UPS says it expects a 10-year agreement to transport packages for DHL will bring UPS some $1 billion in annual revenue over the life of the contract.

UPS is one of the carriers DHL will use as outsourced transportation providers under a restructuring announced Wednesday that will sharply pull back DHL's asset-based operations in the United States.

One of the main DHL competitors in the United States, UPS likened the deal to its transport agreement with the U.S. Postal Service, saying it will only carry DHL packages between cities and not be involved in pickup and delivery.

"We believe this arrangement with DHL would represent a wise use of our assets and network capacity while creating a substantial and profitable revenue stream for our company," said David Abney, UPS's chief operating officer.

UPS said it has no contract yet for the business but expects to complete the pact later this year. The company said it will start carrying "a limited amount" of DHL this year and more starting in 2009.