Amazon and FedEx are severing ties over their online delivery dispute.
FedEx will no longer be making ground deliveries for the online retail giant. The announcement came on Wednesday, just two months after FedEx terminated their air delivery contract with Amazon. FedEx said that the move is meant to shift their focus and allow them to go after more eCommerce companies for business. As other big retailers start to compete online, FedEx could find business from the likes of Walmart and Target. Amazon, for its part, has been building its own delivery fleet, presenting a serious challenge to delivery companies and Amazon’s competition.
Amazon has been working hard on a new drone fleet, in combination with its ground fleet. The company has been trying to reduce its reliance on companies like FedEx and UPS, as well as the US Postal Service. To meet this end, the company has leased jets and built package-sorting hubs at airports. They even went so far as to offer workers large severance packages on the condition that they use the money to start their own delivery businesses to help Amazon. FedEx is clearly not happy about any of this, and they went so far as to warn in a government filing that Amazon could “negatively impact our financial condition and results of operations.” Amazon has been increasing its spending on logistics in recent years. The company spent $27.7 billion on sorting and shipping costs in 2018, up from $16.2 billion in 2017.