FedEx Won't Renew Amazon's U.S. Air-Delivery Contracts
As reported by Bloomberg, FedEx Corp. said it wouldn’t renew its U.S. air-delivery contract with Amazon.com Inc., as the courier focuses on “serving the broader e-commerce market.”
The decision doesn't impact other Amazon contracts, and the Amazon business only accounted for 1.3% of FedEx's total revenue for the year ending Dec. 31, 2018, the statement said (read below).
With the growth in ecommerce daily package delivery set to grow from 50 million today to 100 million in the U.S. by 2026, FedEx says it has a "network and capacity to serve thousands of retailers in the e-commerce space."
Amazon recently announced that it would half its free delivery time for Prime members from two days to one, and will deliver packages by drone within months.
Competition among retailers to provide quick, convenient delivery has also raised to another level on today with the announcement from Walmart that it will make grocery deliveries into customers' homes.
Statement Regarding FedEx Corporation’s Relationship with Amazon.com, Inc.
FedEx has made the strategic decision to not renew the FedEx Express U.S. domestic contract with Amazon.com, Inc. as we focus on serving the broader e-commerce market.
This decision does not impact any existing contracts between Amazon.com and other FedEx business units or relating to international services. As previously disclosed, Amazon.com is not FedEx’s largest customer. The percentage of total FedEx revenue attributable to Amazon.com represented less than 1.3 percent of total FedEx revenue for the 12-month period ended December 31, 2018.
There are significant demands and opportunities for growth in e-commerce which is expected to grow from 50 million to 100 million packages a day in the U.S. by 2026. FedEx has already built out the network and capacity to serve thousands of retailers in the e-commerce space. We are excited about the future of e-commerce and our role as a leader in it.
Certain statements in this news release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements.
Potential risks and uncertainties include, but are not limited to, the rate of future global e-commerce growth and our ability to successfully compete in the e-commerce market, our ability to successfully implement operational changes in the expected time frame, our ability to match capacity to shifting volume levels, and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s filings with the Securities and Exchange Commission.
Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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