FedEx-USPS Nationwide Pact Begins
The Memphis-based company launches the air transport portion of its $7.2 billion contract with the U.S. Postal Service to carry _ and sometimes sort _ Express, Priority and first-class mail.
FedEx Corp., a $20 billion global transportation company, is trying not to make a big deal of it. Trish Harwood, a company spokeswoman, said Monday should be “business as usual.” But the contract will mean up to 3.3 million pounds of mail transported on FedEx planes every day. Most of the mail will come through the company’s superhub at the Memphis International Airport.
Nearly 500 pilots, 250 aircraft mechanics and 1,200 cargo handlers have been hired by FedEx to service the $6.3 billion portion of the seven-year contract announced in January.
The first part, valued at $900 million, began in March with FedEx installing self-service drop-boxes at post office locations in Charlotte, N.C., and then Fort Lauderdale, Fla., with nationwide placement in July. By next year, 10,000 drop-boxes should be in front of post office locations.
FedEx has been working with the Postal Service since June, training their employees how to fill containers that are placed on FedEx’s aircraft. Also, in recent weeks, FedEx has tested transporting USPS shipments on selected routes.
“So, it is not that they are going to start _ bang _ on Monday with everything never having done it before,” Satish Jindel, principal of SJ Consulting Group in Pittsburgh, told The Commercial Appeal for a story published Sunday.
The Postal Service expects to save about $1 billion in air transportation costs while extending the market of its Express Mail next-day, and Priority two-day services.
There have been complaints that the agreement will make next-day mail delivery unavailable from rural areas of the United States.
Express mail from those areas would be offered on a two-day rather than a next-day basis.
John Kelly, vice president of USPS expedited package services, told Traffic World, an industry trade publication, that the Postal Service is hoping the FedEx deal will help boost priority mail volumes during the holiday peak season.
“We are certainly going to be advertising the fact that FedEx is our partner,” Kelly said.
Jindel said that’s what the Postal Service should do because even if FedEx has a few missteps along the way, the quality of service would still be far better than if they had no FedEx at all.
And any mistakes would have a greater impact on FedEx than the Postal Service.
David Webb, president of the Fedex Pilots Association, the union representing the carrier’s 3,800 pilots, said he doesn’t believe anything will go wrong with the Postal Service contract initially.
He said the holiday shipping season will be “more challenging than any that FedEx has seen before.” “It’s going to be interesting how FedEx makes these strategic decisions when there is too much freight on the ramp. Be it our core business freight or postal freight, which one gets left behind?” asked Webb.
Harwood said such a scenario is unlikely and that the company’s freight is its top priority.
