FedEx said on Friday it was not renewing its contract to deliver Amazon packages by air in the US, in the latest fallout from the ecommerce company’s push to take more control of logistics and fulfilment.
FedEx said the decision only affected its US contract for FedEx Express service — meaning shipments by cargo plane that take packages between Amazon warehouses and delivery hubs. It will not impact other existing contracts with Amazon for international delivery and with other FedEx business units, both companies said. FedEx will continue to deliver Amazon packages to customers’ homes.
“We respect FedEx’s decision and thank them for their role serving Amazon customers over the years,” Amazon said.
Amazon has ramped up its own delivery network in recent years, including leasing a fleet of cargo planes that it operates as Amazon Air and building a $1.5bn air freight hub in Kentucky. It is also doing more of its so-called “last mile” deliveries to customers itself, and said this week it would start delivery by drone in the coming months.
Amazon represented less than 1.3 per cent of the parcel delivery company’s revenue last year, FedEx said. That is lower than previous estimates from analysts at Cowen who last year estimated that Amazon accounted for no more than 3 per cent of FedEx revenue.
FedEx said its decision was meant to enable it to “focus on serving the broader ecommerce market,” which it expects to grow from 50m to 100m packages a day in the US by 2026. The company has invested in its own fulfilment centres serving retailers’ ecommerce operations and has made a push to sign up small and medium-sized businesses as customers.
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