FedEx and Amazon’s New Delivery Agreement

FedEx and Amazon's New Delivery Agreement

FedEx is set to take on a significant role in Amazon’s large package delivery network, according to a multi-year agreement announced by the two companies. Under the deal, FedEx will be responsible for residential delivery of select large packages for Amazon, marking a major shift in the e-commerce giant’s logistics operations.

Key Points of the Agreement

  • Cost Favorability: The partnership is expected to give Amazon "cost favorability" compared with its rival UPS, as noted in an internal document obtained by Business Insider.
  • Market Reaction: Following the announcement, FedEx shares surged by 7%, outpacing gains seen in Wall Street benchmarks.

UPS’s Operational Changes

  • Volume Reduction: UPS had previously announced plans to shrink shipment volumes for Amazon by more than 50% by mid-2026. This move is part of a major operational restructuring aimed at focusing on higher-margin business lines, such as healthcare logistics and parcel shipping within North America.
  • Job Cuts: In April, UPS revealed plans to cut around 20,000 jobs globally across all three divisions and shut down about two dozen facilities worldwide, citing declining demand from customers like Amazon as a contributing factor.

Evolving Logistics Partnerships

  • Third-Party Collaborations: Amazon has been working closely with third-party partners, including UPS and USPS (United States Postal Service), over the years.
  • FedEx’s Role: With this new agreement, FedEx will join these partners in handling some of Amazon’s large package deliveries alongside its own last-mile delivery network.

While details about the volume FedEx will handle were not disclosed, this deal marks another significant development in the ongoing evolution of e-commerce logistics networks around the world.

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