FedEx announces termination of Amazon contract for air cargo service
Category: #retail  By Pankaj Singh  Date: 2019-06-10
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FedEx announces termination of Amazon contract for air cargo service

FedEx Corporation, the American multinational courier delivery services company recently announced plans to not renew its contracts with e-commerce giant Amazon for U.S. cargo delivery via FedEx Express, the units that delivers packages via planes, cite sources.

The announcement came on the heels of Amazon’s plan to build out its own delivery network of trucks, vans & planes. The move by Amazon is expected to be a long-term challenge to delivery rivals like UPS (United Parcel Services) and FedEx.

For the record, in past few years, Amazon has gradually grown its delivery aircraft fleet, which were operated by ATSG (Air Transport Services Group) & Atlas Worldwide Holdings. Amazon is investing $1.5 billion to set up an air cargo hub in Kentucky to rely less on others for air shipping. Amazon has signed an agreement to introduce 10 more planes & leased 40 cargo planes, for the next two years.

As per credible sources, FedEx described the plan as a strategic move to allow the company to focus on the larger e-commerce market, a group that includes Amazon’s rival, that are scaling up 1 or 2 day delivery. FedEx estimates that by 2016, the market would double to 100-million packages a day in the United States.

The package delivery company reportedly said that the decision would not affect any existing agreements between FedEx business unit & Amazon or any related international services. In 2018, Amazon recorded for less than 1.3% of FedEx's revenue.

According to industry experts, Amazon is still heavily dependent on United Parcel Services & FedEx, even after immensely expanding its delivery infrastructure. Amazon is trying to break the duopoly of FedEx & UPS by becoming more self-sufficient to lower shipping costs.

Amazon said in a statement that the company respects FedEx’s decision and thanked them for serving Amazon over the years. Shares of FedEx were up by 1% at $158.28 and Amazon’s shares were up by 2.8% at $1,802.78.

Source credits : https://www.businesslive.co.za/bd/companies/retail-and-consumer/2019-06-09-fedex-to-end-amazon-contract-for-air-delivery-service/



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Pankaj Singh

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Pankaj Singh

Pankaj Singh Develops content for Market Size Forecasters, Algosonline, and a couple of other platforms. A Post Graduate in Management by qualification, he worked as an underwriter in the UK insurance domain before deciding to switch his field of profession. With exp...

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