Amazon teams up with FedEx for big package deliveries after UPS pullback

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Amazon has entered into a partnership with FedEx for delivery of large packages, the companies said on Monday, according to a report by Reuters. This came weeks after the shipping and logistics company United Parcel Service (UPS) announced that it is stopping its less profitable deliveries for Amazon.

 

Following this, FedEx shares jumped on Monday, rising 7 per cent — even more than the overall gains in the stock market. FedEx said under this agreement, it will deliver the select large packages for e-commerce retailer Amazon.

 

Citing an internal document, Business Insider reported that this deal was signed in February and it gives Amazon ‘cost favourability’ as compared to the delivery rival UPS. 

 

However, it is important to note that this deal will not replace UPS, Amazon said. The e-commerce giant further said that FedEx, Memphis-based delivery company, will join as its third party partners, including others such as UPS and Washington-based United States Postal Service (USPS). 

 

‘Mutually beneficial’ agreement

 

Lauding the deal, in its statement, FedEx described it as a “mutually beneficial, multi-year agreement”. 

 

The deal might show that FedEx and Amazon are starting to improve their relationship. They stopped working together on home deliveries in 2019 when Amazon began building its own large delivery network.

 

UPS to cut shipments for Amazon

 

Earlier this year, UPS said it will cut the number of packages it ships for Amazon by more than half by late 2026. UPS wants to focus on fewer shipments that make more money.

 

Last month, UPS announced it would cut its workforce by 20,000 and will also close 73 locations. This is part of its plan to reduce deliveries for Amazon and lower costs through a major reorganisation. Over the past five years, FedEx and UPS have been competing hard to win over each other’s customers.

 

[With inputs from Reuters]