FedEx won’t renew its ground delivery contract with Amazon after it expires at the end of August, according to Bloomberg. The decision comes just two months after FedEx Express declined to extend an agreement to fly Amazon packages in the U.S.
“This change is consistent with our strategy to focus on the broader e-Commerce market,” FedEx said in a statement, adding that recent moves to bolster service “have us positioned extraordinarily well” to handle demand. The companies will retain a contract for international deliveries.
“We are constantly innovating to improve the carrier experience and sometimes that means reevaluating our carrier relationships,” Amazon said in an email sent to Bloomberg. “FedEx has been a great partner over the years and we appreciate all their work delivering packages to our customers.”
Amazon will still work with UPS, the USPS, regional carriers and its own delivery network to handle domestic packages. The retail giant invested $800 million during Q2 2019 to improve warehouses and delivery infrastructure and partnered with Rite Aid for in-store pickups, increasing its commitment to expanding its menu of delivery options.
Amazon made up approximately 1.3% of FedEx’s sales last year, but the company may make up the lost revenue by increasing its partnerships with other retailers. FedEx is working with Walmart, AutoZone, Lowe’s, Target and Walgreens to develop autonomous delivery capabilities, and it recently launched a strategic alliance with Dollar General that added FedEx drop-off and pickup services at thousands of stores.