By Wolf Richter of WOLF STREET
Ecommerce is drawing up new battle lines – in the transportation sector.
Amazon is aggressively butting in on freight carriers with its own planes, trucks, and delivery infrastructure, and is at the same time aggressively pushing for faster and cheaper service from freight carriers such as FedEx, UPS, and the US Postal Service. And FedEx has had it with Amazon, announcing today that it was dumping Amazon as customer of its FedEx Express division.
“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,” it said in a surprise statement. The current contract ends June 30.
Its other units that do business with Amazon and its international services with Amazon are not impacted by this decision, FedEx said.
FedEx is not overly dependent on Amazon – unlike some other freight companies that now have come to grief under Amazon’s boots, including New England Motor Freight, a less-than-truckload carrier that “stunned” the transportation world when it filed for bankruptcy in February.
Interestingly, FedEx chose to address this point explicitly in the statement:
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.
Amazon is trying desperately to speed up shipping and keep its shipping costs low. Being so immense, it is able to throw its weight around and negotiate very demanding contracts – that can be too demanding, as New England Motor Freight found out…