For anyone experiencing a similar issue it could be an issue with the postgres image built by your local Docker platform try to use the remote builder in Fly
The steps below are courtesy of kylemclaren.
Create a new app: fly create my-app, then using your prefered Dockerfile run fly deploy --build-only --push --remote-only --dockerfile Dockerfile --app my-app
Then using the built image create the new postgres app using fly create pg --image-ref registry.fly.io/myapp:deployment...