The United States Postal Service (USPS) announced a new contract with delivery giant UPS this week.
On April 1, officials announced that UPS will be the primary air cargo provider for USPS. Financial terms of the agreement were not disclosed.
The new contract with UPS is slated to begin on September 30, 2024, and calls for a five and a half year minimum base term.
USPS says that the 20 year partnership for air cargo services with rival shipper FedEx will expire later in 2024.
“Our requirements were reevaluated in light of the dramatic changes in the mailing and shipping marketplace that have occurred since our 10-year Delivering for America plan was initiated in March 2021. A core strategy of the Postal Service’s Delivering for America plan is to optimize and improve the efficiency of both national and local transportation. Our objective in this area is to reduce our overall transportation cost by $3 billion over the next two years, including $1 billion in airfreight cost savings already achieved. Finalizing this agreement is a key step toward achieving our operational and financial sustainability goals,” USPS said.
Reuters reports that the USPS contract brought FedEx nearly $2 billion per year.
