UPS Reaches “Preliminary Understanding” With USPS To Resume Ground Saver Delivery Partnership
Almost a year after expired contract fallout, UPS and USPS are patching things up with “preliminary understanding” to resume Ground Saver delivery partnership.
The relationship between the two carriers hit the rocks early this year when UPS Ground Saver (previously called SurePost) service suddenly dropped support for PO Boxes, Alaska, Hawaii, Puerto Rico, APO/FPO addresses.
Last mile delivery contract negotiations between UPS and USPS broke down, with each placing blame on the other, until UPS finally announced they were moving to in-house SurePost/Ground Saver volume as part of Network of the Future initiative.
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Fast forward 10 months and it’s clear UPS came out on the losing end of that decision.
CEO Carol Tomé told investors on the Q3 2025 earnings call this week that as soon as new Postmaster General David Steiner took the reins at USPS in July, UPS immediately came to the table to find a mutually beneficial way to move forward.
In prepared remarks, Tomé said:
Moving to Ground Saver, in the third quarter, our Ground Saver average daily volume declined 32.7% year-over-year.
Due primarily to the actions we’ve taken with Amazon and to trim lower-yielding e-commerce volume, we recently reached a preliminary understanding on revenue and rates with the United States Postal Service to support last-mile delivery for our Ground Saver product.
There’s still more work to do, but we are confident we will come to an agreement that ensures our service levels will remain best in class.
She then provided further details in response to an analyst question about the USPS partnership.
As you know, David, the Postal Service has a new Postmaster General, and when Mr. Steiner joined, I immediately started having a conversation with him about how we could create a win-win-win relationship: a win for the Postal Service system, a win for UPS, and a win for our customers.
The way to do that is to leverage what they’re best at, which is final mile, and what we’re best at, which is middle mile.
I’m happy to tell you that we’ve reached preliminary agreement on what that looks like from a volume and rates perspective. We’re working through the details and we’ll get those details all ironed out over the next weeks and months, and by the end of the fourth quarter we’ll be able to give you more details.
I’m very, very pleased with where we are today and this new renewed relationship with the United States Postal Service.
The deal will also include last mile delivery for UPS Mail Innovations shipments as well, which is designed for small to medium-sized businesses that ship a significant volume of letters, documents, and lightweight or flat packages.
Unfortunately, it appears the benefits of the “preliminary agreement” won’t be realized in time to provide peak season rate relief for online sellers as Tomé advised investors it’s too early to say when to expect a positive impact on margins.
It’s too early. Don’t expect any benefit in the fourth quarter. It’ll start, we hope, knock on wood, by the beginning of the year.
It’s not just for our Ground Saver product, which is in our package business, but also for Mail Innovations. We’re excited about what that’s going to mean to our Mail Innovations margin looking forward. At the end of the year, we’ll give you more color.
Stay tuned for updates at the end of Q4.
