After ending its express U.S. shipping contract, per an announcement earlier in the summer, FedEx now plans to conclude its ground-delivery contract with Amazon and will not renew it. Shares of Amazon and FedEx had declined during premarket trading by at least 1 percent, CNBC reported.
“This change is consistent with our strategy to focus on the broader eCommerce market, which the recent announcements related to our FedEx Ground network have us positioned extraordinarily well to do,” a spokesperson for FedEx said. Amazon was not available immediately for comment, the outlet reported.
Amazon has recently grown its delivery network. In June, the eCommerce giant announced its new Delivery Service Partners program. The company also rolled out a delivery drone the same month, with hopes of eventually speeding up delivery for North America Prime members. Amazon is planning to open a $1.5 billion hub in 2021 in northern Kentucky, where it is growing its Amazon Air fleet to encompass 50 aircraft.
News surfaced in June that FedEx would not be renewing its express U.S. contract with Amazon. The shipping firm called the move a strategic decision. It was reported that the move would not impact ongoing contracts with Amazon or other company units in relation to international services.
FedEx reportedly said at the time that the eCommerce retailer made up under 1.3 percent of company revenue in the last year. It was also noted that Amazon had been recently building up its roster of planes, operated by Air Transport Services Group and Atlas Air Worldwide Holdings.
It was also noted that there is a possibility the United States Postal Service (USPS) could raise rates on packages, a move that President Donald Trump recommended in December. In that event, it the move could affect profits for Amazon and other online retailers, the report said.
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