FedEx Signs Seven-Year Air Transportation Contract With U.S. Postal Service
FedEx Corp. said its FedEx Express subsidiary has entered into a new, seven-year express air transportation contract with the U.S. Postal Service.
Under the $10.5 billion agreement, FedEx Express will provide airport-to-airport transportation of Express Mail and Priority Mail within the United States.
The new contract will begin in October, following the current agreement’s expiration in September, the company said.
“This contract provides enhanced value and additional flexibility allowing the [Postal Service] to respond to possible changes,” FedEx Express CEO David Bronczek said in a statement.
Volume under the pact is expected to be about the same as in the past, according to David Ross, managing director of Stifel Transportation & Logistics Research.
FedEx’s operating costs should decline over the course of the contract, due to aircraft fleet replacements and its general domestic express operational restructuring, Ross wrote in a note to investors on Wednesday.
FedEx Corp. is ranked No. 2 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.
