The Wall Street Journal and other business media report that FedEx has been successful in securing a renewal of its multi-billion contract to provide domestic U.S. mail air service for the U.S. Postal Service. The contract which runs for an additional seven years is reported to be valued at $10.5 billion, and calls for FedEx to support Express and Priority mail services between U.S. airports. FedEx’s original contract was awarded in 2001.
In its reporting the WSJ indicated that rival United Parcel Service actively sought to secure this latest contract and that FedEx may have agreed to tougher terms to win the business given the current cost crisis consuming the U.S. Postal Service.
Supporting the U.S. postal program with air services is an important tool for FedEx to continue to efficiently operate its air freight assets and infrastructure. This is especially important given the current structural issues impacting the industry.
Supply Chain Matters has no doubt that this latest contract process was both dynamic and competitive.