FedEx Wins $10.5 Billion Postal Contract

Why compete with the post office when you can profit from it?

By Rich Smith – Apr 24, 2013 at 5:38PM EST

Sometimes it seems less like FedEx (FDX 0.02%) is competing with the U.S. Postal Service, and more like it's depending on USPS to keep its profits going.

On Tuesday, FedEx announced that its FedEx Express subsidiary has signed a seven-year, $10.5 billion contract to haul mail around the country for USPS, extending a current contract that expires in September through late 2020. (That's assuming USPS is still in business in 2020.)

FedEx Express will provide airport-to-airport transportation of USPS Express Mail and Priority Mail within the U.S., continuing an arrangement it's had in place for 12 years now.

FedEx shares reacted positively to the news, rising 1.4% in Wednesday trading to close at $94.46.

Rich Smith is a contributing Motley Fool defense and stock market analyst covering publicly traded and emerging companies in defense, space, aerospace, and other sectors. Prior to The Motley Fool, Rich practiced international corporate law for Clifford Chance in Russia, and for the Russian-Ukrainian Legal Group in Moscow, Kyiv, and Washington, D.C. He holds a bachelor’s degree in international relations from the College of William & Mary, a law degree from the University of Baltimore, and a language certification from the International Institute of Russian Language & Culture in Tver, Russian Federation. The Globe and Mail once featured him as “one of the best stock pickers since 2009.”

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FedEx Wins $10.5 Billion Postal Contract

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