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Businesses United States News

FedEx Reduces Amazon Ties as Retailer Flexes Delivery Muscles (bloomberg.com) 35

FedEx said it wouldn't renew its U.S. air-delivery contract with Amazon.com, paring a key customer relationship as the largest online retailer deepens its foray into freight transportation. From a report: 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 for cheaper and speedier deliveries, as the e-commerce powerhouse builds its own aircraft fleet and delivery capabilities. FedEx said Amazon represented 1.3% of sales last year.
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FedEx Reduces Amazon Ties as Retailer Flexes Delivery Muscles

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  • by Anonymous Coward

    The key portion of the article is how much Amazon used Fed Ex last year. The bottom line is that Amazon was only using FedEx to fill in some gaps, probably in less profitable service areas anyway. So it makes sense that Fed Ex would dump the contract. Fed Ex's primary customers have and always have been priority business to business shipping anyway.

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  • FedEx, UPS, and USPS have been offering Amazon steep discounts to get access to the huge volume of Amazon deliveries. But if they couldn't make money doing it, Amazon won't be able to either. And if Amazon has to resort to buying its own trucks and paying its own drivers, they may find out that it costs more than paying FedEx a higher rate for their services. After all, this is FedEx's core business, it's just an expense at Amazon.

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