FedEx-USPS Deal Could Be Worth $5B

January 9, 2001 9:05 AM, EST

FedEx Corp. (FDX) and the U.S. Postal Service are close to a contract that could bring the Memphis-based company at least $5 billion in revenue over the next several years -- but would avoid ground delivery, the Wall Street Journal reported Tuesday.

FedEx would use its air resources to haul all postal Express Mail shipments, as well as Priority Mail shipments. Indeed, FedEx could end up handling most air transportation needs for USPS, according to the Journal.

It would be the largest contract in postal history, far surpassing the recently ended Emery Worldwide Airlines agreement, which was originally valued at $1.7 billion, according to the paper.

Emery still carries Express Mail under a separate 10-year agreement, set to end in 2004. The CNF Inc. (CNF) subsidiary is trying to stop the FedEx/USPS deal, stating that it and other airlines were unfairly excluded from competing for the job.

FedEx flies primarily at night, so some flights for USPS could take place during the day. Concentrating on air could avoid potential labor concerns – postal workers and FedEx pilots are unionized, but drivers in the fleet of ground trucks are not.