FedEx announced it is severing its relationship with Amazon to deliver Express packages for the online retailer in the US. Ground deliveries will continue for the time being.
However, this might be a watershed moment in the US logistics industry as many observers feel that Amazon own logistics arm may eventually offer third-party delivery services competing directly with FedEx and UPS.
“We believe FDX’s (FedEx) strategic break-up with AMZN (Amazon) is a watershed moment for the Parcel industry that signals AMZN’s emergence as a significant player in the industry and brings a new level of risk to numbers at both UPS and FDX.”
Morgan Stanley equity analyst Ravi Shankar
Recently, FedEx announced it would expand its US ground operations to seven-day service, becoming the first carrier in the US to offer residential deliveries on Sundays to all shippers.
In the short term, FedEx may lose some parcel volume. However, in the long term, FedEx appears to be freeing up resources to better serve its shippers, which includes many small online businesses.
“We respect FedEx’s decision and thank them for their role serving Amazon customers over the years.”
While FedEx is ready to lose the Amazon business in the US, it will continue to deliver packages internationally for Amazon.
But the days of FedEx handling Amazon’s international business could be numbered too as the company is also expanding its own logistics network on a global scale.
The new Amazon Prime Air hub is being constructed at Cincinnati/Northern Kentucky International Airport (CVG), right next door to DHL’s America’s Hub.
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