Amazon's loss of a strategic air freight partner means that the brand's in-house transportation arm will have to do some heavy lifting.
Popular freight carrier FedEx has announced that it will no longer fly Amazon packages as of June 30, according to an article on Business Insider.
“FedEx delivered 3% of Amazon packages last year, according to Wolfe Research. That's about 200,000 Amazon boxes a day of FedEx's daily volume of about 2.9 million packages, Moody's Investors Service estimated,” the article said. Following the end of the relationship on June 30, Amazon will have to take air transportation responsibility for the approximately 200,000 packages previously relegated to FedEx’s U.S. air agreement.
“As FedEx balances its wins and losses from the change in relationship, the pressure is on Amazon's burgeoning in-house logistics network of ocean freight containers, trailers, fulfillment centers, cargo planes, and more to be able to carry out its two-day delivery promise—and soon, its one-day pledge,” said the article.
The move by FedEx to dissolve its strategic partnership with Amazon is meaningful at a time when the latter is facing increasing scrutiny for its status as a possible tech monopoly and closing out its Amazon Restaurant arm.
Despite its purportedly unrivaled status—after all, business analysts still refer to the shuttering of brick-and-mortar businesses for more convenient online alternatives as “The Amazon Effect”—”FedEx Express, the company's air freight sector, will benefit in the long-run, analysts said,” according to the article. “Moody's wrote to investors that Amazon—a customer requiring massive amounts of residential, small-package deliveries instead of more fruitful business-to-business contracts—is among FedEx's least-profitable businesses,” according to the article.
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