Amazon and FedEx terminate the US shipping contract

FedEx will no longer provide express delivery for Amazon packages in the United States as the e-commerce giant continues to expand its own internal distribution network.

FedEx announced Friday that it has decided not to renew its US express shipping contract with Amazon. The company said in a statement that it was a "strategic decision" and that the change would not affect other existing contracts with Amazon, including international shipments.

Amazon's contract with FedEx Express is for air services only, which means that FedEx will continue to act as the carrier and delivery partner for the last mile.

FedEx added that Amazon was not a big customer and accounted for only about 1.3% of its total business turnover in 2018. FedEx shares fell by less than 1%, but Amazon shares have not moved.

The representative of Amazon said in an e-mail: "We respect the FedEx decision and thank them for their role in serving Amazon's customers over the years."

The change comes at a time when Amazon aggressively invests in its own internal network of shipping and delivery services. It recently launched a new program called Delivery Service Partners, which allows entrepreneurs to run their own local delivery van business with Prime logos.

The company has also purchased cargo aircraft and trucks, while creating new services that simplify truck deliveries. In its annual financial report for 2018, Amazon listed for the first time "transportation and logistics services" among its group of competitors.

FedEx has often downplayed Amazon's competitive risk. Rajesh Subramaniam, executive vice president of FedEx, said during a phone conversation with badysts that Amazon's new delivery service "should not be confused with competition with FedEx". In 2016, while the media suggested that Amazon was seriously considering creating its own delivery service, T. Michael Glenn, former executive vice president of FedEx, said it would be "a daunting task requiring tens of billions of dollars." dollars' to build and replicate the existing FedEx delivery network services.