It’s the start of a new partnership between the U.S. Postal Service and UPS, but it ends a long-term relationship with rival carrier FedEx.
The USPS said Monday that UPS will now be its primary air cargo supplier after FedEx remained in that position for more than two decades.
“This award is effective immediately and significantly expands the existing relationship between the two organizations,” UPS said in a company statement. “After a transition period, UPS will become the primary air cargo supplier to the USPS and will move the majority of USPS air cargo within the United States.”
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UPS called the partnership with USPS “mutually beneficial” as it aims to smooth out the already “integrated network” of both organizations.
The exact financial terms of the new partnership have not been made public, but Reuters reported that UPS noted the price was “significant.”
The outlet also noted that FedEx had earned about $2 billion annually from its contract with the USPS.
FedEx, meanwhile, said in a securities filing Monday that it was “unable to reach an agreement on mutually beneficial terms to extend the contract” and that it would make changes to offset the loss.
In Q4 2023 earnings, UPS reported consolidated revenue of $24.9 billion, down significantly (approximately 7.8%) from the $27 billion achieved in the same period last year.
Consolidated quarterly operating profit was $2.5 billion in the fourth quarter, down 22.5% from the same period in 2022.
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“2023 was a unique and difficult year and through it all we remained focused on controlling what we could control, stayed true to strategy and strengthened our foundation for future growth,” Carol Tomé, CEO, said at the time of UPS.
UPS was down more than 23% year over year as of late Monday afternoon.