UPS Just Inked a Major Deal With the U.S. Postal Service — And Ended a 20-Year Relationship With FedEx The U.S. Postal Service named UPS as its primary domestic air cargo provider.
By Emily Rella
Opinions expressed by BIZ Experiences contributors are their own.
It's the beginning of a new partnership between the U.S. Postal Service and UPS — but it ends a long-term relationship with rival carrier FedEx.
The USPS said on Monday that UPS would now be its primary air cargo provider after FedEx had stood in the position for over two decades.
"This award is effective immediately and greatly expands the existing relationship between the two organizations," UPS said in a company release. "Following a transition period, UPS will become the USPS's primary air cargo provider and move the majority of USPS air cargo in the US."
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UPS called the partnership with the USPS "mutually beneficial" as it aims to smooth out both organization's already "integrated network."
The exact financial terms of the new partnership have not been publicly disclosed, but Reuters reported that UPS noted the price was "significant."
The outlet also noted that FedEx had made an estimated $2 billion annually from its contract with the USPS.
FedEx, meanwhile, said on Monday in a securities filing that they were "unable to reach agreement on mutually beneficial terms to extend the contract" and that it would make adjustments to make up for the loss.
In Q4 2023 earnings, UPS reported consolidated revenues of $24.9 billion, down significantly (7.8% roughly) from the $27 billion it brought in at the same time last year.
Quarterly consolidated operating profit came in at $2.5 billion in Q4, a 22.5% drop from the same time in 2022.
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"2023 was a unique and difficult year and through it all we remained focused on controlling what we could control, stayed on strategy, and strengthened our foundation for future growth," UPS CEO Carol Tomé said at the time.
UPS was down over 23% year over year as of Monday late afternoon.
