UPS is moving full-steam ahead with its plan to decrease the volume of Amazon parcels it delivers by 50% by the second half of 2026. Despite Amazon's LTL ambitions and investments in a rural delivery network, the e-commerce giant needs help getting parcels to customers. Last week, FedEx and Amazon went public with a new relationship. Today, we'll look back at their previous business together, what this new contract entails, and what it means for your business.

A Short History of FedEx and Amazon's Prior Dealings

Six years ago, the competition between Amazon and FedEx caused a rift, resulting in the two ending their working relationship.

Before August 2019, Amazon contracted with FedEx for ground and express domestic shipments. By September of that year, FedEx had allowed both contracts to lapse. In FedEx's 2019 annual report, the company addressed competition, stating, "If customers, such as Amazon.com, further develop or expand internal capabilities for the services we provide, it will reduce our revenue and could negatively impact our financial condition and results of operations."

In 2019, Forbes reported that FedEx's decision to stop working with Amazon would allow it to partner with other major retailers. The article noted that, by 2026, the number of e-commerce parcels delivered each day was expected to increase from 50 million to 100 million. But those estimates were incorrect. According to the Capital One Shopping Package Delivery Statistics, 58,082,192 parcels were delivered daily in 2022.

Is FedEx the New UPS?

The new contract isn't a replacement for UPS. Instead, Amazon spokesperson Steve Kelly shared, "FedEx joins our other third-party partners, like UPS and the U.S. Postal Service, that work alongside our own last-mile delivery network to help us balance capacity to best serve customers." According to the e-commerce company, it now delivers two-thirds of its orders using in-house warehouses and delivery drivers.

What's in the New Contract?

While the new contract details are not public, an internal FedEx source obtained by Business Insider says, "We have reached a mutually beneficial, multi-year agreement to provide residential delivery of select large packages for Amazon." FedEx has the infrastructure to support heavy and bulky deliveries across the US.

How Will FedEx's New Relationship With Amazon Affect You?

Just six years ago, FedEx seemed concerned that "high volume package shippers are developing and implementing in-house delivery capabilities and utilizing independent contractors for deliveries, which could in turn reduce our revenues and market share." Those concerns led to a cooling between the two organizations. Now, they're working together again.

While we may never know exactly what prompted the change, weak demand likely led to FedEx's decision to work with Amazon again.

Now is an ideal time to negotiate or renegotiate a contract with FedEx.

Amazon and FedEx's rekindled relationship is a sign that FedEx is willing to accept work it once declined. There's no better time to find out how its current circumstances might work in your favor. Get started with a complimentary ShipRx Savings Analysis to find out how much you can save.