FedEx Corp said on Friday it has chose to not renew its contract with Amazon.com Inc for US cargo delivery through FedEx Express, the unit that delivers packages on planes. Though the company's existing contracts with Amazon will remain in place, FedEx will no longer provide express service for Amazon, which the company says represented a little over a single percent of its annual revenue a year ago.
"FedEx has already built out the network and capacity to serve thousands of retailers in the e-commerce space", it said.
The decision impacts FedEx Express US; other business units in the company and its worldwide services remain unaffected. Amazon has been expanding its fleet of planes and is building package-sorting hubs at two airports.
Amazon has historically relied on partners such as FedEx, UPS, and USPS to help deliver its packages. Amazon, however, is more than three times their size by revenue and was sitting on about $23.5 billion in cash at the end of March.
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Amazon represented less than 1.3 per cent of FedEx's sales a year ago, according to a statement Friday by the delivery giant.
"We respect FedEx's decision and thank them for their role serving Amazon customers over the years", Amazon said in a statement.
FedEx Express also pointed to its e-commerce contracts with Target, Walmart and Walgreens in an emailed statement Friday.
Weatherbee said it would be harder for UPS to break with Amazon because he believes it derives a greater percentage of its revenue from the retailer. The reduction in services arrives amid Amazon's own growing delivery business. The company is also taking back almost 2 million daily residential deliveries that it now outsources to the post office.