Fedex Reduces Amazon Ties as Retailer Flexes Delivery Muscles

From Yahoo Finance:

FedEx Corp. said it wouldn’t renew its U.S. air-delivery contract with Inc., paring a key customer relationship as the largest online retailer deepens its foray into freight transportation.

The delivery giant will instead focus on “serving the broader e-commerce market” with U.S. package volume from online shopping expected to double by 2026, according to a FedEx statement Friday. The Amazon contract expires at the end of this month, and doesn’t cover international services or domestic operations at other units such as FedEx’s ground deliveries.

FedEx’s surprise move signals that the No. 2 U.S. courier will bank on smaller e-commerce customers that lack Amazon’s bargaining power for big volume discounts. Amazon’s emergence as a logistics giant is piling pressure on FedEx and United Parcel Service Inc. for cheaper and speedier deliveries, as the e-commerce powerhouse builds its own aircraft fleet and delivery capabilities.

“They know their Amazon business is going to continue to shrink,” said Satish Jindel, founder of SJ Consulting Group, referring to FedEx. “Why have your capacity be used up by a customer that’s going to continue to chip away? They’d rather use that capacity for other customers.”

Link to the rest at Yahoo Finance

5 thoughts on “Fedex Reduces Amazon Ties as Retailer Flexes Delivery Muscles”

  1. It’s not surprising. FedEx runs a premium-priced service. Amazon operates at rock-bottom.

    Like most businesses, FedEx has some amount of excess capacity, mostly in their trucking and to-door delivery operations. But there’s not *that* much excess capacity they can sell, particularly once it starts delaying prompt delivery of premium-priced cargo.

    I have several beefs with how FedEx does business, but abandoning a race to the bottom on pricing and service is likely a good business decision.

  2. No surprises here, last couple of Amazon deliveries were by kids using their own cars (and were days earlier than expected.)

    FedEx can’t beat that speed of price-wise (another post I’d read said something about FedEx not liking the new contract Amazon was offering them.)

    So long as things get delivered promptly and intact I’ll not worry about who delivers it.

  3. I hate it when a vendor sends my package FedEx – they can never find my house, so my package is days late.

    They have gotten a little smarter over the last couple of years though. Now they get it sorta close, and hand it over to USPS. I know people complain about USPS, but my order always arrives promptly.

  4. I’ve had few delivery problems, but they were disproportionately FedEx. I live in a place with 24/7 Front desk service – and the driver couldn’t find it open (he/she wrote on the reason for not delivering); no way to contact them; horrible online interface for trying to find out what happened to my (already late) package.

    I expect the name to mean something, and it seems not to mean what I expect. So I guess the ads don’t apply (which they don’t mention in the ads) when doing Amazon deliveries.

    Maybe it will be best if they’re not in my loop for Amazon deliveries.

    If their premium services DO promise something, I’ll use that when I need premium services.

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