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  • 1440 Daily Digest

UPS Expands USPS Partnership

UPS announced it will become the primary air cargo provider for the United States Postal Service following unsuccessful negotiations between FedEx and USPS. The USPS, which doesn’t own or operate any aircraft, has had a relationship with FedEx since 2001 for US Mail, Priority Mail, and Priority Express Mail air transportation.

The USPS has been transitioning more parcels to ground transportation to save costs, aiming to reduce annual air transportation expenses by 90% over two years while saving around $1B per year. USPS payments to FedEx totaled $1.7B in 2023, down from $2.4B in fiscal year 2020, largely attributed to USPS’ shift to ground operations. FedEx said it is implementing cost-cutting measures and the termination of the USPS deal could potentially have an impact on hundreds of pilot jobs.

UPS, one of the world's largest package delivery companies, reported $91B in revenue in 2023, with $308M in USPS business. The specifics of the UPS contract remain undisclosed. FedEx will continue providing domestic air transportation services until its contract expires Sept. 29.

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