UPS to Become the Primary Air Cargo Provider for USPS
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UPS will become the primary air cargo provider for the United States Postal Service.
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.
UPS will move the majority of air cargo in the U.S. for the postal service following a transition period, according to UPS.
Financial terms of the deal were not disclosed.
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and No. 4 on the TT 100 list of North America's largest logistics companies.
USPS’ current air cargo contract with FedEx Corp. is set to expire in late September.
FedEx ranks No. 2 on the TT100 for-hire list.
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 that 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 on Sept. 29.
During FedEx’s third-quarter conference call on March 21, Chief Customer Officer Brie Carere said that 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.
Air cargo shipments have been rising. Last month the International Air Transport Association said that 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 UPS rose nearly 2% before the opening bell April 1, while FedEx’s stock fell 2.1%
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