Amazon Adds FedEx to Delivery Partners as UPS Cuts Back

Amazon will have FedEx deliver large packages to the retailer’s customers for the first time in six years.

The companies reached a multiyear agreement that renews a relationship that ended in 2019, Bloomberg reported Monday (May 12).

The deal follows a January announcement by UPS that it will cut the number of packages it delivers for Amazon by half by the end of next year, according to the report.

Amazon said in the report that it does not plan to use FedEx to replace the business it still does with UPS; instead, FedEx will serve as one of several third-party partners that deliver to the retailer’s customers, per the report.

“FedEx joins our other third-party partners like UPS and the USPS, that work alongside our own last mile delivery network to help us balance capacity to best serve customers,” Amazon spokesman Steve Kelly said in the report.

Amazon’s own logistics network, which is made up of small businesses, delivers more than two-thirds of the retailer’s packages, according to the report.

A FedEx spokesperson said in the report: “We have reached a mutually beneficial, multiyear agreement to provide residential delivery of select large packages for Amazon.”

UPS said April 29 that it was accelerating its planned volume reduction from Amazon, a longtime major customer, as part of UPS’ pivot away from low-margin, high-volume accounts and toward more profitable business.

Amazon’s insourcing of logistics has been an industrywide headwind, and UPS’ proactive recalibration could be a prudent step toward margin expansion, even if it results in near-term revenue pressure, PYMNTS reported at the time.

FedEx said in August 2019 that it planned to conclude its ground-delivery contract with Amazon and would not renew it. The logistics company had already ended its express U.S. shipping contract early that summer.

“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 at the time.

News had surfaced in June 2019 that FedEx would not be renewing its express U.S. contract with Amazon, calling the move a strategic decision.