Dow Jones soars above 23,000. Is it too stretched? >>> READ MORE

FedEx Wins New 7-Year Contract With USPS

It outbid rival UPS to extend its current deal


fedex_trucks_plane_logos_630_flickrFedEx (NYSE:FDX) will continue to carry Express Mail and Priority Mail for the United States Postal Service.

The company has won a $10.5 billion contract to extend the service for seven more years. It’s current contract expires this fall, Bloomberg notes.

Post Office Suing Lance Armstrong for Millions
Post Office Suing Lance Armstrong for Millions

However, the new deal may not be a sweet as its former arrangement. According to one estimate, FedEx received $1.6 billion from the Postal Service last year. FedEx did not reveal the exact terms of the new contract, but the term and price suggests that it will get $100 million a year less going forward.

The reduced price likely resulted from FedEx outbidding rival shipping service UPS (NYSE:UPS), which announced last year that it planned to bid aggressively for the contract. UPS is estimated to have generated just $126.4 million from Postal Service contracts last year.

Last year, the Postal Service lost almost $16 billion. The service is looking to pare services and close low-traffic post offices to cut costs.

Shares of FedEx climbed almost 2% in Wednesday morning trading, while UPS dipped slightly.

Article printed from InvestorPlace Media,

©2017 InvestorPlace Media, LLC