August 25, 2019
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FedEx ends ground shipping contract with Amazon

John Minchillo | AP
John Minchillo | AP
A FedEx delivery truck is loaded by an employee on the street in downtown Cincinnati, June 25, 2019. FedEx is severing another tie with Amazon as the online powerhouse continues to strengthen its own shipping capabilities.

FedEx will allow its ground-shipping contract with Amazon to sunset at the end of August, severing another relationship with the e-commerce giant as it builds out its own parcel delivery network.

The move comes two months after FedEx said its Express unit — its fastest domestic service — would not renew a contract to ship Amazon packages by air. (Amazon founder Jeff Bezos owns The Washington Post.)

“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 said in a statement Wednesday. News of the change was first reported by Bloomberg.

FedEx has been expanding its services to capitalize on consumers who prefer to shop from the comfort of their homes, increasingly for large purchases such as televisions, mattresses and sofas. FedEx announced in May that its ground delivery unit would ship packages seven days a week starting in 2020. Amazon accounted for less than 1.3% of FedEx’s revenue in 2018, the company said in June.

Amazon has been growing its own logistic network, delivering more of its customers’ orders and reducing its reliance on FedEx and other shippers. The Seattle-based company began laying the groundwork for that business after the 2013 holiday season, when an uptick in sales swamped the UPS and FedEx networks and caused delivery delays. The shipping companies later made adjustments to improve operations, including implementing new restrictions for large retailers such as Amazon.

Amazon leased a fleet of planes, acquired semitrailers and built out delivery networks in major cities. It also built warehouses throughout the country. However, the company is still far from being on equal footing with UPS and FedEx in this realm, The Washington Post reported in June.

Amazon is “constantly innovating to improve the carrier experience and sometimes that means reevaluating our carrier relationships,” the company said in a statement. “FedEx has been a great partner over the years and we appreciate all their work delivering packages to our customers.”

The online retailer works with other shipping partners more regularly than FedEx. About half of Amazon’s packages are shipped through the U.S. Postal Service; UPS and FedEx handle the rest.

 



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