Postal Service, FedEx form alliance

The U.S. Postal Service and FedEx Corp. have announced a unique business alliance that will allow the Postal Service to use FedEx's vast air transportation network and let FedEx take advantage of the Postal Service's many retail outlets. Deputy Postmaster John Nolan may have been joking when he said the Postal Service and FedEx Corp. are "interchangeable now," but few of his competitors are laughing. Nor are some members of Congress. Nolan made the remark at a press conference Wednesday to announce the partnership. The Postal Service will pay FedEx nearly $6.3 billion over seven years to fly Express and Priority Mail. The alliance could save the agency more than $1 billion. The Postal Service currently leases planes and rents space on commercial airlines to move mail. The Postal Service will continue to use space on commercial airlines, but will stop leasing an aging fleet of planes. "This should help in terms of cost savings and help [the Postal Service] in terms of efficiencies," said Robert McLean, executive director of the Mailers Council, an Arlington, Va.-based trade group. "They are getting a reliable network that is very productive. We are hoping it will result in more efficiencies." The alliance is scheduled to roll out in August, but it must first clear a legal challenge. Emery Worldwide Airlines sued USPS in federal court to block the contract. Emery, which last year sued to get out of a failed partnership to process and transport Postal Service Priority Mail, claims that the contract violates procurement regulations. The agency, Emery claims, is required to put up for bid any contracts exceeding $10,000. Nolan says the agency did an exhaustive analysis of potential business partners and found that FedEx was the best fit. A ruling on the case is expected by early spring. The retail part of the alliance is also sure to come under heavy scrutiny. FedEx will put collection boxes at post offices nationwide. It's the first private-sector company to gain such a privilege. FedEx expects to deploy 10,000 boxes during the first 18 months of the contract. Depending on the total number of boxes deployed, the deal will generate between $126 million and $232 million in revenue for the Postal Service. The added revenue and cost savings will come in handy for the agency, which lost money last fiscal year and is expected to finish in the red again this year. Private sector competitors, mainly United Parcel Service, questioned the arrangement, claiming it violates antitrust laws. "The retail arrangement is not exclusive," countered Nolan, adding that it was open to any company. When news of a possible alliance first leaked last summer, high-ranking Republicans raised questions about antitrust issues. Now that the deal is final, Hill sources speculate that members will take a close look at the details.
Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security


When you download a report, your information may be shared with the underwriters of that document.