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The U.S. Postal Service is transporting more First-Class Mail and Marketing Mail via air to satisfy its air cargo contract with UPS and avoid higher rates, according to a July 1 report from the agency's Office of Inspector General.
As part of its contract with UPS, which became the agency’s primary air transportation provider in 2024, the USPS guarantees a minimum daily average volume, with increased rates applying if volumes are a certain percentage above or below the negotiated amount.
The exact percentage was redacted in the report, which did not name UPS directly. However, it focused on the Postal Service's primary air cargo contract that began on Sept. 30, 2024, which aligns with the characteristics of the UPS agreement. The deal is valued at more than $10 billion and is effective through March 2030, according to the OIG.
The USPS didn't adequately consider declining volume for its Priority Mail service when solidifying the minimum volume thresholds, the report said. In the agency's 2025 fiscal year, volume for Priority Mail services plummeted 24.1% year over year as shippers shifted packages to slower but more affordable services.
