FedEx steps away from Amazon

9 August 2019

FedEx has decided not to renew its ground delivery deal with Amazon in the US, as the international courier moves to “focus on the broader e-commerce market.” 

The decision to cut its ties with Amazon on the delivery of goods to homes comes just weeks after FedEx chose not to renew its US air cargo delivery contract with Amazon in June this year. 

FedEx has turned its attention towards the larger e-commerce market, while Amazon continues to invest in its own logistics capabilities.

In a statement yesterday, a FedEx spokesperson said: “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.”  

Responding to the news, an Amazon spokesperson said: “We are constantly innovating to improve the carrier experience and sometimes that means reevaluating our carrier relationships.”  

And Dave Clark, senior vice president of Worldwide Operations at Amazon, tweeted: “Nothing but respect for FedEx but they were very small piece of our network and vice versa, we wish them nothing but the best (conscious uncoupling at its finest). We have great strategic partners who are part of our long term plan and we appreciate what they do for customers.”  

Earlier this year FedEx indicated its intention to exploit the wider e-commerce market. In a statement in June the company said: “There is significant demand and opportunity for growth in e-commerce which is expected to grow from 50 million to 100 million packages a day in the U.S. by 2026.” 

It added that Amazon are not its largest customer and that the partnership provides less than 1.3% of FedEx’s total revenue in 2018.

Amazon’s growing delivery network has positioned the company as a competitor to firms such as FedEx. 

Amazon chief executive Jeff Bezos revealed in a tweet in May: “We’re investing $1.5 billion in our new air hub [a cargo jet warehouse] to get you your packages faster.” 

The company’s ambitions in terms of becoming a global player in the distribution of goods have been highlighted by some key developments in recent years. 

In 2016 it unveiled its first branded cargo plane, part of its own US air freight network.  

Amazon has also been investing in drone delivery technology and in 2017 filed a patent in the US for an “airborne fulfilment centre” that would deliver packages using a fleet of drones.

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