UPS (NYSE:UPS) announced on Monday that the logistics and supply chain management company has been awarded a major air cargo contract by the United States Postal Service (USPS). UPS did not disclose the financial terms of the contract but described it as ‘significant.’
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UPS will assume the role of the U.S. Postal Service’s primary air cargo provider after a transition period.
Shocking Shift: FedEx Loses USPS
This announcement was shocking, considering that FedEx (NYSE:FDX) had held this contract for a period spanning 20 years. Despite the declining payments, USPS retained its status as FedEx’s primary air Express customer. This continued even as air-based Express services shifted to more cost-effective truck transport for deliveries.
FedEx, in response, stated that it had been open to extending the contract with USPS, provided that the commercial terms were advantageous to FedEx shareholders. The company further affirmed its commitment to fulfilling its contractual obligations with USPS until the contract concludes in September, 2024.
Is UPS Stock a Buy or Sell?
Analysts remain cautiously optimistic about UPS stock with a Moderate Buy consensus rating based on 10 Buys, nine Holds, and one Sell. Over the past year, UPS stock has declined by more than 15%, and the average UPS price target of $159.95 implies an upside potential of 8.2% at current levels.
