Amazon Partners with FedEx to Strengthen Shipping Capabilities Amid UPS Shift
In a strategic move to bolster its delivery network, Amazon has announced a multi-year partnership with FedEx. This collaboration, finalized in early 2025, focuses on handling large and bulky packages for residential customers.
This development comes as UPS plans to reduce its Amazon business by half starting in 2026. The shift underscores Amazon’s proactive approach to securing reliable shipping solutions amid evolving industry dynamics.
The deal offers Amazon cost advantages over UPS, addressing the higher expenses associated with delivering oversized items. While financial details remain undisclosed, internal sources indicate FedEx’s terms are more favorable than UPS’s previous offerings.
This partnership marks a reunion for Amazon and FedEx, who parted ways in 2019. At the time, FedEx sought broader e-commerce opportunities, citing profitability concerns with Amazon’s shipments.
Despite Amazon’s robust logistics network, third-party carriers remain essential for certain shipments. FedEx joins UPS and the USPS in supporting Amazon’s delivery needs, enhancing capacity and reliability.
The renewed alliance benefits both parties: Amazon gains cost-effective solutions and capacity assurance, while FedEx secures high-volume business, leveraging internal improvements since 2019 for better service management.
This collaboration highlights the competitive landscape in the shipping industry, as Amazon balances in-house capabilities with strategic partnerships to maintain customer service excellence.
Source: Inc.com
Revisiting a Familiar Partnership
The renewed collaboration between Amazon and FedEx marks a notable reunion for the two logistics giants. Their previous partnership ended in 2019 when FedEx decided not to renew its contracts with Amazon, opting instead to pursue broader e-commerce opportunities with other retailers. At the time, FedEx expressed concerns about the profitability of handling Amazon’s shipments, which aligns with the current stance of UPS as it reduces its involvement with the retail giant.
While Amazon has significantly expanded its own logistics network since the split, the company still relies on third-party carriers for specific types of shipments, particularly large and bulky items. This is where FedEx’s expertise comes into play. An Amazon spokesperson highlighted the strategic importance of this partnership, stating, “We’ve reached an agreement with FedEx to serve as one of several third-party partners to deliver packages to our customers.” The spokesperson also emphasized that FedEx joins other key partners like UPS and the USPS, all of whom work alongside Amazon’s own last-mile delivery network.
The timing of this deal is particularly strategic for Amazon, as it addresses potential capacity challenges posed by UPS’s decision to halve its Amazon business starting in 2026. Internal documents reveal that securing FedEx’s capacity is Amazon’s “primary solution” to mitigate these constraints. By locking in this multi-year agreement, Amazon ensures a stable and reliable shipping solution for its customers, even as it continues to expand its in-house logistics capabilities.
For FedEx, the partnership represents a significant opportunity to regain a high-volume client while leveraging improvements made since the 2019 split. FedEx has implemented internal changes to better manage both general e-commerce deliveries and the specific demands of Amazon’s shipping needs. These adjustments are expected to make the partnership more sustainable and profitable for both parties compared to their previous arrangement.
The reunion underscores the evolving dynamics in the shipping industry, where companies are continually adapting to meet the demands of e-commerce growth. For Amazon, this deal is a testament to its ability to balance its own delivery infrastructure with strategic partnerships, ensuring that customers continue to receive reliable and efficient service. Meanwhile, FedEx gains a steady stream of high-volume business, reinforcing its position as a key player in the logistics sector.
Source: Inc.com
Conclusion
Amazon’s renewed partnership with FedEx is a strategic move to enhance its delivery capabilities, particularly for large and bulky items. This collaboration comes at a crucial time as UPS plans to reduce its involvement with Amazon, starting in 2026. The deal not only provides Amazon with cost-effective solutions but also ensures reliable shipping capacity, which is essential for maintaining customer satisfaction.
For FedEx, this partnership represents an opportunity to regain a high-volume client and demonstrate its improved capabilities since the two companies last worked together in 2019. The agreement underscores the competitive nature of the shipping industry, where adaptability and strategic partnerships are key to meeting the growing demands of e-commerce.
Amazon’s approach to balancing its in-house logistics network with third-party carriers like FedEx, UPS, and the USPS highlights its commitment to delivering efficient and reliable service. As the e-commerce landscape continues to evolve, such strategic collaborations will remain vital for maintaining operational excellence and customer trust.
Frequently Asked Questions
Why did Amazon choose FedEx as its new shipping partner?
Amazon selected FedEx due to its expertise in handling large and bulky items, as well as its improved service capabilities since their previous partnership ended in 2019. The deal also provides Amazon with cost advantages compared to UPS.
What specific services will FedEx provide to Amazon?
FedEx will focus on delivering large and bulky packages to Amazon’s residential customers. This partnership is part of Amazon’s strategy to ensure reliable shipping capacity amid industry changes, such as UPS reducing its Amazon business.
How does this partnership affect UPS and other Amazon shipping partners?
While UPS is reducing its involvement with Amazon starting in 2026, FedEx joins UPS and the USPS as key third-party carriers supporting Amazon’s delivery network. This ensures Amazon maintains its shipping capacity and reliability without relying solely on any one carrier.
Will this partnership impact Amazon’s own logistics network?
Amazon continues to expand its in-house logistics capabilities but recognizes the importance of third-party carriers for specific types of shipments. The FedEx partnership complements Amazon’s own network, ensuring a balanced and efficient delivery system.
How will this collaboration benefit customers?
Customers will benefit from more reliable and efficient delivery of large and bulky items. The partnership ensures Amazon can maintain high service standards even as the shipping landscape evolves.
What are the financial terms of the Amazon-FedEx deal?
While specific financial details of the multi-year agreement have not been disclosed, internal sources indicate that FedEx’s terms are more favorable to Amazon than UPS’s previous offerings. The deal is expected to be mutually beneficial, providing FedEx with high-volume business and Amazon with cost-effective solutions.