FedEx has confirmed that it will not renew its express air shipment contract with Amazon, noting that the partnership with Jeff Bezos’ company represented only a small part of its business. However, the logistics giant stressed that it will continue to work with the e-commerce company in other forms of package delivery.
After the announcement, The Wall Street Journal revealed that FedEx has begun to offer the same express air shipping service for the same price charged for a shipment by land, whose price is cheaper. The goal of FedEx is to have a better position to compete with UPS, in addition to raising the adoption of its two-day delivery service for online sellers.
A Bloomberg report explains that the move is the way FedEx is recognizing Amazon’s efforts to deploy its own logistics operations, so it has decided not to renew the contract before Amazon decides to take the initiative and break the deal.
In any case, FedEx expects e-commerce to remain a growing business in the US, with forecasts that point to an increase of 100 million packages per day by 2026.
Amazon keeps growing
Amazon continues to expand its air cargo fleet, currently with 15 aircraft in its logistics network. The company’s plan is to have 70 operational aircraft by the year 2021. In 2016, Amazon launched Prime Air in order to optimize the pace of package delivery and, since then, has built a much larger business outside this program .
The fact that Amazon has invested in its own delivery business has allowed it to offer Prime users the free two-day and even one-day delivery service for many of the products offered on its platform.
Also published on Medium.