Postal Service implied covenant not entered into with UPS on SurePost, JPMorgan says

The contract between UPS (UPS) and the United States Postal Service for SurePost expired on Dec. 31, 2024, and earlier this week the postal service issued an industry warning suggesting the two parties did not strike a new deal for SurePost, JPMorgan analyst Brian Ossenbeck told investors in a research note. The company points out that this is a different deal than the air freight contract that UPS won from FedEx (FDX) in 2024. JPMorgan says the issue is getting investors’ attention, but it has not seen any official comments from UPS. It expects UPS to review the strategic rational and financial implications on the Q4 earnings call on January 30. Overall, JPMorgan sees the move as a long-term positive for package rates as well as UPS, but says it is uncertain how well-prepared networks will be to insource SurePost volume immediately after the peak season, given that FedEx initially estimated its transition to a similar service would take about a year.

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