Emery wins round with USPS

By Staff -- Logistics Management, 10/1/2000

The U.S. Postal Service (USPS) has agreed to pay Emery Worldwide Airlines an increased rate for its Priority Mail contract with the airfreight company, after Emery won a judgment against the USPS in federal court in late August. Emery, a subsidiary of CNF Inc., sued the USPS in the U.S. Court of Federal Claims, saying it was being underpaid for sorting and transporting Priority Mail for the government agency.

The court agreed and issued a summary judgment ordering the USPS to abide by its 1997 contract with Emery, calling the Postal Service's refusal to comply with the pricing agreements in the five-year contract "indefensible." But it turned down Emery's request to have the USPS declared in breach of contract, which would have allowed the aircargo carrier to suspend operations at its 10 Priority Mail sortation centers.

CNF spokesman James Allen says that the USPS has agreed to increase the provisional rate paid to Emery for its Priority Mail services for 1999 and 2000. The company expects to receive $102.1 million in payment, he says, but is actually owed $173.4 million. That's because the USPS significantly underestimated the volume of Priority Mail that Emery would be required to handle and also requested changes in mail handing that increased costs, Allen says. He stresses that Priority Mail handling has not suffered while the contract was being disputed. "The operations of the contract have gone well from Day One and continue to go well now."