Business Insiderยท2025-05-12 20:09Core Viewpoint - Amazon has re-established a partnership with FedEx for package deliveries, moving away from UPS due to cost advantages and capacity constraints [1][2][5]. Group 1: Partnership Details - Amazon signed a new deal with FedEx in late February to handle certain package deliveries, which is expected to provide "cost favorability" compared to UPS [1]. - The extent of the deal and specific packages to be handled by FedEx have not been disclosed [1]. - FedEx will serve as one of several third-party partners for Amazon, joining UPS and USPS to help balance delivery capacity [3]. Group 2: Historical Context - FedEx and Amazon previously severed ties in 2019 as they began to compete in logistics, with FedEx focusing on other e-commerce clients [4]. - At the time of the split, FedEx indicated that Amazon was a minor part of its network, and logistics consulting firm MWPVL estimates that FedEx currently handles no Amazon packages in the US [4]. Group 3: Industry Impact - The new FedEx deal comes after UPS announced it would reduce shipping volume for Amazon packages by over 50% by the end of 2026 due to profitability concerns [5]. - Amazon's in-house logistics service has surpassed both FedEx and UPS in shipping volume, with Amazon shipping 6.3 billion parcels in 2024, a 7.3% increase from the previous year [7]. Group 4: Future Plans - Amazon's Extra Large delivery network, which handles bulky items, plans to leverage FedEx for 100% of any capacity risks in the second half of the year, although this statement was deemed "premature" by Amazon's spokesperson [6].