Economy

FedEx pulls from US Amazon small package deliveries

FedEx pulls from US Amazon small package deliveries”

FedEx will stop delivering packages for Amazon on the ground in the US when the shipping company's contract expires at the end of the month, it announced yesterday.

This is an interesting move from FedEx and according to experts; it is a move that will allow the company to pick up more non-Amazon contracts. Amazon doesn't say how much of its packages flow through FedEx, but it's likely a much smaller amount compared to UPS and the U.S. Postal Service.

"This change is consistent with our strategy to focus on the broader e-commerce market", FedEx said in a statement as it looks to expand and serve companies that would include rivals of Amazon.

FedEx says it will no longer make ground deliveries for Amazon as the online shopping giant builds its own fleet and becomes more of a threat to delivery companies.

Meanwhile, FedEx Ground is working to wring out more residential profit by shifting the delivery of almost 2 million SmartPost packages from U.S. Postal Service mail carriers to its own drivers.

" Nonetheless, followed by FedEx's Wednesday's (August 7th) statement to suspend tie-up with Amazon's ground-based delivery service, shares of FedEx wrapped up the day down by 0.33 per cent to $160.66 per share, while shares of Amazon.com Inc. ended the day with a decent gain of 0.31 percent to settle down at $1,793.40". The e-retailer has grown its own fleet of air and ground transportation, giving it more control over how its packages are delivered.

Dave Clark, Amazon's senior vice president, operations, seemingly wasn't feeling the negativity one iota.

As Amazon continues to construct its own delivery network, will the e-tailer ultimately terminate its partnerships with other courier services as a means of fulfilling its one-stop-shop status?

"'What was a frenemy, they've now figured out is their competitor, ' Trip Miller, managing partner at Memphis-based Gullane Capital, tells them, referring to the FedEx relationship with Amazon", they add.

Meanwhile, "the Amazon announcement continues an eventful year for FedEx Ground". In May, the company revealed its plans to deliver on Sundays year-round and rely less on the U.S. Postal Service.



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