What to Know
- FedEx says it will not renew its ground-delivery contract with Amazon at the end of the month
- FedEx ended its express contract, which covered air shipping, in June
- Amazon recently announced its Delivery Service Program to help third-party businesses create their own ground delivery networks
“This change is consistent with our strategy to focus on the broader e-commerce market, which the recent announcements related to our FedEx Ground network have us positioned extraordinarily well to do,” a FedEx spokesperson said.
Shares of FedEx and Amazon were down at least 1% in premarket trading. Amazon was not immediately available to comment. Bloomberg first reported FedEx’s decision.
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FedEx announced in June that it is ending its express U.S. shipping contract, which only affected air services. At the time, FedEx said it was a “strategic decision” that would not affect its other contracts with Amazon. At the time, FedEx said less than 1.3% of total revenue was attributable to Amazon during the 12-month period ended Dec. 31.
Amazon has continued to increase its own delivery network.
In late June, Amazon announced a Delivery Service Partners program in an effort to attract entrepreneurs who can create their own local delivery networks with up to 40 vans each. earlier that month, it debuted a delivery drone it hopes will eventually speed up delivery for Prime members in North America.
Amazon also has a $1.5 billion hub opening in northern Kentucky in 2021 where it’s expanding its Amazon Air fleet to include 50 planes. Amazon said its air network can make “two-day shipping possible almost anywhere in the U.S.” Still, FedEx has helped to provide the “last mile” of delivery services, bringing packages to customer doors.
FedEx said in May it would expand its ground-delivery service to run seven days a week starting in January.
This story first appeared on CNBC.com. More from CNBC: