Freight FedEx terminates contract with Amazon

Cargo operator FedEx has announced that it will not renew the FedEx Express U.S. domestic contract with Amazon.

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The freight company stated, that FedEx will now focus on serving the broader e-commerce market and has therefore the plans, no to renew the current contract with Amazon. The decision however, according to FedEx, will now impact existing contracts between Amazon and other FedEx business units.

Years ago, Amazon started its own airfreight network with Prime Air trough agreements with ATSG and Atlas Air. Since then, the airline has been ramping up its services. Prime Air is currently operating a fleet of Boeing 767-300Fs and 737-800Fs.

In a statement, FedEx declared, that Amazon is not their largest customers, as the percentage of the revenue attributable to Amazon represented less than 1.3 percent of the total revenue.

The decision to focus on the bigger e-commerce market is a strategic one for FedEx. The statement included: "There is significant demand and opportunity for growth in e-commerce which is expected to grow from 50 million to 100 million packages a day in the U.S. by 2026. FedEx has already built out the network and capacity to serve thousands of retailers in the e-commerce space. We are excited about the future of e-commerce and our role as a leader in it."

Amazon on the other hand stated, that the company would respect FedEx´s decision. The e-commerce giant thanks FedEx for their role in serving customers over the years.

FedEx Corp operates with more than 445 feeder aircraft, including mid- to widebody cargo jets like the A300, A310, Boeing 737, 757, 767, 777, McDonnell Douglas DC-10 and MD-11. FedEx Express also operates with smaller ATR 42 and ATR 72 aircraft for regional routes. Main hubs are in Memphis, Indianapolis, Dallas, Miami, Newark, Oakland, Anchorage, Paris, Toronto and Guangzhou. 220 countries are being served worldwide.

Amazon´s Prime Air was founded three years ago and currently operates with a fleet of 40 Boeing 767-300Fs. Recently, the company announced that new Boeing 737-800Fs will be added to the fleet. These aircraft are perfect for serving smaller markets. Moreover, through ATSG, Amazon will add 10 additional 767Fs in the next years.

Source © investors.fedex.com

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