A delivery giant FedEx chose not to renew its ground-shipping contract with Amazon when it expires this month. It comes just two months after FedEx announced that it wouldn’t renew Amazon’s FedEx Express contract. This newly ended contract focused on FedEx’s ground deliveries that helped bridge the “last-mile” gap between Amazon’s warehouses and its customers.
“This change is consistent with our strategy to focus on the broader e-commerce market, which the recent announcements related to our FedEx Ground network have us positioned extraordinarily well to do,” a FedEx spokesperson said.
This move is an evidence of escalating tensions between the longtime partners as the e-commerce giant builds its own delivery network, including leasing cargo planes, buying trucks and funding local delivery drivers. Just last November, Amazon announced that it would hire thousands of drivers for the delivery of packages, in USA alone.
FedEx’s annual report released last month cited the rise of Amazon as a competitor, as a potential risk for investors. High-volume shippers such as Amazon "are developing and implementing in-house delivery capabilities and utilizing independent contractors for deliveries, and may be considered competitors," FedEx wrote.
Despite its huge investments, Amazon has a long way to go before it can rival major delivery companies. In a recent report released by Goldman Sachs, analysts wrote that Amazon would need to invest a whopping $122 billion into its logistics network to catch up with FedEx and UPS.
