Amazon has announced a new partnership with FedEx to handle some of its large package deliveries, following UPS’s decision to cease less-profitable deliveries for the e-commerce giant. This comes as a surprise to many in the industry, as FedEx and Amazon had previously cut ties in 2019.
The agreement with FedEx, signed in February, is a multi-year deal that covers residential delivery of select large packages for Amazon. According to reports, this new deal gives Amazon “cost favorability” compared to its delivery rival UPS, potentially saving the company significant amounts in delivery costs.
Despite this new partnership with FedEx, Amazon has clarified that it will not be replacing UPS entirely. Instead, FedEx will join Amazon’s existing third-party partners, including UPS and the USPS, to work alongside its own last-mile delivery network.
FedEx has described the agreement as “mutually beneficial” in a statement, indicating a positive outlook on the partnership. This move may signify a positive shift in relations between FedEx and Amazon, as the two companies had previously ended their residential delivery ties in 2019.
On the other hand, UPS announced earlier this year that it plans to reduce its shipment volumes for Amazon by more than 50% by the second half of 2026. This decision is part of UPS’s strategy to focus on fewer, more profitable deliveries and streamline its operations.
With UPS cutting back on Amazon deliveries and FedEx stepping in to fill the gap, the delivery industry is seeing significant shifts in market dynamics. Both FedEx and UPS have been engaged in a fierce battle for market share over the past few years, with each company vying for a larger piece of the delivery pie.
Overall, the partnership between Amazon and FedEx for large package deliveries is a strategic move that could benefit both companies in the long run. As e-commerce continues to grow, efficient and cost-effective delivery solutions are essential for meeting customer demands and staying competitive in the market.
