FedEx will allow its ground-shipping contract with Amazon to sunset at the end of August, severing another relationship with the e-commerce giant as it builds out its own parcel delivery network.
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.)
“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,” FedEx said in a statement Wednesday. News of the change was first reported by Bloomberg News.
FedEx has been expanding its services to capitalize on consumers who prefer to shop from the comfort of their homes, increasingly for large purchases such as televisions, mattresses and sofas. FedEx announced in May that its ground-delivery unit would ship packages seven days a week starting in 2020. Amazon accounted for less than 1.3 percent of FedEx’s revenue in 2018, the company said in June.
Amazon is racing to offer ever-speedier deliveries, and analysts say building out its own fleet is the most cost-effective way to do so. In April, the company announced it would begin offering free next-day shipping to its 100 million Prime members. In 2017, it fulfilled more than 5 billion of their orders.
“Nothing but respect for FedEx but they were very small piece of our network and vice versa, we wish them nothing but the best (conscious uncoupling at its finest), Dave Clark, Amazon’s senior vice president for worldwide operations, said Wednesday in a Twitter post. “We have great strategic partners who are part of our long term plan and we appreciate what they do for customers.”
Amazon has been expanding its own logistic network, delivering more of its customers’ orders and reducing its reliance on FedEx and other carriers. The Seattle-based company began laying the groundwork for that business after the 2013 holiday season, when an uptick in sales swamped the UPS and FedEx networks and caused delivery delays. The shipping companies later made adjustments to improve operations, including implementing new restrictions for large retailers such as Amazon.
Amazon leased a fleet of planes, acquired semitrailers and built out delivery networks in major cities. It also built warehouses throughout the country. However, the company is still far from being on equal footing with UPS and FedEx in this realm, The Washington Post reported in June.
Amazon is “constantly innovating to improve the carrier experience and sometimes that means reevaluating our carrier relationships,” the company said in a statement. “FedEx has been a great partner over the years and we appreciate all their work delivering packages to our customers.”
Abha Bhattarai contributed to this report.