FedEx will stop air shipments of packages for Amazon

Daniel Fowler
June 8, 2019

FedEx said it will "focus on serving the broader e-commerce market" as part of the strategic move, which only impacts air services and not other existing contracts with Amazon and FedEx business units such as FedEx Ground, or worldwide deals.

"FedEx has already built out the network and capacity to serve thousands of retailers in the e-commerce space, including brands such as Target, Walgreens and Walmart", a statement from the Memphis-based logistics company reads.

In a move not entirely expected but hardly surprising, FedEx Corp.

In a statement, Amazon said only that it respected FedEx's decision and thanked the delivery company for serving Amazon customers over the years.

FedEx Corp said on Friday it has made a decision to not renew its contract with Amazon.com Inc for US cargo delivery through FedEx Express, the unit that delivers packages on planes.

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Amazon depends on multiple services for its package delivery needs, including UPS and the United States Postal Service. Amazon has been expanding its fleet of planes and is building package-sorting hubs at two airports.

Amazon accounted for less than 1.3% of FedEx's revenue previous year, the company said in its statement.

"FedEx will focus on more profitable e-commerce customers which should help boost the margin profile within the Express segment over time". It also said Amazon is not its largest customer. Jindel estimated that FedEx's domestic air-parcel business with Amazon is probably "a few hundred million a year, at the best".

FedEx will retain some Amazon business because the decision doesn't affect existing contracts involving the courier's other divisions such as its ground operation.

The company is also taking back almost 2 million daily residential deliveries that it now outsources to the post office.

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