FedEx Corporation (NYSE:FDX) has announced the termination of it’s delivery contract with e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN) and that it does not plan on renewing it.
The announcement means that FedEx will no longer offer ground delivery services to Amazon after the end of their current contract. The courier service provider announced about two months ago that it would stop delivering packages for Amazon by plane. The two announcements thus highlight the end of the partnership between the two firms.
“This change is consistent with our strategy to focus on the broader e-commerce market,” FedEx revealed to Bloomberg.
FedEx also revealed that the decision to cut ties with the e-commerce giant will not have much of an impact on its revenue. Amazon contributed just 1.3% of the revenue that FedEx generated in 2018. The two companies are ending their partnership on good terms.
Amazon revealed to Vox through a statement saying that it is focused on providing better experiences for carriers and that involves re-thinking its carrier relationships. The e-commerce firm also described FedEx as a great partner during their relationship which lasted for several years.
Amazon has been developing its own logistics business
Amazon has over the years gotten so big that it can afford to create its own logistics services and that is exactly what it has been doing. This might be one of the reasons behind the end of its relationship with FedEx. This also means that the two will be competing against each other and so it is a classic case of a partnership turning into a rivalry.
Amazon has been expanding its fulfillment centers over the years as part of its plan to facilitate speedy delivery. It also rolled out a service called Amazon Key in 2017, through which couriers have access to customer homes.
The e-commerce company is also working with the U.S Postal Service to facilitate deliveries. These partnerships still play a vital role especially when it comes to facilitating delivery fulfillment. The firm has also invested heavily to deliver its promise of same-day shipping to millions of customers.