FedEx will “start lapping Amazon” in 2021 as rivalry escalates

FedEx has said its ground delivery service will “start lapping Amazon” in 2021 despite lowering its earnings outlook for 2020.

The delivery giant’s chief financial officer told investors this week that heavy investments made this year will begin paying off in 2021, helping the company return to prominence in the delivery market flowing the meteoric rise of Amazon in the sector.

“If you think about all the positive things we’ve said and that we’re seeing, as we get into 2021, we will start lapping Amazon,” Alan B. Graf Jr. said.

This comes after FedEx reported lower than expected earnings throughout its second quarter earlier this week leading to a ten per cent drop in its share prices, representing a $4 billion drop in market value.

It blamed this decline largely on Amazon, which announced this week that it was now it now fulfilled the majority of its own orders via Amazon Logistics, removing its reliance on third party delivery companies like FedEx and UPS.

READ MORE: Amazon has delivered 3.5 billion parcels in 2019 smashing estimates

“The loss of volume from Amazon had a larger negative impact to the second quarter than the first quarter since the FedEx ground contract with Amazon expired in August,” Graf added.

Earlier this month Amazon announced it was banning all of its third-party sellers from using FedEx’s ground-delivery service on “some of the highest demand shipping days in history”.

This came after the pair announced their ground-delivery contract would not be renewed in August, two months after FedEx announced its Express unit would also delivering Amazon packages.

Despite this spat between the two gigantic companies taking its toll on FedEx, it says that major investments it has made in ensuring its delivery service runs seven days a week alongside “operational synergies” in Europe will begin paying off in the near future.

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