Fedex Amazon Agreement

The ground delivery contract with Amazon will not be renewed if it expires at the end of this month, FedEx said in a statement. The decision accelerates the company`s withdrawal from the largest online retailer just two months after FedEx said its express unit would not renew an agreement to fly Amazon packages in the U.S. Amazon has already leased 40 cargo planes and signed an agreement to include 10 additional aircraft in the fleet over the next two years. FedEx expressly stated that the termination of the Express Agreement did not affect other aspects of its relationship with Amazon at that time and found that its international and “other” business entities (including Ground) were not affected. The company also says it is looking to take advantage of the demand for e-commerce outside of Amazon and deliberately set up its network to “serve thousands of retailers in the field of e-commerce”. While both airlines have accumulated robust delivery capabilities for years to host e-commerce sites like Amazon, FedEx announced last week that fedEx would no longer provide Amazon`s flight packages, but would also cease its ground contract. The move comes two months after FedEx said its express unit — its fastest domestic service — would not renew a contract to ship Amazon packages by air. (Amazon founder Jeff Bezos owns the Washington Post.) Amazon stopped using FedEx for its own U.S. deliveries, but third-party vendors could continue to use FedEx. These sellers now account for more than half of the merchandise sold on Amazon`s site, including many items listed as suitable for prime. “FedEx has made the decision to no longer want to sharpen its executioner`s sword,” said Scott Galloway, a professor at New York University`s Stern School of Business. “It`s another reflection of this win-take-all`The Hunger Games economy,” dominated by fewer and fewer companies. This is partly because Amazon is unlikely to be a significantly more profitable customer for UPS than for FedEx.

Customers like Amazon benefit from high discounts in exchange for committing large amounts of parcel volumes. . UPS, America`s largest courier, is following a different path by continuing its relationship with Amazon. Analysts estimated that the retailer`s commitment to expand overnight deliveries led to a 30 percent increase in UPS`s domestic volume the next day in the second quarter. UPS, at least at this point, doesn`t seem to let go — though it`s not in its long-term interest to continue to depend on what is now its fastest-growing competitor. Or, for whatever reason, it won`t be. Analysts said Amazon has other advantages over shipping companies like FedEx. Using its countless customer and geographic data, Amazon can support shipping packages to densely populated areas, which is more efficient than deliveries to rural areas.

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