FedEx announced today that the American courier company has decided against renewing its FedEx Express U.S. domestic contract with Amazon.com. The main motive behind this move by the multinational delivery service is to focus on "serving the broader e-commerce market", as per the press release.
As a result of FedEx's decision to not renew the express shipping contract, Amazon's customers located in the U.S. will not have access to domestic express shipping services offered by FedEx any more. Other contracts between Amazon and FedEx stand unaffected by this action. This means other Amazon contracts relating to FedEx business units and international services will not be affected either.
FedEx stated that Amazon, as a customer, accounted for less than 1.3% of the company's total revenue over the course of 12 months for the year ended December 31, 2018. The multinational courier firm adds that the Seattle-based tech giant is not FedEx's biggest customer. Thus the cancellation of the express shipping contract is not much of a loss for the American shipping company.
Setting its sights to the future, FedEx now intends to enter the e-commerce market and assume the role of the leader in it. To this end, the courier service claims that it has already created a network which can cater to the needs of thousands of retailers in the e-commerce sector. According to the firm's projections, by 2026, the demand for e-commerce in the U.S. will increase from 50 million to 100 million packages per day.
When it comes to Amazon, the company doesn't have much to worry about concerning this move either. Considered one of the world's largest tech companies, the online shopping platform can easily find a replacement for the express shipping services offered by FedEx. Last month, RBC Capital Markets suggested that Amazon’s network is already capable of delivering items on the same day or a day later to 72% of the total U.S. population. In addition to offering services such as Key for Garage, in-car delivery, , the company also offers Amazon Scout - a service which employs autonomous robots to deliver packages.