UPS has a similar service in the US. Basically, UPS ships the "long haul" part (from source to local - to you - mail center) and then the regular mail service takes it the rest of the way.
From a shippers standpoint, I think it's the best of both worlds. All the business to business benefits of UPS, economies of the UPS long haul shipping, and allowing the postal service to absorb the expensive "last mile".
From a recipient standpoint, I think it's the worst of both worlds. You now have 2 organizations, plus the handoff in between, to muck up the shipping. Plus it seems to inevitably take longer.
In your case, my GUESS is that FedEx is handling through customs.