FedEx Corp. said today it won a $10.5 billion contract to provide domestic air transportation services for the U.S. Postal Service.
The Memphis-based shipping giant had previously warned that the contract could be transitioned to another provider, like rival UPS, and that the terms and conditions of the new arrangement could be “less favorable” than the current contract, which expires in September 2013. The new contract begins in October 2013.
FedEx will keep the Postal Service contract to provide airport-to-airport transportation of Postal Service Express Mail and Priority Mail for another seven years.
“Following a rigorous evaluation of technical aspects, pricing, and other factors in the proposals, the Postal Service determined that the FedEx proposal represented the best value,” the agency said in a prepared statement.
The new deal allows for service improvements, capacity flexibility and other operational benefits, the Postal Service said.