FedEx ends Amazon ground deliveries
FedEx is ending its contract withAmazonfor grounddeliveries in the United States at the end of the month, a spokeswoman for the shipping giant said Wednesday.
The move came twomonths after FedEx said it would no longer provide express shipping service for Amazon. By severing another tie tothe e-commerce giant, FedEx indicated it was focused on expanding its business outside of Amazon and signaling to other retailers that it was on their side.
“This change is consistent with our strategy to focus onthe broader e-commerce market,” FedEx said in a statement.
Over time, Amazon’s relationship with FedEx has shifted from customer to competitor, as the online retailer has beefed up its own delivery capacity with a fleet of airplanes and same-day couriers.
In a May regulatory filing, FedEx noted the potential threat that Amazon’s moves posed.
“Some high-volume package shippers, such as Amazon.com, are developing and implementing in-house delivery capabilities and utilizing independent contractors for deliveries, andmay be considered competitors,” FedEx said in the filing, which also noted that Amazon was “investing significant capital to establish a network of hubs, aircraft and vehicles.”
In a statement Wednesday, Rena Lunak, an Amazon spokeswoman, said the company was “constantly innovating to improve the carrier experience and sometimes thatmeans reevaluating our carrier relationships.”
“FedExhas been a great partner over the years, and we appreciate all their work delivering packages to our customers,” Lunak said.
Despite its outsize role in e-commerce, Amazon is not a major source of business for FedEx. It accounts for just 1.3 percent of the shipping company’s total revenue.
InMay, FedExmoved to bolster its ground-delivery service, announcing that it would soon offer seven-day residential delivery.
“The recent announcements related to our FedEx Ground network have us positioned extraordinarilywell,” FedEx said in its statementWednesday.
Still, FedEx’s decision to end its ground contract with Amazon so publicly confounded some longtime freight industry experts.
“I am baffled,” said Satish Jindel, founder of ShipMatrix, which provides technology to the shipping industry, and a former employee of a startup delivery company that later became FedEx’s ground unit. “It is creating bad blood.”
FedEx’s announcement, Jindel said, appeared to be mostly designed to send a message to Walmart, another large customer, that the shipping company was willing to align itself with it over Amazon in an effort to win more business.
FedEx is joining a number of other large companies— Microsoft and Google are two others — that have formed strategic alliances with Walmart to challenge Amazon in areas like cashier-less stores and voice-activated shopping. Walmart said in March 2018 that it would open FedEx locations in 500 of its stores in the United States.
The move Wednesday was also an acknowledgment that Amazon’s in-house delivery capabilities are expanding so rapidly that the services of FedEx and the U.S. Postal Servicemight eventuallybecome mostly obsolete to the ecommerce giant.
Amazon has been building a fleet of airplanes, trucks and vans that allow the company to control every leg of a package’s journey, from warehouse to doorstep. Last year, its expanded its in-house “last-mile delivery” services to 30 percent of all ground-delivered packages, about 4 million items a day, from 20 percent, Jindel said.