UPS has won a high-profile contract, likely to be worth several billion dollars, with the US Postal Service to become its primary air cargo provider, ending rival FedEx’s more than 20-year partnership with the postal service when the existing deal ends in September this year.
The financial terms of the new contract have not been disclosed, but UPS confirmed that it was “significant.” In comparison, FedEx’s contract with USPS was estimated to have been worth $10.5 billion over seven years when it started back in 2013. That $1.5 billion a year contract was extended in 2017 for a further seven years, until 2024.
“Mutually beneficial”
UPS said in a statement that the new contract “greatly expands the existing relationship between the two organisations.”
“Together UPS and USPS have developed an innovative solution that is mutually beneficial and complements our unique, reliable and efficient integrated network,” said UPS Chief Executive Officer Carol B Tomé.
The new contract, which was issued on April 1, 2024, calls for a five-and-a-half -year minimum base term. Implementation of the new deal is scheduled to begin on September 30, 2024, when USPS’s existing contract with FedEx expires.
FedEx will continue to provide air transportation services domestically and to Puerto Rico through the contract’s expiration.
FedEx’s position
