FedEx won’t renew its ground contract with Amazon
FedEx announced it will also stop delivering ground packages from Amazon once its current deal expires as the ecommerce giant continues efforts to build its own delivery fleet.
The news comes two months after the company said it would stop delivering air shipments for Amazon.
While FedEx took the step, for the first time, to warn investors that Amazon’s plans to create its own delivery network could negatively impact its business, it also noted Amazon accounted for just 1.3% of its total revenue in 2018.
FedEx took in approximately $850 million from Amazon.
Amazon is leasing aircraft and space for sorting facilities near airports across the country, as well as offering incentives for people to start their own local delivery franchises.
The efforts are in direct competition to FedEx as well as UPS and the U.S. Postal Service.
Streamlining delivery costs is key for Amazon, which generates millions of dollars every day in potential shipping fees.
Bringing more and more delivery in house could be a strategic move to cut costs and optimize its faster delivery options.
FedEx and other shipping companies can still have a part of the ecommerce pie with companies such as Walmart and Target, who haven’t taken major steps to build their own nationwide delivery network — yet.