US logistics giant FedEx is terminating its contract to deliver Amazon deliveries through its ground outlets, essentially severing the company's relationship with the world's largest shipper.
On August 8, FedEx announced that after the original contract with Amazon expired at the end of August, the company decided not to renew the contract. According to The Wall Street Journal reported that day, in June before that, FedEx said that it would terminate its air freight contract with Amazon in the United States, but it would continue to carry out ground transportation and international transportation. The move by
is evidence of escalating tensions between the longtime partners FedEx and Amazon. Amazon is building its own logistics network, including leasing cargo planes, buying trucks and subsidizing local truck drivers. Although
is drifting away from the largest e-commerce company in the United States, FedEx has positioned its target customers as retailers competing with Amazon such as Wal-Mart and . In a statement, FedEx said: "This change is consistent with our strategy to focus on the broader e-commerce marketplace." to redistribute packages. While FedEx has terminated its relationship with Amazon, the speed of Amazon's new Prime one-day delivery business will not be affected, according to people familiar with the matter.
In fact, Amazon has reduced most of its business with FedEx. According to data from the logistics consulting company SJ Consulting, Amazon’s self-operated logistics accounted for 45% of Amazon’s July shipments, U.S. Postal Service (U.S. Postal Service) accounted for 28%, United Parcel Service (UPS) accounted for 21% , FedEx did not register any deliveries in July.
Amazon Express consignment share. The legend from top to bottom is: Amazon self-operated logistics; USPS; UPS; FedEx; others. Photo source: Wall Street Journal
Due to the surge in e-commerce shipments in recent years, FedEx and UPS have invested billions of dollars to adapt to business growth. FedEx has lowered its profit forecast twice in the last two fiscal years due to declining revenue in its express delivery unit and rising ground business costs.
Although Amazon ships millions of packages every day, in addition to its own logistics that is developing, it will also hand over orders to FedEx, UPS and the US Postal Service. Amazon accounted for 1.3 percent of FedEx's total revenue in 2018, which totaled less than $1 billion, FedEx said.
Dave Clark, Amazon's vice president of operations, said in a tweet: "We respect FedEx, but they are only a small part of our network and vice versa." Ship with FedEx, but there will be no discounted rates. Amazon third-party sellers who do their own shipping can still ship with FedEx.
