FedEx’s Express unit ends relationship with Amazon

FedEx Express ditches Amazon

(NYSE:FDX) said Friday that it will not renew its contract for its FedEx Express air and global unit to handle Amazon.com, Inc.

FedEx will retain some Amazon business because the decision doesn't affect existing contracts involving the courier's other divisions such as its ground operation.

FedEx did not disclose details of the Amazon contract, but Wassmer said Amazon represented less than 1.3 per cent of FedEx revenue a year ago.

However, the decision did not really come as a surprise to Amazon, the report said. On Amazon's side, the company will have to find other ways to support its massive Prime deliveries, particularly during peak holiday demand.

The move comes as Amazon builds out its own delivery network of planes, trucks and vans, a move seen as a long-term challenge to FedEx and delivery rival United Parcel Service (UPS).

Amazon Prime Air, which is based in Hebron, Ky., near Cincinnati, Ohio, uses its own branded aircraft operated by Air Transport International, ABX Air, Atlas Air and Southern Air.

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It's "a strategic decision" that will let FedEx focus on thousands of other retailers including Target, Walgreens and Walmart, company spokeswoman Katie Wassmer.

FedEx announced on Friday that it would not be renewing a contract with Amazon having to do with its Express business in the United States. "We are excited about the future of e-commerce and our role as a leader in it".

In a statement, Amazon said only that it respected FedEx's decision and thanked the delivery company for serving Amazon customers over the years.

Amazon has been testing a new online service that matches truck drivers with shippers since previous year.

Deliveries made via FedEx's Express service typically arrive overnight or in two to three days. Dropping Amazon will allow FedEx to carry "more desirable freight" than Amazon's business from a profitability standpoint.

In a move not entirely expected but hardly surprising, FedEx Corp. "This is really significant, since odds are it will take Amazon years to build out this part of the supply chain and I'm not so sure that their plan was to ever move entirely away from the Big 2".

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