USPS to reduce FedEx spending in transformation plan!

The U.S. Postal Service reduced its spending on FedEx Express services by nearly 11% from fiscal 2021 to fiscal 2022, according to data compiled by David Hendel, a partner at the law firm Culhane Meadows.

FedEx remains the agency’s largest supplier in fiscal 2022, which ends Sept. 30. However, the Postal Service’s spending with the delivery giant is likely to decline again in fiscal 2023 as the delivery giant shifts volume from air cargo to ground shipping, according to an April press release.

U.S. Postal Service cuts FedEx spending

Every year since 1999, Hendel has compiled a list of the top 150 postal service providers based on data obtained through Freedom of Information Act requests.

The Postal Service is increasingly relying on trucks to deliver mail and packages between facilities under Postmaster General Louis DeJoy’s transformation plan to improve the agency’s finances.

That spells trouble for FedEx, which counted the Postal Service as its express unit’s largest customer as of Feb. 28, according to a securities filing. FedEx provides domestic airport-to-airport shipping services to the agency under a contract that expires in September 2024.

FedEx warned in the filing that it expects Postal Service shipments to decline in the fourth quarter of 2023 and next year. The company has been struggling recently with sharply falling package volumes, particularly on the express side, and it is cutting flying hours and parking planes to reduce costs.

Other carriers besides FedEx are also vulnerable to the Postal Service’s changes. The press release from Hendel and Culhane Meadows noted that American, United and Delta received nearly $45 million less in revenue from the Postal Service in fiscal 2022 than the previous year.

Some air cargo carriers fared better, with Kalitta Air, Amerijet International and Alaska Airlines reporting year-on-year increases in agency spending.

The Postal Service’s total external transportation spending increased by $1 billion year-over-year, despite its shift from air to land shipments, the company learned.

“The Postal Service attributes the increase to inflationary pressures resulting from increased fuel costs and supply imbalances,” the release said.

The USPS declined to comment on the list.

Editor ✎Estella/

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