FedEx has cut another business tie with Amazon, choosing not to renew its ground delivery contract.
This follows the courier company’s earlier decision to drop its Express contract for domestic deliveries by air in the US.
Amazon is building its own logistics network, both in the air and on the ground, making it an up-and-coming competitor of FedEx. Amazon first cited “transport and logistics services” as competitors in its annual filing earlier this year, and while FedEx has been keen to downplay the significance of the threat—and insist that Amazon only accounts for a tiny proportion of the company’s existing business—it now appears to be distancing itself from its potential new rival.
FedEx maintains that it’s part of a strategy of focusing on the broader e-commerce market. According to Bloomberg, the growth of e-commerce has meant a big jump in sales for companies like FedEx but tighter profit margins as they deal with the ballooning costs of home deliveries, and FedEx’s business from Amazon was reportedly low-margin.
Amazon will still be using FedEx for international deliveries, and UPS and the United Parcel Service to deliver packages in the US.