POSTAL SERVICE, FEDEX REACH AGREEMENT ON BUSINESS ALLIANCE

POSTAL SERVICE, FEDEX REACH AGREEMENT ON BUSINESS ALLIANCE

WASHINGTON — The U.S. Postal Service and FedEx Express have formed a business alliance based on air transportation and retail business agreements. Under this alliance, the Postal Service will buy space on FedEx airplanes to transport Express Mail, Priority Mail and First-Class Mail and FedEx will locate overnight service collection boxes at post offices nationwide.

“The Postal Service delivers Main Street, and FedEx provides an air fleet,” said Postmaster General William J. Henderson. “Together with FedEx we have found a way to give the American consumer greater choice, flexibility and convenience. These agreements will leverage two great networks – the extensive reliability of FedEx planes and the coast-to-coast retail presence of the Postal Service.”

The Postal Service has determined an integrated national air transportation network with a highly reliable transportation supplier is needed to meet customer needs for more reliable service, reducing costs and managing cost growth in future years.

The Postal Service will pay FedEx approximately $6.3 billion over seven years for shared access to the FedEx national air transportation network. With more than 650 aircraft, FedEx is one of the largest airlines in the world. This agreement will provide one integrated national air transportation network for the Postal Service. The transportation agreement will begin in August 2001.

“Whenever the public and private sectors work together, the real beneficiary is the American public,” said Frederick W. Smith, chairman, president and CEO of FedEx Corp. “These two service agreements create a winning business situation.”

The retail agreement gives FedEx the opportunity to place FedEx self-service collection boxes on postal property. This non-exclusive business concept will be open to any company that offers overnight package service with a national reach. Each day some seven million customers go to one of 38,000 postal outlets nationwide. Over the life of the agreement, FedEx has the option to place thousands of boxes at post offices nationwide. The estimated value of the agreement could range from a minimum of $126 million to more than $232 million, depending upon the number of boxes placed. This retail agreement will be launched with an operational test in February, and FedEx expects to place thousands of drop boxes throughout the country within the next year.