Amazon has finalized a new package delivery agreement with FedEx, marking a significant collaboration between the e-commerce leader and the logistics company.
According to a report from Business Insider, which cited an internal document, the deal was established in late February. Under the terms of the agreement, FedEx will handle the delivery of certain packages ordered by Amazon customers directly to their homes.
“We have reached an agreement with FedEx to serve as one of several third-party partners to deliver packages to our customers,” said Amazon spokesperson Steve Kelly in a statement to Finance Newso Business.
Kelly elaborated that FedEx would be joining other delivery partners such as UPS and USPS, working together with Amazon’s own delivery network to optimize service capacity and effectively cater to customer demands.
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As per Amazon’s disclosures, its logistics network manages over two-thirds of all packages delivered in the U.S.
FedEx expressed its commitment to the partnership, confirming that the agreement is designed to be mutually beneficial and underscores its capability to provide comprehensive delivery services to retailers in the e-commerce sector. “We offer a unique capability that allows us to service all ZIP codes in the U.S. and effectively manage heavier and harder-to-handle packages,” a FedEx representative remarked.
According to Business Insider, the internal document indicated that the partnership would provide Amazon with “cost favorability” compared to its ongoing relationship with UPS, which has been a long-standing delivery partner. In January, UPS and Amazon agreed to cut the volume of packages handled by UPS by more than 50%.
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Amazon clarified that the intention behind this new collaboration with FedEx is not to replace UPS, but rather to enhance its delivery options.
Previously, FedEx had a contract with Amazon for ground deliveries, but that arrangement concluded in 2019.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMZN | AMAZON.COM INC. | 212.59 | +3.95 | +1.89% |
| FDX | FEDEX CORP. | 232.95 | +15.12 | +6.94% |
Brie Carere, FedEx’s executive vice president and chief customer officer, disclosed during a Bank of America conference this week that the company has just executed a new deal with Amazon, which she conveyed in a transcript provided by SeekingAlpha.
Carere indicated that this arrangement is expected to enhance FedEx’s yield within the domestic market. “We possess a unique capacity to cover all ZIP codes across the U.S., and we excel at moving heavy, difficult packages,” she noted, adding that most of the business from this partnership would involve larger items.
When asked if the deliveries would consist of bulky or freight type packages, she confirmed they would be managed through FedEx’s surface transportation network.
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“It will be part of the FedEx Ground portfolio, meaning it won’t be overwhelmingly large,” Carere clarified. “It will include parcels, but heavier weights, which will increase our average weight per package and improve our yield.”
Carere also commented that while this new venture will not make FedEx Amazon’s primary delivery company, the firm is optimistic about the relationship moving forward.
