FedEx to end ground delivery business with Amazon

FedEx grounds ground-delivery partnership with Amazon

FedEx grounds ground-delivery partnership with Amazon

"It is no surprise to us", said Christian Wetherbee, an analyst at Citi Research, in a note sent to customers.

It's been said that because Amazon requires FedEx to deliver all of its packages to consumers throughout the United States in one to two days, FedEx has been forced to allocate tons of resources to deliver Amazon's packages.

Earlier today, on Wednesday, Aug. 7, 2019, FedEx shared with the world that it would no longer be carrying Amazon's packages to consumers as of the end of this month, per an official statement that the company released via its own website and several well-established, trusted press release distribution channels.

"Furthermore, the decision reflects the reality that Amazon's economic reach has grown so great that the company has started to alienate not just rival retailers, but longtime business partners", write David Yaffe-Bellany and Michael Corkery for The New York Times.

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Meanwhile, Amazon develops it's land and air transport fleet, gaining more control over how its packages are delivered while reducing its dependence on FedEx, UPS, and the United States Postal Service. They noted that it took many years and billions of dollars for their companies to build extensive, worldwide networks of planes and delivery trucks. At the same time, it has greatly reduced its reliance on FedEx, UPS (NYSE:UPS), and the US Postal Service.

Cowen analyst Helene Becker also believes that FedEx can garner more business by moving away from Amazon. But while FedEx is done with Amazon, UPS, the largest US courier, is keeping it tight with the online retail overlord. "They wouldn't carry competitor packages, like UPS, so why would they carry Amazon packages?" On The Ground After FedEx allowed the first deal to expire, Amazon then only accounted for 1% of FedEx's total business.

Besides building its own delivery business, the online retailer wants to drop off packages to its shopper's doorsteps even faster, which is proving to be a bigger expense than expected. Last month, Amazon admitted it would cost more than the $800 million it had said it would spend to switch its Prime two-day delivery promise to one-day delivery.

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