FedEx, USPS extend air express contract

Agreement on mail hauling reaches to 2024 after companies add four more years

FedEx and the Post Office said Thursday they’ve tacked on four more years to FedEx’s contract to haul premium U.S. mail products by air.

The contract was extended to Sept. 29, 2024 and is worth about $1.5 billion a year to FedEx Express, the Memphis-based company’s air express unit.

FedEx has been providing express air transportation to the U.S. Postal Service since 2001. The current agreement was executed April 23, 2013, and was to run through 2020.

The agreement calls for FedEx Express to provide airport-to-airport transportation of USPS Priority Mail Express and Priority Mail within the United States.

“We are pleased to be able to extend this agreement and to continue the outstanding service that FedEx Express has provided to the USPS for more than 16 years,” FedEx Corp. president and chief operating officer David J. Bronczek said. “This contract provides USPS with the operational reliability and flexibility they have come to expect from FedEx.”

FedEx Express unit revenue in the year ending last May 31 was about $26.4 billion.

FedEx shares have been trading over $190 in recent weeks after hitting an alltime high of $201.57 in December. The stock closed Thursday at $191.18 a share, down $2.65.

The mail contract helps Memphis because FedEx uses extra volume from mail to maximize efficiency of its domestic airline fleet and the world hub at Memphis International Airport.

FedEx looms large at the airport, chipping in about 38 percent of revenues that keep the airport open for cargo and passenger carriers alike.

U.S. mail from across the country passes through the hub, putting planes, people and facilities to work in the daytime lulls between FedEx’s busier overnight hours.