FedEx splits with Amazon as ecommerce giant builds own delivery network

FedEx is scrapping its Amazon delivery contract, announcing that their deal will not be renewed after it expires this month.

Amazon and FedEx’s ground delivery contract will be discontinued at the end of the month, coming just two months after FedEx announced its Express unit would also stop flying Amazon packages across the US.

Amazon is understood have made up around 1.3 per cent of FedEx’s sales last year, and the delivery giant will hope to replace its lost business by ramping up partnerships with more traditional retailers like Walmart.

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This comes as the ecommerce giant continues to build its own delivery network, largely modelled on FedEx’s contractor-based ground unit, building hundreds of fulfilment centres and exploring next-day air deliveries with leased jets.

The split has seen FedEx’s shares dip 1.6 per cent to $158.57, while Amazon’s fell 1.1 per cent to $1767.3.

“This change is consistent with our strategy to focus on the broader e-commerce market,” FedEx said in the statement

Amazon’s senior vice president of operations Dave Clark Tweeted: “Nothing but respect for FedEx but they were very small piece of our network and vice versa, we wish them nothing but the best (conscious uncoupling at its finest). We have great strategic partners who are part of our long term plan and we appreciate what they do for customers.”

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