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NEW YORK – UPS will be the number one air cargo provider to the U. S. Postal Service.
The Atlanta-based shipping company announced Monday that it has won an air shipping contract from the U. S. Postal Service. This is a partnership between the two that expands the existing partnership between the two.
UPS will transfer most of the air freight to the U. S. The U. S. Department of Homeland Security will be released through the U. S. Postal Service after a transition period, according to UPS.
The financial terms of the deal were revealed.
The existing air shipping contract between USPS and FedEx Corp. It will expire at the end of September. The company said in a statement that its contract with UPS would be for a minimum of five-and-a-half years.
FedEx said in a regulatory filing that it was unable to reach an agreement on mutual terms to extend its contract with USPS. The company said negotiations ended on Friday, after lengthy discussions.
FedEx Express will continue to provide air transportation locally and to Puerto Rico until the contract expires on Sept. 29. UPS’s contract with USPS goes into effect the next day.
During FedEx’s third-quarter conference call on March 21, Brie Carere, director of visits, said the company has been offering services to the USPS for more than two decades and that the two sides are still in negotiations.
USPS announced a four-year extension of its air shipping network contract with FedEx in 2020. The courier and delivery service said the contract supplies domestic air transportation for the U. S. Mail, Priority Mail and Priority Mail Express.
In recent years, the USPS has focused on lowering prices, and the solution lies in transitioning from air to ground transportation. In February, USPS Postmaster General Louis DeJoy said the USPS is trying to reduce its overall transportation prices by $3 billion over the past year. next two years, including $1 billion in savings already realized in air travel.
As the USPS looks to orient itself more toward ground shipments to reduce costs, air freight shipments have increased globally. Last month, the International Air Transport Association said overall demand for air shipments, measured in tonne-kilometers of shipping, rose 18. 4% in January from the year-ago period. This is the annual expansion since the summer of 2021.
Shares of United Parcel Service Inc. fell on Monday afternoon, while FedEx shares fell only about 3%.
Michelle Chapman, Associated Press