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Blog / UPS to replace FedEx as USPS primary air cargo carrier
2 minutes read

UPS to replace FedEx as USPS primary air cargo carrier

Although FedEx broke the news on April 1, the end of their 20-year partnership with the United States Postal Service was no April Fool’s Joke.

According to the FedEx press release, after concluding extensive discussions, USPS and FedEx opted to let their existing agreement for domestic transportation services expire on September 29, 2024. Why? FedEx says, “our respective strategies have shifted as we transform our networks and operations for the future.”

USPS wasn’t left without an option for long, though. FedEx’s loss is UPS’s gain. With immediate effect, UPS begins the transition phase to “become the USPS’s primary air cargo provider and move the majority of USPS air cargo in the US.” What does this mean for the carriers? More importantly, how will this affect your business? We’ll tell you everything we know in today’s blog post.

What happened to the USPS and FedEx contract?

In FedEx’s statement, the carrier alluded that they were once open to continuing the relationship, saying, “We have long said we would extend the contract with the USPS if we could agree to commercial terms in the best interests of FedEx shareholders.” In addition to the stakeholders, the fate of approximately 300 pilots’ careers with FedEx depended on their ability to reach an agreement. Unfortunately, the two could not reach an agreement, with FedEx stating, “Although we were unable to reach mutually agreeable terms, we remain committed to delivering outstanding service through the completion of our contract in September.”

When FedEx and USPS could not reach agreeable terms, UPS swooped in, sealing a significant agreement with the postal service provider. After reduced business following 2023’s potential Teamsters strike and a downturn in the freight industry, this partnership could not have come at a better time. UPS Chief Executive Officer Carol B. Tomé said, “Together UPS and USPS have developed an innovative solution that is mutually beneficial and complements our unique, reliable and efficient integrated network.”

Does this spell bad news for FedEx (and you, as a FedEx client)?

USPS is responsible for approximately $2 billion of FedEx’s annual business. And with even fewer flying opportunities, this isn’t good for the already-unsatisfied FedEx pilots.

In spite of the uncertainty, the carrier offered an optimistic outlook, saying, “The elimination of structural costs currently in place to support postal service volume will be addressed, and, in conjunction with our DRIVE efforts, FedEx profitability will improve in FY25 and beyond.”

As FedEx readies itself to make up for the nearly $2 billion loss of income, now is an ideal time to reevaluate your FedEx contract. The team at ShipRx has been helping companies save on shipping costs for more than 30 years, and we have a 100% success rate. We’ll evaluate your current contract for free, and we only get paid once you start saving money, so there’s nothing to lose.

Book your free savings analysis now and begin saving money in as few as six weeks!

 

 

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