Amazon Cuts Ties With FedEx To Pursue Own Delivery Business
The end of FedEx' relationship with Amazon has been seen as a clear sign that the online retailer is likely now confident enough to rely more on its own delivery fleet moving forward.
Amazon has slowly been building its delivery fleet for the past few months, a move that will eventually see it competing against the companies that used to deliver its packages.
FedEx announced on Wednesday that it will not be renewing its contract with Amazon. The company's contract to deliver packages for Amazon officially expires at the end of this month. The announcement comes just two months after FedEx also revealed that it was terminating its air delivery contract with the online retailer.
The Memphis-based delivery firm mentioned that Amazon represents less than 1.3 percent of its total revenue last year. This means that cutting ties with Amazon will not have that big of an effect on its bottom lines.
However, the company could be still be facing problems down the road as Amazon is slowly preparing itself to become a major competitor in the lucrative delivery industry. While Amazon will mostly be serving itself, the company's fledgling in-house delivery business could eventually end up competing directly with other services as it grows.
Amazon has been trying to cut its reliance on third-party shippers such as FedEx, UPS, and the US Postal service. Part of the reason for the strategy is for the company to have more control over how its packages are delivered to its customers. However, the main reason for the move is to significantly cut costs and reduce risk by integrating its delivery process.
To achieve this goal, Amazon has been quite busy trying to acquiring assets to build its own ground and air delivery fleet. The Seattle-based company has already started to build package-sorting hubs at various airports across the United States.
The company has also started to lease jets, which are now being stamped with its logo. Amazon had even launched a program that allowed contractors to start their own business by delivering packages for the company using Amazon-branded vans.
Apart from traditional delivery systems, Amazon has heavily invested in more advanced technologies such as autonomous driving and artificial intelligence. Just this week, the company has begun test runs for its new autonomous delivery robots in Southern California.
The robots, which are basically six-wheeled delivery machines, are reportedly able to pick up packages from the company's distribution centers and deliver them to customers with minimal human input. Not to be outdone, FedEx is reportedly also trying to develop its own autonomous delivery system.