April 1 (Reuters) – United Parcel Service will become the United States Postal Service’s (USPS) primary air cargo provider, the company said on Monday, as rival FedEx announced an end to its more than 20-year partnership with the postal service provider.
USPS was the largest customer for FedEx’s air-based Express segment, even as payments declined after the postal service shifted letters and packages from planes to more economical trucks as part of an operational revamp.
“It’s not a huge loss for FedEx, but it will impact their density… You’re losing consistency in terms of revenue from a pretty significant partner, but it wasn’t the most profitable business for them … it’s not all negative,” said Faisal Hersi, an equity analyst at Edward Jones.
USPS represented just about 4% of Express’ annual revenue, according to a Reuters calculation.
FedEx’s stock dips and UPS flat as USPS makes changes to its air cargo business
FedEx says its contract with USPS will end in Sept. after parties could not agree terms
FedEx Statement Regarding Expiration of USPS Contract
Note: In a Form 8-K filed with the Securities and Exchange Commission on April 1, 2024, FedEx Corporation announced the agreement between FedEx Express and the United States Postal Service (“USPS”) for domestic transportation services will expire by its terms on September 29, 2024. This decision was made on March 29, 2024, following extensive discussions.
