The U.S. Postal Service (USPS) has contracted with FedEx Express to provide international transportation and delivery services for Global Express Guaranteed (GXG), its premier international product. FedEx replaced DHL on July 1 as the transportation provider for the post office's date-certain international service, available to 190 countries.

Under the new arrangement, customers will drop off GXG packages at their local post offices. FedEx will then pick up those packages, sort them, and handle the country-to-country linehaul and final delivery.

FedEx already had a strong relationship with the USPS. The Memphis-based express carrier provides some domestic air transportation services for Priority Mail, Express Mail, and first class mail. FedEx also has positioned nearly 5,000 drop boxes at U.S. Postal Service retail locations around the country.

"It's adding international on top of domestic for FedEx," says express industry consultant Satish Jindel of S.J. Consulting in Pittsburgh, Pa. "It's incremental to what they already do."

Although FedEx and the USPS may appear to compete in the international delivery segment, the integrated carrier does not view its relationship with the USPS as adversarial. "It's a different set of customers that USPS works with," says FedEx spokesperson Lourdes Peña. "We consider this an expansion of our business."

GXG shipping labels will feature both U.S. Postal Service and FedEx logos. About 7,400 USPS locations will initially offer the co-branded service, and more will be added as demand increases.