Amid increasing competition, global courier company FedEx has decided not to renew its air shipping contract with e-commerce giant Amazon.
Amazon’s FedEx Express contract is in question, which according to Amazon is used for air transportation of packages and is not used for last-mile and ground deliveries, The Verge reported on Friday.
“FedEx has made the strategic decision to not renew the FedEx Express US domestic contract with Amazon.com as we focus on serving the broader e-commerce market,” Carl Quintanilla, CNBC Journalist tweeted a screenshot of FedEx’s statement.
“The decision does not impact any existing contracts between Amazon and other FedEx business units or relating to international services,” the statement added.
Amazon is not FedEx’s largest customer and only 1.3 per cent of the total revenue generated by the global courier company in 2018 was attributed to Amazon.com.
However, the decision did not really come as a surprise to Amazon, the report said.
The e-commerce company has invested years into building its own delivery infrastructure to cut down on logistics costs.
Currently, Amazon oversees a massive warehouse, air hub, and cargo freight logistics network in addition to its growing network of Flex personal delivery drivers, which are employed using an Uber-like contract model.
“We respect FedEx’s decision and thank them for their role serving Amazon customers over the years,” the report quoted an Amazon spokesperson as saying.
Since FedEx has refused to transport Amazon parcels via air, it remains unclear how Amazon would be able to keep up with its recently-introduced one-day delivery program for Prime members in the US.