FedEx stops making ground deliveries for Amazon

An Amazon package on the porch of a Jersey City N.J. residence after its delivery

FedEx and Amazon are parting ways. But Amazon is also rapidly bolstering its own delivery network, agitating established logistics businesses.

"Some high-volume package shippers, such as Amazon.com, are developing and implementing in-house delivery capabilities and utilising independent contractors for deliveries, and may 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". Most, if not all, of that business is believed to have been concentrated during the peak delivery season. FedEx's worldwide deliveries for Amazon are likely very small, he said.

FedEx is taking another step to break away from Amazon. As FedEx itself is so quick to point out, Amazon accounts for only about 1.3% of its revenue.

The delivery company Wednesday said it would not renew its ground delivery contract with Amazon when it expires in August. In its July annual report, FedEx mentioned Amazon six times in a section titled "We face intense competition". Still, it is not large enough, and certainly not compensatory enough, for FedEx to stick around. And now the company has one less partner. However, the traffic flows are not stable, and the rates that Amazon demands do not justify the cost of the operational demands and pressures imposed on the FedEx network, the source said.

The move follows a separate action taken in June that ended a contract between the two companies when it came to shipping packages by air with FedEx Express.

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You may have noticed some of the packages you receive are delivered by Amazon employees, not FedEx, UPS, or the post office.

"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)".

The delivery and logistics company attributed just over 1% of its 2018 sales to Amazon. "FedEx has been a great partner over the years and we appreciate all their work delivering packages to our customers". In April, the company announced it would begin offering free next-day shipping to its 100 million Prime members.

The surge in e-commerce business has been a double-edged sword for FedEx and UPS by spurring sales growth while squeezing profit margins, since home-deliveries are more costly to handle than drop-offs at commercial customers.

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