WASHINGTON--The U.S. Postal Service awarded FedEx Corp.
contract Tuesday to provide domestic air transportation service for Priority and Express Mail.
FedEx is retaining the contract that was set to expire in September. The shipping giant was thought to be at risk of losing the lucrative deal, possibly to rival UPS.
Instead, FedEx will keep the air cargo deal for another seven years. The Postal Service said FedEx faced competitive process in order to retain the contract.
"Following a rigorous evaluation of technical aspects, pricing, and other factors in the proposals, the Postal Service determined that the FedEx proposal represented the best value," the agency said in a statement.
The new deal allows for service improvements, capacity flexibility and other operational enhancements, the Postal Service said. The agency is revamping its own network--including consolidating hundreds of mail processing facilities--in order to respond to plumenting letter volumes but a growing package delivery business.