Wed, Aug 07, 2019

FedEx is severing shipping ties with Amazon as Jeff Bezos' company scales up its own logistics operation

@TechInsider

FedEx is ending its ground-delivery contract with Amazon when it expires at the end of August, the shipping company said in a statement Wednesday.

The news comes as Amazon works to scale up its own logistics and delivery services, including hiring its own fleet of full-time drivers to deliver packages to Prime customers.

"This change is consistent with our strategy to focus on the broader e-commerce market," FedEx said in an email, "which the recent announcement related to our FedEx ground network have us positioned extremely well to do."

Amazon was not immediately available for comment.

Amazon was responsible for just over 1% of FedEx's sales in 2018. Over the past year, FedEx's leadership has made it clear that it views Amazon as a competitive threat and not a collaborative partner.

Amazon, meanwhile, is hoping to do the same thing for logistics that it did with cloud computing and web-hosting services. The company's network for now is used only for in-house goods, using a massive shipping network that's already grown fifteenfold — double the rate of sales — from 2008 to 2018.

Industry experts say Amazon would love to eventually offer that network to third-party customers for shipment of any number of other goods, not just those sold on its platform.

As of now, however, Amazon's network may not be much of a threat, according to Wall Street analysts. Goldman Sachs estimated in early July that — despite the company's 70 planes and 10,000 trucks — it could take another $122 billion worth of investment to catch up to the infrastructure that the leaders UPS and FedEx have built over past decades.

Shares of FedEx and Amazon were largely unchanged in early trading Wednesday following the news.

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