AMERICAN express delivery giant FedEx says it is ending its domestic US ground-delivery contract with Amazon.comto make itself available to a broader range of e-commerce customers, reports New York's FreightWaves.
The break will occur at the end of August and apply to all of Amazon's national account business with FedEx, though FedEx's small international business with Amazon will continue for the moment.
Two months ago, FedEx said it would end its US air services agreement with Amazon, citing the same rationale.
According to estimates from consultant IDrive, FedEx Ground, which is the FedEx unit handling the Amazon ground-delivery work, carries fewer than 40 million Amazon parcels a year.
FedEx complains that Amazon provided it with low-yield business and little of that.
Amazon is said to be using its network to deliver parcels on short-haul, high-density routes while giving its third-party partners volumes moving over longer distances to low-density destinations.
Amit Mehrotra, an analyst at Deutsche Bank, illustrated the problem by saying a FedEx truck could be driving 75 miles to make one Amazon package delivery to a rural destination.
The symbolism of FedEx's move, however, is undeniable. "One of the two largest e-commerce parcel delivery companies in the US is not doing any business with the dominant e-commerce player in the country," said Morgan Stanley analyst Ravi Shanker.