Dive Brief:

• UPS and the U.S. Postal Service have reached a "preliminary agreement" on aspects of a delivery plan for UPS' Ground Saver service, UPS CEO Carol Tomé said on an earnings call Tuesday.
• The two sides have come to an understanding on what the arrangement will entail from a volume and rates perspective, with further details to be solidified in the coming weeks and months, according to Tomé. If finalized, the agreement will result in the Postal Service providing last-mile delivery support for Ground Saver shipments.
• "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," Tomé said. The CEO added that UPS would provide more information at the end of Q4.

Dive Insight:

Ground Saver, which offers low-cost shipping in exchange for slower delivery speeds, formerly relied on the Postal Service when it was called UPS SurePost. In the previous arrangement, UPS would hand off millions of SurePost packages to USPS for delivery.

That changed at the start of 2025, as the Postal Service moved to overhaul agreements that leaned on its final-mile delivery capabilities under former Postmaster General Louis DeJoy. UPS opted to keep SurePost volume in-house due to cost and reliability concerns stemming from the agency's shakeup.

The two carriers began discussing a new Ground Saver deal once David Steiner took the helm as USPS postmaster general in July, Tomé said.

"When Mr. Steiner joined, [we] immediately started a conversation with him about how could we create a win-win-win relationship, a win for the postal system, a win for UPS and a win for our customers," Tomé said. "And the way to do that is to leverage what they're best at, which is final mile, and what we're best at is middle mile."

As discussions continue, UPS' Ground Saver volume has plummeted. Average daily volume for the service fell 32.7% year over year in Q3, in part due to UPS' push to reduce the number of Amazon packages it delivers, EVP and CFO Brian Dykes said on the earnings call.

Efficiently delivering Ground Saver volume in house amid the volume decline has been a concern for UPS. In Q2, the carrier's results took an $85 million hit due to making more Ground Saver delivery stops than expected.

"On the Ground Saver product, density continues to be a challenge," Tomé said on Tuesday's call. "We just can't seem to get more packages per stop on these residential deliveries. And this is one reason why we're so very excited about a renewed relationship with USPS."

In response to an inquiry about the UPS talks, the Postal Service told Supply Chain Dive in July it doesn't discuss the specifics of its commercial relationships publicly.