UPS has been awarded a contract by the United States Postal Service (USPS) to become its primary air cargo provider.
The contract is effective immediately, but there will be a transition period as UPS takes over from FedEx, which has had a long-term mail contract with USPS.
This new contract will see UPS move the majority of USPS air cargo in the US.
“Together UPS and USPS have developed an innovative solution that is mutually beneficial and complements our unique, reliable and efficient integrated network,” said UPS chief executive Carol Tomé.
Georgia-headquartered UPS announced its contract with the postal service on April 1.
Air Cargo News‘ sister title FlightGlobal reported that Tennessee-based FedEx said its domestic transportation agreement with USPS will expire on September 29 in a decision made “following extensive discussions”.
FedEx had been open to extending its contract to be the USA’s primary air mail carrier “if we could agree to commercial terms in the best interests of FedEx shareholders”, but says it was unable to reach a favourable agreement.
Over the course of a “long and productive relationship for more than 20 years”, the company says its strategies have shifted from those of the postal service ”as we transform our networks and operations for the future”.
At the conclusion of the contract, FedEx plans to adjust its network in a bid for greater efficiency and flexibility.
“The elimination of structural costs currently in place to support postal service volume will be addressed,” it said.
UPS has had a tough start to the year. In January, the company announced that its revenues in the fourth quarter dropped nearly 8% year on year as volumes fell in both the domestic and international segments.
The company said it would cut more than 12,000 jobs as part of efforts to reduce costs in light of continuing market weakness.
UPS to cut 12,000 jobs as market downturn bites
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