Sunday, 18 August, 2019

FedEx terminates its ground delivery contract with Amazon

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Russell Knight | 11 August, 2019, 23:12

Hence, delivery giant FedEx has now chose to end its ground delivery business with Amazon and instead go for contracts with more companies, which sell their products online.

Analysts have said Amazon has secured a better rate with UPS for package deliveries on planes, so it makes little sense for the company to partner with FedEx.

"This change is consistent with our strategy to focus on the broader e-commerce market", FedEx said in a statement.

FedEx Corp confirmed on Wednesday it would terminate its contract with Amazon.com Inc for small-package ground deliveries, as the online retailer focuses on building out its own delivery network.

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The announcement comes two months after FedEx said it had chose to allow its express delivery contract with Amazon to also expire, stating that the decision to do so was strategic in order to concentrate "on serving the broader e-commerce market".

In the past couple of months, Amazon has been focusing on growing its delivery system of vans, trucks, and planes and is being considered as possible competition to FedEx as well as United Parcel Service (UPS), the two companies which have counted Amazon as their customer since a long span of time.

"The move is a way for FedEx to 'get Walmart to realize that they're not working with Walmart's biggest competitor and to have Walmart make FedEx their primary carrier, ' Jindel said on Bloomberg Radio", Black adds. "For many reasons, we think it is doubtful that that will be the case". On The Ground After FedEx allowed the first deal to expire, Amazon then only accounted for 1% of FedEx's total business.

In a regulatory filing in February, Amazon tweaked the description of its business to say that competitors include transportation companies so FedEx "is taking them at their word and dropping them as a client", Becker said. The delivery giant had announced two months prior that it would no longer execute air deliveries for the e-commerce giant that eats up half of online purchases. The higher costs were related to reconfiguring its warehouses and moving products and goods to facilities that were closer to its customers.

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