FedEx falls after announcing end of Postal Service agreement

FedEx this morning announced the agreement between FedEx Express and the United States Postal Service for domestic transportation services will expire by its terms on September 29. This decision was made on March 29 “following extensive discussions.” The company added, “FedEx and the United States Postal Service have had a long and productive relationship for more than 20 years. Over time, our respective strategies have shifted as we transform our networks and operations for the future. We have long said we would extend the contract with the USPS if we could agree to commercial terms in the best interests of FedEx shareholders. Although we were unable to reach mutually agreeable terms, we remain committed to delivering outstanding service through the completion of our contract in September.” Upon the conclusion of the contract, FedEx will implement adjustments to its network “that will drive efficiencies and create more flexibility.” The elimination of structural costs currently in place to support postal service volume “will be addressed and, in conjunction with our DRIVE efforts, FedEx profitability will improve in FY25 and beyond,” the company noted. Shares of FedEx are down 3% to $280.95 in midday trading.