New contract makes UPS the primary air cargo provider for the US Postal Service

UPS is set to become the new primary air cargo provider for the United States Postal Service, the company announced Monday.

The shipping company said in a news release it has been awarded a "significant air cargo contract" by the USPS that is effective immediately and "greatly expands the existing relationship between the two organizations."

According to the news release, UPS will become the primary air cargo provider and move the majority of USPS air cargo in the U.S. following a transition period.

“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 officer Carol B. Tomé in the announcement.

In an emailed statement to USA TODAY, the USPS said the agreement with UPS will be for a minimum of five and a half years and implementation of the new contract is scheduled to begin on Sept. 30, 2024. Financial terms of the deal were not disclosed.

FedEx, USPS contract expires in September

FedEx, the current primary air cargo provider for the USPS, said in a regulatory filing its agreement with the agency will expire on Sept. 29, 2024, and that the parties were "unable to reach agreement on mutually beneficial terms to extend the contract." According to the filing, negotiations concluded on March 29 following "extensive discussions."

FedEx will continue to provide air transportation services domestically and to Puerto Rico through the contract's expiration on Sept. 29, according to the regulatory filing.

"The Postal Service’s decade-old contracts for air cargo services will expire later this year. 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," the USPS said in a statement.

"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," the statement reads.

"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," the statement concludes.

Gabe Hauari is a national trending news reporter at USA TODAY. You can follow him on X @GabeHauari or email him at Gdhauari@gannett.com.