Amazon has been expanding its own delivery network of planes, trucks and vans and is regarded as a potential long-term threat to FedEx and rival United Parcel Service Inc, both of which have long counted the e-commerce company as a customer.
The announcement Wednesday that FedEx would no longer make ground deliveries for Amazon comes two months after the delivery company said it was terminating its air delivery contract with Amazon.
The delivery company Wednesday said it would not renew its ground delivery contract with Amazon when it expires in August.
The online retailer works with other shipping partners more regularly than FedEx. Amazon only made up about 1.3% of FedEx's sales in 2018, according to Bloomberg. The company also has to contend with the risk of pilot shortages and strikes at the third-party carriers it relies on to support its burgeoning air-cargo operations.
Earlier this year, FedEx extended delivery services to seven days a week, a move meant to capture a bigger chunk of e-commerce shipments. As FedEx itself is so quick to point out, Amazon accounts for only about 1.3% of its revenue.
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That growth has left companies like FedEx with something of a quandary: keep working with Amazon, even if it could hurt long-term business prospects, or cut ties with the company and try to build a shipping business around other players.
"Nothing but respect for FedEx but they were very small piece of our network and vice versa, we wish them nothing but the best (conscious uncoupling at its finest)", tweeted Amazon executive Dave Clark, who oversees the company's warehouses and delivery business.
Despite its outsize role in e-commerce, Amazon has never been a major source of business for FedEx. In theory, Amazon could still ship packages via FedEx, but it would not receive the significant discounts that were built into its ground-shipping and express contracts.
Despite its recent investment, Amazon has a way to go before it can match the logistics infrastructure of the major packaging companies. 'We don't see them as a peer competitor at this point in time.
Amazon, which also has its own aircraft and vehicle fleet for its logistics and is experimenting with drone and robot deliveries, has faced criticism from President Donald Trump, who claimed its deal with the US Postal Service gave the company overly favorable rates. "It is creating bad blood".