Amazon is the most dominant e-commerce company in the United States and accounts for a sizable chunk of business for logistics companies like FedEx and UPS in addition to the United States Postal Service. However, Amazon has been increasing its efforts to own its entire logistics chain and that has been giving logistics companies cause to evaluate their relationship with the e-commerce giant. FedEx has thus made a decision to not renew its FedEx Express U.S. domestic contract with Amazon.
The decision is limited to the FedEx Express contract for Amazon which involved air transportation of packages. It doesn’t involve last-mile deliveries on the ground so it’s not like your next Amazon package may not be dropped off by FedEx.
As it stands, most of the two-day deliveries for Amazon Prime are currently handled by UPS. FedEx’s decision to not renew the contract will not impact the company’s other business relationships with Amazon, which include filling the gaps that are not plugged by UPS.
FedEx also dispelled the impression that this decision would come at a huge cost to the company. It said that Amazon represented less than 1.3 percent of its total revenue last year and that Amazon isn’t the biggest FedEx customer. Choosing not to renew the Express customer may thus not reflect in a significant way on the company’s balance sheet.