What Happened?
On August 7th, FedEx Ground formally announced that it will not renew its shipping contract with Amazon. The contract is set to expire at the end of August. This announcement follows on the heels of FedEx Express own Amazon contract termination announcement a few months ago.
Why?
This announcement really wasn’t surprising given FedEx’s extremely small market share in Amazon package deliveries. Starting in 2012/2013, FedEx began to move away from Amazon and up until last year, Amazon represented less than 2% of revenues for the entire company. Given the small impact Amazon has on FedEx, now seemed like a good opportunity to cut ties so FedEx can focus its efforts on its various growth initiatives.
How Does This Impact FedEx Contractors?
For the vast majority of FedEx contractors, this is a non-issue for their business. For the past few years, USPS, UPS and Amazon’s own delivery fleet have handled the bulk of Amazon’s packages. FedEx typically handled one off packages where its network/pricing made more sense for the package to be delivered by FedEx. To give you a sense for how small Amazon really is for FedEx, our terminal typically delivers between 30,000-40,000 packages per day. Of that total, Amazon was approximately 80-100 packages per day. Now if one contractor happened to be doing those 80-100 packages per day (unlikely), then there could be an impact to a contractor. Outside of that, our terminal certainly won’t feel any impact from the loss of Amazon.
Future For FedEx Ground Post Amazon
FedEx Ground has a bright future going forward as it continues to grow faster than the overall ground market. FedEx continues to take market share from UPS, taking back more volume from USPS and is launching new initiatives like 7 day operations and large package routes to continue to win customer accounts and drive volume for FedEx Ground contractors.
Are you interested in buying FedEx Ground routes? Are you a current contractor looking to sell your routes? Contact Us! We are not only experts in selling routes, but we are one of the largest FedEx Ground contractors in the mountain states.