The main reason for the reduction in daytime flying is the expiration of a significant contract with the United States Postal Service (USPS) in September 2024. The USPS awarded this contract to UPS Airlines instead. The loss of this contract resulted in decreased revenue for FedEx Express and prompted cuts across its U.S. network.
"On the surface, this appears to be a loss for FedEx, and it certainly led to a loss in revenue for the carrier. This is the main reason why FedEx has been reducing daytime flying and has had to make cuts across its United States network due to the expiration of the USPS contract. However, the loss of the contract may not have been all bad for FedEx Express, and it could be a case of short-term loss, long-term gain, depending on the company's future moves."
Revenue from the USPS contract had reportedly been declining before its expiration. FedEx had invested heavily in infrastructure to support these operations but may have found that continuing was no longer beneficial.
The air freight industry is also experiencing reduced demand as passenger airlines have resumed widebody services post-pandemic. Increased competition from Amazon Air—whose fleet now approaches 100 aircraft—has further pressured traditional cargo carriers like FedEx.
Additionally, economic uncertainty in the U.S. has contributed to lower parcel shipping volumes and higher operating costs for cargo airlines. In response, FedEx has implemented cost-cutting measures that include layoffs and facility closures as part of an initiative called "Network 2.0." Labor relations have suffered as a result; negotiations with pilots over an updated contract have stalled since talks began in 2021.
"FedEx pilots were once some of the highest-paid in the world with excellent working conditions, but the contract currently in place is now 10 years old. Contract talks first began in 2021, but negotiations have stalled. As such, pilots have been publicly displaying their frustration with the company and have notably been targeting CEO Raj Subramaniam not just for their issues, but with the company's overall direction."
The reduction in daytime flights is one aspect of broader efforts by FedEx Express to adjust its business model amid changing market conditions and internal challenges.
"The loss of the USPS contract has led to a reduction in daytime flying. This is not itself a bad thing, as the contract was reportedly not giving the returns that the company was looking for, and being free from this contract, which may not have been providing a return on investment, could allow FedEx to pursue other, more lucrative opportunities. However, these cuts have also led to job losses, and the company as a whole has been slimming down in a brutal fashion."
As FedEx seeks stability through cost reductions while facing employee dissatisfaction and increased competition from both established rivals like UPS Airlines (with a mainline fleet size of 295) and newer entrants like Amazon Air (operating nearly 100 aircraft), it must balance operational efficiency with workforce morale.
With ongoing labor disputes—including public expressions of frustration by pilots—and continued financial pressures from decreased demand for air freight services, FedEx Express remains focused on navigating these complex challenges.
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