United Parcel Service (UPS) will be the primary air cargo provider for the United States Postal Service following the award of a new contract that was announced Monday, April 1.

Terms/details of the contract weren’t revealed, but UPS noted that the deal is “significant.” It will result in the multinational shipping, receiving and supply chain management company moving the majority of the Postal Service’s air cargo in the United States.

UPS is now the primary air cargo contractor to the United States Postal Service.

“Together UPS and USPS have developed an innovative solution that is mutually beneficial and complements our unique, reliable and efficient integrated network,” said Carol B. Tomé, CEO of UPS, a partner in ASI’s Business Savings Program, which offers members exclusive deals.

UPS rival FedEx had been the Postal Service’s primary air cargo partner for more than 20 years, servicing USPS’s Priority Mail and other fulfillment offerings.

The current contract between FedEx and USPS ends Sept. 29. The Postal Service and FedEx were not able to come to terms on extending that deal. FedEx will service the Postal Service’s air cargo needs through the end of the end of September as the transition to UPS plays out.

FedEx generated $1.7 billion in business with the Postal Service in its fiscal year 2023, according to financial filings. In the fiscal year that ended September 2020, the tally was about $2.4 billion. The decline signaled, in part, a shift in logistical strategy from USPS that has seen less reliance on air cargo.

USPS was the biggest customer of FedEx’s air cargo Express segment. Freight Waves reported earlier this year that several hundred FedEx pilots’ jobs could be at risk as a result of losing the Postal Service contract. FedEx is in negotiations with a union, Air Line Pilots Association, over a new contract for its pilots.

UPS endured contentious contract negotiations with unionized drivers and logistics workers in 2023, but a deal was reached last year.

FedEx’s stock price was down following the UPS/USPS announcement. Still, FedEx has noted that it anticipates improved profitability in its fiscal 2025 financial year, as cost reductions and leaner operations help the bottom line.