Amazon Strikes New FedEx Deal to Fill UPS Supply Hole

Amazon goes again to FedEx after falling out with UPS.

Based on an inside doc obtained by Enterprise Insider, Amazon signed a brand new partnership cope with FedEx in late February to deal with some components of its package deal deliveries.

The FedEx deal provides Amazon “price favorability” in comparison with UPS, the doc stated, indicating the retail big stands to save cash from the transition.

The doc does not specify the extent of the deal or which Amazon packages can be dealt with by FedEx.

“Securing FedEx capability is our major answer for these capability constraints,” the interior doc stated.

FedEx shares popped in after-hours buying and selling on Monday, following BI’s unique reporting.

In an e-mail to BI, Amazon’s spokesperson confirmed the brand new partnership.

“We have reached an settlement with FedEx to function one in every of a number of third-party companions to ship packages to our prospects,” the spokesperson stated in an e-mail assertion. “FedEx joins our different third-party companions like UPS and the USPS, that work alongside our personal final mile supply community to assist us steadiness capability to finest serve prospects.”

The renewed alliance between Amazon and FedEx provides a notable twist to the broader delivery business.

FedEx and Amazon reduce ties in 2019 as the 2 firms more and more competed within the logistics and supply house. On the time, FedEx stated it will concentrate on different e-commerce prospects as an alternative. Amazon’s then-operations lead Dave Clark downplayed the fallout, writing on X that FedEx was a “very small piece of our community and vice versa.”

Logistics consulting agency MWPVL estimates FedEx presently handles no Amazon packages within the US. (Third-party sellers on Amazon’s market are nonetheless ready to make use of FedEx as a delivery possibility).

The FedEx deal follows UPS’s announcement earlier this 12 months that it will scale back its delivery quantity for Amazon packages by greater than half by the tip of 2026. Regardless of Amazon being its largest buyer, the corporate cited profitability considerations as the explanation for slowly winding down the partnership.

Based on the interior doc obtained by BI, Amazon’s Further Giant supply community, which ships cumbersome objects like TVs and furnishings, expects to get some supply help from FedEx by way of this new deal. Within the second half of this 12 months, Amazon’s Further Giant supply group plans to “leverage FedEx for 100%” of any capability dangers, it added.

Amazon’s spokesperson instructed BI that the Amazon doc’s reference to the extra-large supply group’s plans was “untimely at this level.”

In the meantime, Amazon’s in-house logistics service has since surpassed FedEx and UPS in delivery quantity.

Based on Pitney Bowes, Amazon shipped 6.3 billion parcels in 2024, up 7.3% from the 12 months earlier than, and much forward of UPS’s 4.7 billion and FedEx’s 3.7 billion. USPS was the one provider forward of Amazon at 6.9 billion packages.

Amazon beforehand disclosed that greater than two-thirds of its packages are delivered by way of its personal logistics community within the US.

Amazon’s spokesperson instructed BI that the corporate recurrently works third-party supply companions to “steadiness capability,” and the FedEx deal shouldn’t be meant to interchange UPS solely.

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