FedEx wins $10.5b US Postal Service contract

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FedEx Express has beat out competitor UPS as the sole recipient of a $10.5 billion express air contract with the US Postal Service (USPS).

The new seven-year contract will begin in October.

The Memphis-based operator has been providing service to USPS for 12 years with a contract that ends in September.

"This contract provides enhanced value and additional flexibility allowing the USPS to respond to possible changes", says David Bronczek, president and chief executive of FedEx Express. "We look forward to continuing our successful business relationship with the USPS."

FedEx had told investors in a July regulatory filing that it was aware it could lose the USPS contract or see it revised under less favourable terms. UPS had hoped to gain some of the new flying.

"UPS is disappointed in the U.S. Postal Service (USPS) decision to award the domestic airlift contract solely to FedEx," states UPS, adding that it has other continuing contracts with the postal service. In 2006, USPS awarded UPS with a $100 million per year contract to transport first class and priority mail to 98 US cities, which lasts until 2014.