USPS replaces FedEx with UPS for air cargo transport

The United States Postal Service tapped the United Parcel Service for a five-and-a-half year air transportation service contract, kicking long-time partner FedEx to the side. The new contract is scheduled to start at the end of September and is expected to cut $3 billion in transportation costs for USPS over the next two years. Dramatic changes in the mailing and shipping marketplace prompted the change, according to a USPS statement. UPS confirmed the deal on Monday, describing the contract as “significant” in a company statement.

How has FedEx responded? The competitor shipping company released a statement saying the companies could not reach a compromise after their respective strategies had shifted. The company says the contract’s expiration means it can cut structural costs associated with supporting USPS. It predicts the savings from those cuts should impact FedEx’s profitability by next year. 

Dig deeper: Read my report in The Sift about UPS laying off 12,000 employees earlier this year.