They say that summer is the season for breakups, and FedEx and Amazon seem to be kicking things off. On Friday, June 7, FedEx announced it will no longer provide express shipping to Amazon, effectively ending the longstanding shipping contract between FedEx and the eCommerce giant.
Amazon Wasn’t a Huge Customer for FedEx Anyway
While this breakup might seem like huge news, it really isn’t too big of a deal. Amazon only accounted for less than 1.3% of FedEx’s total revenue last year, so it’s unlikely that terminating this agreement will put a dent in either organization’s wallets.
If stock prices are any indication, news of the FedEx and Amazon breakup didn’t rattle that many cages. FedEx stock (NYSE:FDX) only moved lower 1%, while Amazon’s stock price (NASDAQ:AMZN) didn’t even budge.
The Contract Between FedEx and Amazon Only Affects Air Service
People should note that the contract FedEx is opting not to renew only affects air service. That means that Amazon will still continue to rely on FedEx for ground transport and last mile delivery, just like Amazon currently does with USPS.
Amazon is Busy Building Out Its Own Delivery Network
Meanwhile, this breakup has neither company teary-eyed and curled up with a pint of Ben and Jerry’s underneath a blanket. FedEx will continue servicing its higher-volume customers such as Target, Walmart, and Walgreens, and will keep working towards delivering an anticipated 100 million packages per day by 2026.
On the other end, Amazon has been building out its own delivery network for quite some time, and even recently broke ground on a brand new Prime airport in Kentucky. This airport will serve as the company’s centralized air hub in the United States. Amazon currently has 42 branded aircrafts in the country. By the end of this year, Bezos and Co. plan to grow the fleet to 50.