By Will Feuer

FedEx said talks to extend its contract with the U.S. Postal Service have broken down, and the parcel carrier will let the contract end in September.

FedEx said in a regulatory filing that it couldn't reach an agreement to continue providing U.S. transportation services to USPS that included mutually beneficial terms to extend the contract. FedEx has provided domestic transportation services to USPS for over 20 years.

In recent years, the USPS contract became a drag on FedEx's earnings. FedEx Chief Customer Officer Brie Carere said as recently as last month that the company was making progress on renegotiating the contract on more favorable terms.

FedEx has been re-tooling operations over the past year in a bid to cut costs and simplify the delivery giant's network. The company has been slashing billions in costs, spurred in part by an industry downturn in delivery volume. FedEx is also combining its Express and Ground delivery units, changing a decades-old operating structure.

Earlier Monday, FedEx rival United Parcel Service said it had been awarded a significant air cargo contract by the U.S. Postal Service, making UPS the primary air cargo provider for USPS.

Shares of FedEx fell more than 2% in premarket trading while UPS stock was up about 2%.

Write to Will Feuer at

(END) Dow Jones Newswires

04-01-24 0833ET