USPS Says FedEx Deal Still on Track

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The U.S. Postal Service said yesterday that it is still looking forward to implementing a seven-year shipping deal with air express carrier FedEx. The announcement followed last week's news that the USPS' Office of Inspector General is investigating the $6.3 billion, no-bid deal.

Under terms of the contract, FedEx will provide air transportation for certain postal services. The agreement is expected to take effect in late August. A second seven-year deal with the USPS allows FedEx to place self-service drop boxes in every U.S. postal location. Both agreements were reached in January.

The USPS will begin testing FedEx's transportation network in mid-June, said Paul Vogel, vice president of network operations at the agency.

"We are right on track with the transportation agreement [with FedEx]," Vogel said. "This is a tremendous agreement for us, and I know our customers are going to appreciate it starting Aug. 28."

The Office of Inspector General is looking into whether postal service managers misinformed their governing board by claiming that the shipping deal with FedEx would save the agency more than $1 billion.

The USPS' Board of Governors asked the office to review the contract after it was approached by Emery Worldwide Airlines, which claims that the deal would cost the USPS much more than the agency has indicated and would reduce service levels, according to a source familiar with the situation.

Vogel said yesterday that the shipping deal with FedEx would result in "a reduction in our costs and a stabilizing in our cost structure."

FedEx began installing its drop boxes at post offices in North Carolina in March and in Florida last week under its agreement with the USPS.

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