Overview
- UPS has been awarded a significant contract to become the primary air cargo provider for the U.S. Postal Service, replacing FedEx after more than 20 years.
- The contract between UPS and USPS is set to start on Sept. 30, with a minimum term of five-and-a-half years, aiming to reduce USPS's transportation costs by about $3 billion over two years.
- FedEx's decision to not renew its contract with USPS came after negotiations failed to reach mutually beneficial terms, with the current contract expiring on Sept. 29.
- FedEx plans to adjust its network to drive efficiencies and improve profitability in fiscal year 2025 and beyond, following the contract's end.
- Shares of UPS rose following the announcement, while FedEx shares declined, reflecting the market's reaction to the new agreement.