Does FedEx Still Work with USPS? Understanding Ground Economy Service
Q: Does FedEx still partner with USPS for package delivery? → A: Yes, but only through FedEx Ground Economy service, which replaced SmartPost in 2020. The original air cargo partnership between FedEx and USPS expired September 29, 2024, when UPS became USPS’s primary air cargo provider.
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The FedEx and USPS partnership has evolved significantly since its 2001 inception. While the major air transportation contract ended in late 2024, FedEx Ground Economy continues to leverage USPS’s final-mile delivery network for cost-effective shipping solutions.
FedEx Ground Economy delivers packages weighing 1–70 pounds in 2–7 business days across the continental United States, Hawaii, Alaska, and U.S. territories. This service saves shippers up to 20% compared to standard FedEx Ground rates by utilizing USPS’s comprehensive 160 million address delivery network for the final stretch. For answers to common questions about USPS services and cost-saving strategies, see our USPS Frequently Asked Questions guide.
What Happened to the FedEx and USPS Air Cargo Partnership?
The landmark air cargo partnership that began in 2001 officially ended September 29, 2024. UPS was awarded USPS’s primary air cargo contract, becoming the new provider for the majority of USPS’s domestic air transportation needs.
This change reduced FedEx’s annual business with USPS from $2.4 billion in fiscal 2020 to $1.7 billion in fiscal 2023. The partnership generated substantial revenue for both carriers over two decades:
- FedEx provided long-haul air transportation for USPS mail and packages
- USPS handled final-mile delivery through its extensive postal network
- The collaboration improved delivery efficiency by 20% during peak operation years
- Combined network reached over 220 countries internationally
Why Did the Partnership End?
USPS restructured its air cargo relationships as part of its “Delivering For America” 10-year plan. The agency sought competitive bids from multiple carriers, ultimately selecting UPS over FedEx for the primary air transportation contract.
What does this mean for shippers? While the air cargo relationship changed, FedEx Ground Economy continues operating with USPS for final-mile delivery of ground packages. Many customers still wonder can I drop off FedEx at USPS or can I ship FedEx from USPS locations, which depends on the specific service being used.
How Does FedEx Ground Economy Work with USPS?
FedEx Ground Economy (formerly SmartPost) maintains the collaborative model that made the original partnership successful, and shippers can review the full range of FedEx Services And Shipping Options to determine which solution best fits their needs. FedEx handles the long-distance ground transportation, while USPS completes the final-mile delivery to residential addresses.
Here’s how the process works:
- Package pickup: FedEx collects packages from shippers
- Ground transportation: FedEx moves packages to regional USPS facilities
- Final-mile delivery: USPS delivers packages to the re
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For official rates and service details, see FedEx.
FAQ: Fedex and Usps Partnership
Is FedEx still partnered with USPS in 2026?
Yes, but only through FedEx Ground Economy (formerly SmartPost), which uses USPS for final-mile delivery. The two-decade air cargo contract ended September 29, 2024, when UPS became USPS’s primary air transportation provider.
The 2020 Air Cargo Split: What Actually Ended
The most consequential change in the FedEx–USPS relationship was the expiration of the air cargo contract in 2020. For roughly two decades, FedEx flew a large share of the Postal Service’s Priority Mail and First-Class air network on its planes — the single largest commercial air-cargo arrangement in the country at the time. When that contract lapsed, USPS moved the bulk of the business to UPS. So the partnership that most people picture — FedEx aircraft hauling the mail — is the one that no longer exists.
This matters because it is easy to conflate two very different relationships. The air cargo contract was FedEx carrying USPS volume. The surviving relationship runs the opposite direction: USPS carrying FedEx volume on the final leg of certain ground shipments. If you read that FedEx and USPS “ended their partnership,” that headline was about the air side. The last-mile handoff on economy parcels continued.
From SmartPost to Ground Economy: The Rebrand and the USPS Handoff
FedEx SmartPost was rebranded FedEx Ground Economy, but the mechanic that defines it stayed the same: FedEx line-hauls the parcel through its network and injects it into the local post office near the destination, where a USPS letter carrier makes the actual delivery to the door or mailbox. This is why a package you booked with FedEx can show a final “Delivered by USPS” scan, and why it can land in your cluster mailbox rather than on your porch.
The handoff is designed for low-cost, non-urgent residential parcels, so it trades speed for price. It also explains a recurring tracking quirk: events go quiet during the FedEx line-haul, then reappear with USPS scans once the parcel is inducted. Nothing is wrong — the two systems simply do not share a single event stream in real time.
How to Tell If USPS Will Finish Your FedEx Delivery
Check the service level on the label or tracking page. If it reads Ground Economy (formerly SmartPost), the final mile is almost certainly USPS. FedEx Home Delivery and FedEx Ground, by contrast, stay on FedEx vehicles end to end. When a tracking page lists a USPS tracking number alongside the FedEx one, that is the induction handoff in progress.
When You Want One Carrier Start to Finish
The dual-carrier model is cheap but adds a seam where delays and scan gaps happen. If you would rather keep a shipment on a single network, USPS Ground Advantage carries the parcel post-to-door without a handoff, and UPS Ground stays on brown trucks the whole way. Booking those services at commercial rates — without a monthly account — is exactly what ParcelPath is built for, so you can pick the single-carrier path when predictability matters more than shaving the last bit of cost.
Tracking a FedEx Ground Economy Parcel Through the USPS Handoff
The single most confusing part of the FedEx and USPS relationship for recipients is tracking. A FedEx Ground Economy label starts life with FedEx scans as the parcel moves through FedEx line-haul, then goes quiet for a stretch, and finally reappears with USPS delivery scans once the local post office takes over the last mile. That silent gap is not a lost package — it is the handoff itself, the window in which the parcel is being injected into the USPS stream but has not yet been scanned into a USPS facility. If you enter the FedEx tracking number and see no movement for a day or two after an “in transit” scan, that is the expected behavior of a service built to hand the final leg to the Postal Service.
Practically, this means you often have two usable tracking numbers for one shipment: the FedEx number the shipper gave you, and a USPS number that appears once the handoff completes. Checking the FedEx number is best early in the journey; checking USPS Informed Delivery or the USPS site is more accurate once the parcel is close to home.
Why the USPS Final Mile Suits Residential, Not Business, Delivery
Handing the last mile to USPS is what makes Ground Economy economical, but it also shapes where the service shines and where it stumbles. Because letter carriers already visit every residential address six days a week, adding a Ground Economy parcel to that route costs almost nothing extra, which is exactly why the service targets lightweight residential e-commerce rather than time-critical business freight. The trade-off is speed and precision: USPS final-mile delivery does not offer the tight appointment windows, guaranteed morning delivery, or dock-level commercial handling that a straight FedEx Ground or Express service provides. For a business shipping documents or freight to a loading dock on a deadline, the USPS handoff is the wrong tool; for a retailer sending a two-pound parcel to a home mailbox, it is often the cheapest reliable option available.
How the USPS Handoff Reaches PO Boxes and Rural Routes
One underappreciated consequence of the USPS final mile is where a FedEx Ground Economy parcel can actually go. Standard FedEx Ground cannot deliver to a PO Box, because a private carrier has no access to the postal box array — but because Ground Economy hands the last leg to USPS, those parcels can reach PO Boxes and the hard-to-serve rural routes that only the Postal Service covers six days a week. For a shipper sending to a customer who receives mail at a PO Box or lives on a remote rural route, this is a genuine advantage of the partnership rather than a limitation. The trade-off remains speed: reaching those addresses through the postal network is economical but slower than a door-to-door private-carrier service, so it suits patient residential e-commerce rather than time-critical shipments.
Part of our FedEx Frequently Asked Questions guide. Related: FedEx Abbreviations, FedEx Blind Shipment, Does FedEx Deliver to Post Office.
