Just two months after the American multinational courier delivery service FedEx Corp. said it wouldn't renew its contract with Amazon for Express Shipping in the United States, the company has trimmed another tie with the tech giant Amazon. This time, FedEx Corp. announced that it will not be renewing its ground-delivery contract with Amazon that is set to expire at the end of this month (via Bloomberg). A FedEx spokesperson said:
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.
Vis-à-vis the entire situation, an Amazon spokesperson claimed that:
We are constantly innovating to improve the carrier experience and sometimes that means reevaluating our carrier relationships. FedEx has been a great partner over the years and we appreciate all their work delivering packages to our customers.
FedEx refusing to renew the contract entails two major points. First, it emphasizes the fact that Amazon has emerged as a shipping competitor for FedEx courtesy of its growing cargo fleet thereby negatively impacting the relationship between the two companies. And second, it shows FedEx's move towards less dependence on Amazon for revenue, which already accounted for a mere 1.3%, or less than one billion, of the total revenue for FedEx in 2018.
To clarify, the non-renewal is applicable only to domestic shipping, that is, within the United States. FedEx will still have a contract with Amazon for international shipping. Furthermore, Amazon will still have the option to send parcels within the country via FedEx, the only difference being that now they will be at unsubsidized rates.
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