Federal Express is increasingly seeing Amazon as a competitor in the shipping business. FedEx announced Wednesday that it is ending its ground-shipping contract with Amazon.
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The U.S. business world was abuzz today over a high-profile breakup. FedEx is parting ways with Amazon. The logistics company says it will stop making Amazon’s ground deliveries. NPR’s Alina Selyukh reports.
ALINA SELYUKH, BYLINE: As far as breakups go, this one did not seem to break that many hearts. After FedEx announced its plans to stop delivering Amazon packages – both by air and with ground shipping – Amazon issued its own statement, saying basically it happens. Sometimes, things just don’t work out. Amazon’s executive in charge of operations tweeted – and I quote – “we wish them nothing but the best, conscious uncoupling at its finest.”
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ADELE: (Singing) I wish nothing but the best for you, too.
SELYUKH: Forget romance. To get mathematical about it, last year, Amazon deliveries accounted for just over 1% of FedEx’s total revenue.
Logistics expert Marc Wulfraat estimates that, for Amazon, FedEx delivers about 4% of packages. Wulfraat runs the consulting firm MWPVL International.
MARC WULFRAAT: It’s kind of the end of a relationship that was never all that big in the first place.
SELYUKH: FedEx didn’t offer much detail but said the change allows them to focus on the, quote, “broader e-commerce market.” In recent months, FedEx shifted how it talks about Amazon, calling it a competitor. And indeed, Amazon already has a web of warehouses, trucking contracts and leased airplanes. And note that Amazon is one of NPR’s financial supporters.
But reading the tea leaves, Wulfraat says it’s all about Amazon’s new push to one-day shipping.
WULFRAAT: Probably Amazon does not want to pay the premium associated with that.
SELYUKH: Wulfraat is speculating. But he says, for FedEx, delivering your last-minute shopping is far less profitable than business shipments. It’s one package to your door versus dozens to the warehouse using the same truck and the driver’s time. He predicts Amazon and FedEx might both suffer from their breakup in the short term. But in the end, they will move on.
Alina Selyukh, NPR News.
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