FedEx will no longer be providing express delivery service for Amazon in the United States. The decision comes as the e-commerce giant continues to work and expand its own in-house delivery network. This decision was announced by FedEx on Friday. They have released a statement in which they have termed it as a ‘strategic decision’.
The shipping company say that this decision will not affect other existing contracts with Amazon, including international shipping. Amazon’s contract with FedEx Express only affects air services, which means FedEx will continue to serve as a carrier and last-mile delivery partner. FedEx says that their decision will not impact their company.
They added that Amazon is not a big client as they only account for roughly 1.3% of their total revenue for 2018. As they announced their decision, their stock fell about 1% while this decision didn’t affect Amazon as their stock didn’t budge. Amazon responded to this decision as their representatives released an email statement which says, “We respect FedEx’s decision and thank them for their role serving Amazon customers over the years.”
This decision comes at a time when Amazon are focusing on their own in-house network of shipping and delivery services. Amazon have recently launched a new program called Delivery Service Partners. This program lets entrepreneurs run their own local delivery truck business with Prime logos. On top of that Amazon are buying cargo planes and trucks to help them expand their networks.
In its 2018 annual financial filling, for the first time in its history, Amazon have listed “transportation and logistics services” among its group of competitors. FedEx has downplayed the competitive risk from Amazon on numerous times which was affirmed by FedEx’s executive vice president Rajesh Subramaniam. FedEx’s former executive vice president, T. Michael Glenn said that Amazon would require tens of billions of dollars to build and replicate FedEx’s existing delivery network.