FedEx to end ground delivery business with Amazon

FedEx will no longer make ground deliveries for Amazon as the online shopping giant builds its own fleet and becomes more of a threat to delivery companies.

The announcement Wednesday comes two months after FedEx already terminated its air delivery contract with Amazon. FedEx said dumping Amazon is part of its plan to go after more e-commerce deliveries from other companies.

Traditional retailers like Walmart and Target want to sell more of their goods online, which in turn allows FedEx to distance itself from Amazon. com without suffering the same competitive damage it might once have.

“This does not come as a surprise to us,” Citi Research analyst Christian Wetherbee said in a note to clients. “The company is clearly trying to move away from its partnership with Amazon and we believe it is using this move as a selling point to win new non-Amazon business.”

At the same time, Amazon is growing its own fleet of air and ground transportation, giving it more control of how its packages are delivered while reducing its reliance on FedEx, UPS and the U.S. Postal Service. The Seattle-based company has been leasing jets, building package-sorting hubs at airports and has launched a program that lets contractors start businesses delivering packages in vans stamped with the Amazon logo.

Last month, FedEx warned for the first time in a government filing that Amazon’s delivery business could “negatively impact our financial condition …”