United Parcel Service (UPS) announced Monday it is becoming the primary air cargo provider of the United States Postal Service (USPS), replacing FedEx (FDX) in the position.
The shipping giant said it will become the primary air carrier, moving the majority of U.S. air cargo, after 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,” UPS Chief Executive Officer (CEO) Carol B. Tomé said in a statement.
USPS and FedEx negotiated through March 29, before ending negotiations after not being able to reach “mutually agreeable terms,” FedEx said in a statement. The company’s current contract with USPS runs through Sept. 29, after which FedEx said it will “implement adjustments” to its network, and will continue cost-cutting efforts that have improved profitability in recent quarters.
Both UPS and FedEx had a down 2023 after both shipping companies struggled as demand for their services, which spiked to record levels during the pandemic, finally started to fall as restrictions were largely eliminated and people didn’t need to rely as much on things like online shopping.
UPS shares fell 0.5% from their Thursday close at $147.82 each as of 9:44 a.m. ET Monday after the announcement, while FedEx was 1.6% lower at $285.13.