{"id":217934,"date":"2019-06-08T03:06:03","date_gmt":"2019-06-08T07:06:03","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=217934"},"modified":"2019-06-08T03:06:03","modified_gmt":"2019-06-08T07:06:03","slug":"fedex-will-stop-air-shipments-of-packages-for-amazon","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2019\/06\/08\/fedex-will-stop-air-shipments-of-packages-for-amazon\/","title":{"rendered":"FedEx will stop air shipments of packages for Amazon"},"content":{"rendered":"
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FedEx said Friday that it will not renew the contract for domestic FedEx Express handling of Amazon shipments when the deal expires June 30. (File Photo y MaxEddi – Own work, Public Domain<\/a>)<\/figcaption><\/figure>\n

FedEx is dropping a contract for air shipment of packages for Amazon within the United States, reducing its ties with the online retail giant that is already expanding its own delivery business.<\/p>\n

FedEx said Friday that it will not renew the contract for domestic FedEx Express handling of Amazon shipments when the deal expires June 30.<\/p>\n

Spokeswoman Katie Wassmer called it \u201ca strategic decision\u201d that will let FedEx focus on thousands of other retailers including Target, Walgreens and Walmart.<\/p>\n

In a statement, Amazon said only that it respected FedEx’s decision and thanked the delivery company for serving Amazon customers over the years.<\/p>\n

Amazon.com Inc. is emerging as a potentially formidable challenger to FedEx Corp. and United Parcel Service Inc. Amazon has been expanding its fleet of planes, building package-sorting hubs at two airports, and launching a program that lets contractors start a business delivering packages in vans bearing the Amazon smile logo.<\/p>\n

With a decades-long head start in delivering packages, FedEx and UPS have highly developed global networks. Amazon, however, is more than three times their size by revenue and was sitting on about $22 billion in cash at the start of 2018.<\/p>\n

FedEx did not disclose details of the Amazon contract, but Wassmer said Amazon represented less than 1.3% of FedEx revenue last year. That would work out to about $907 million in revenue for the fiscal year that just ended May 31, according to Cowen Research analyst Helane Becker calculated.<\/p>\n

\u201cWe estimate the loss of the contract is minimal as we believe it is low margin business,\u201d Becker wrote in a note to clients. \u201cFedEx will focus on more profitable e-commerce customers which should help boost the margin profile within the Express segment over time.\u201d<\/p>\n

Even without Amazon, FedEx sees the potential for significant growth in handling online-shopping deliveries, which FedEx believes will double by 2026.<\/p>\n

Memphis, Tennessee-based FedEx cited that outlook when it announced last week that it will go to year-round, seven days a week deliveries in January. The company is also taking back nearly 2 million daily residential deliveries that it currently outsources to the post office.<\/p>\n

FedEx shares rose $1.17 to close at $158.02, while Amazon gained $49.55, or 2.8%, to $1,803.91.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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