FedEx

(FDX) - Get FedEx Corporation Report

said its unit

FedEx Express

and the

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U.S. Postal Service

have agreed to two seven-year service contracts worth a total of about $7 billion.

The Memphis, Tenn., delivery and transportation services company said FedEx Express will provide air capacity for postal express shipments in the first agreement, which will take effect in late August and generate about $6.3 billion in revenue.

FedEx will place drop boxes at U.S. post offices under the second contract, which the company estimates is worth about $900 million in revenue. FedEx expects to place more than 10,000 drop boxes throughout the country within the next 18 months.

Shares of FedEx lately fell 57 cents, or 1.4%, to $41.70 in midday trading on the Big Board.