FedEx Won’t Renew US Contract With Amazon

FedEx will not be renewing its express U.S. contract with Amazon, according to reports. The shipping company is calling the move a strategic decision. With the news, its stocks were down this morning (June 7).

The move will not have an effect on ongoing contracts with Amazon or other company units related to international services.

FedEx said Amazon made up less than 1.3 percent of company revenue in the last year, according to Reuters. Amazon has been building up its own roster of planes recently, operated by Air Transport Services Group and Atlas Air Worldwide Holdings.

Amazon is also investing $1.5 billion in an air cargo hub to be built in northern Kentucky, as it moves to rely more on its own logistics for deliveries. The company has leased 40 cargo planes and plans to add 10 planes to its roster in the next few years.

There’s also the possibility that the United States Postal Service could raise rates on packages, a move that President Donald Trump recommended in December. If that happens, it would affect profits for Amazon and other online retailers.

By afternoon trading on Friday (June 7), FedEx pared gains, and its shares were up almost 1 percent to $158.01. Amazon shares were up 2.6 percent on the news.

In other Amazon delivery news, the eCommerce giant has announced that it will have a drone delivery service within months, according to a report by Reuters. The announcement was made by CEO of Worldwide Consumer Jeff Wilke on Wednesday (June 5) at the company’s “re:MARS” conference in Las Vegas. The drone will be able to lift off and land like a helicopter, and will be more stable than previous Amazon drone models. It can also see objects in motion better than the human eye. Wilke did not specify where the drones will be deployed, but in the past Amazon has delivered by drone in the U.K.

The drone delivery initiative is not new for Amazon; the company has been talking about it for a number of years, but this is the first time it has announced a release date.

Part of the problem with implementation was making sure difficult-to-see wires would not affect the drones. Also, the company has faced regulatory hurdles prohibiting commercial flights, especially in the United States.

Wilke said the fully electric drones can fly up to 15 miles, and that Amazon will continue to build facilities closer to urban areas. The drones can transport packages under five pounds, which is the majority of what the eCommerce retailer sells.