FedEx acknowledges Amazon as a key competitor

FedEx CEO Fred Smith has finally acknowledged Amazon as a key competitor, after downplaying the threat posed by the company in the logistics industry.

Smith made the acknowledgement in a call to investors last week.

“We basically compete in an ecosphere that’s got five entities,” Smith said. “There is UPS. There is DHL. There is a US Postal Service. And now increasingly there is Amazon. That’s who we wake up every day trying to think about how we compete against and give the best services to our sales force.”

In January FedEx released a statement expressly pointing out how little of the company’s revenue came from Amazon as a customer—only 1.3% in all of 2018. This appeared to be in response to Amazon for the first time officially citing “transportation and logistics services” as competitors.

However, over the summer, FedEx elected not to renew its contracts with Amazon for ground delivery services and for express services in the US, which the company said was due to a refocus on the broader e-commerce market, but may have been due to narrow profit margins on its Amazon business, and Amazon’s own growing logistics operations.

Source: Insider