year revenue and quarterly profit forecasts fell short in December. FedEx and USPS have had a “longstanding business relationship since 2001,” according to USPS. Their contract, which had FedEx providing transportation for “U.S. Mail, Priority Mail and Priority Mail Express,” was last renewed in 2020. FedEx was reportedly prepared to end its relationship with the postal service if it was unable to negotiate better financial terms.
Further Reading
FedEx Express revamp hangs on fate of USPS, pilot talks (Reuters)
FedEx profit misses, cuts full-year revenue forecast; shares sink (Reuters)
FedEx Express pilots seek to end mediation, union says strike possible (Reuters)
U.S. Postal Service Wants More Packages to Wrest Business From UPS, FedEx (Wall Street Journal)
