FedEx announced on Friday that it will not renew an express shipping service contract it has with Amazon, saying that this is a its “strategic decision” designed to allow it to serve “the broader e-commerce market” since it has the capacity “to serve thousands of retailers in the e-commerce space, including brands such as Target, Walgreens and Walmart.”
In its analysis, the New York Times writes:
“Friday’s move … reflects how Amazon has gone from simply a sought-after customer to a direct competitor of FedEx. As Amazon has built its own delivery capacity through a fleet of airplanes and same-day couriers, the internet giant has been able to ship more of its products on its own and control its costs. That has put FedEx in an untenable position of essentially competing with Amazon for Amazon’s own business.
“FedEx is betting on other retailers, which are expanding their e-commerce businesses but still need shipping companies to help them fulfill their express orders. FedEx said e-commerce was expected to double to 100 million packages a day in the United States by 2026.”
And in its story, TechCrunch writes:
“The change would not affect other existing contracts with Amazon or international services. FedEx Express only impacts air services. FedEx will still serve as a carrier for Amazon for last-mile deliveries.” Furthermore, it writes, “FedEx tempered the news by stating that Amazon is not its largest customer. The percentage of total FedEx revenue attributable to Amazon.com represented less than 1.3% of total FedEx revenue for the 12-month period ended December 31, 2018, according to FedEx.”
The Times story al.so points out that the Walmart reference in the FedEx announcement is a kind of shot across Amazon’s bow, since “Walmart has become a particularly large FedEx customer … and the move not to renew the contract shows how the shipping company is deepening ties with Amazon’s biggest rival.”
Amazon released a statement saying that it respects the FedEx decision.
In its analysis, the New York Times writes:
“Friday’s move … reflects how Amazon has gone from simply a sought-after customer to a direct competitor of FedEx. As Amazon has built its own delivery capacity through a fleet of airplanes and same-day couriers, the internet giant has been able to ship more of its products on its own and control its costs. That has put FedEx in an untenable position of essentially competing with Amazon for Amazon’s own business.
“FedEx is betting on other retailers, which are expanding their e-commerce businesses but still need shipping companies to help them fulfill their express orders. FedEx said e-commerce was expected to double to 100 million packages a day in the United States by 2026.”
And in its story, TechCrunch writes:
“The change would not affect other existing contracts with Amazon or international services. FedEx Express only impacts air services. FedEx will still serve as a carrier for Amazon for last-mile deliveries.” Furthermore, it writes, “FedEx tempered the news by stating that Amazon is not its largest customer. The percentage of total FedEx revenue attributable to Amazon.com represented less than 1.3% of total FedEx revenue for the 12-month period ended December 31, 2018, according to FedEx.”
The Times story al.so points out that the Walmart reference in the FedEx announcement is a kind of shot across Amazon’s bow, since “Walmart has become a particularly large FedEx customer … and the move not to renew the contract shows how the shipping company is deepening ties with Amazon’s biggest rival.”
Amazon released a statement saying that it respects the FedEx decision.
- KC's View:
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I suspect that Amazon customers won’t notice any of this, but it is clear that FedEx, while it has said in the past that it wasn’t worried about Amazon becoming a shipping competitor, is creating a little distance between the two companies. That makes sense from the FedEx perspective, and I think we’re going to see more of it.
