August 8, 2019
But that’s not the case with Memphis-based Federal Express, which until recently had been among the company’s swiftest and most dependable contractors.
In fact, according to a report by The Wall Street Journal, on August 7, FedEx announced that it would not renew its contract at the end of this month to deliver Amazon packages through its ground network—essentially severing ties with one of the world’s biggest shippers.
The shipping and logistics company already had discontinued its U.S. air deliveries for the e-commerce giant in June, but had said at that time that it would continue to handle ground deliveries and international shipments. Now just the global business remains.
The moves are evidence of escalating tensions between the longtime partners as the e-commerce giant builds out its own delivery services, the Journal said—including leasing cargo planes, buying trucks, and funding local delivery drivers.
“This change is consistent with our strategy to focus on the broader e-commerce market, which the recent announcements related to our FedEx Ground network have us positioned extraordinarily well to do,” FedEx commented.
The decision has come at a time when Amazon already is planning its holiday deliveries. The e-commerce company will have to find a new way to handle millions of packages ahead of the critical holiday shopping season at the same time it continues looking to speed home deliveries.
The once-staid delivery business has been upended in recent years as consumers buy everything from toilet paper to trampolines online, causing a surge in e-commerce shipments. FedEx and rival United Parcel Service have invested billions of dollars to handle the increased volumes. FedEx recently said it would expand to seven-day home deliveries, The Wall Street Journal reported.
Although Amazon ships millions of packages a day, it spreads the orders among FedEx, UPS and the U.S. Postal Service, as well as its own growing delivery operations. FedEx has said Amazon represented 1.3% of FedEx’s total revenue in 2018, or less than $1 billion.
Research contact: @FedEx