Amazon Nixes FedEx Ground For Prime Deliveries

Amid the Christmas shipping frenzy, Amazon told sellers that they can no longer use FedEx Ground for Prime shipments due to unpredictable service, the Wall Street Journal reported on Monday (Dec. 16).

Although Amazon itself stopped using FedEx Ground, third-party sellers were allowed to keep using it until now. The use of FedEx’s Ground and Home services is banned effective immediately for Prime deliveries and will last “until the delivery performance of these ship methods improves,” according to an Amazon email sent Sunday (Dec. 15) to third-party merchants and seen by WSJ.

The email said that merchants can use FedEx Express for Prime orders and can continue using FedEx Ground for non-Prime deliveries.

The new rule doesn’t affect a lot of Amazon merchants but restricts options for those sellers “on some of the highest shipping days in history,” a FedEx spokeswoman told the news outlet. She added that FedEx anticipates delivering an unprecedented amount of packages over this year’s holiday season. “The overall impact to our business is minuscule.”

FedEx shares were down 33 percent from August 2018-19, an August WSJ article said. The delivery giant said in June that it was severing its relationship with Amazon.

Amazon has added trucks and cargo planes in a plan to handle more deliveries on its own. It delivered 30 percent of its orders in the 2018 holiday season, according to Rakuten Intelligence.

In its February annual report, the eCommerce giant said that “transportation and logistics services” are among its competitors.

FedEx was forced to cut its profit forecast for 2019 due to higher costs and lower revenue caused by its now-defunct partnership with Amazon.

The company also posted an 11 percent decline in fiscal first-quarter profit due to issues its Express unit is facing because of the U.S. trade war with China, while FedEx’s Ground unit is spending heavily on additional transportation costs and equipment rentals.

“The global macro economy continues to soften, and we are taking steps to reduce capacity,” FedEx chief executive Frederick Smith said on a Sept. 17 earnings call.