What’s Next for the FedEx-Amazon Relationship
Shares of both FedEx and Amazon took a dip on Wednesday after former announced that it will end its ground-delivery contract with the e-commerce giant at the end of the month.
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Both FedEx Corp. (NYSE: FDX | FDX Price Prediction) and Amazon.com Inc. (NASDAQ: AMZN) shares took a dip on Wednesday after former announced that it will end its ground-delivery contract with the latter at the end of the month. This comes a couple of months after FedEx announced that it killed part of its deal to deliver packages for Amazon via air transportation.
Back in June, FedEx specifically, said that it is ending its express U.S. shipping contract, which only affected air services. At that time, FedEx said it was a “strategic decision” that would not affect its other contracts with Amazon, although this does not seem to be the case now.
Also at that time, FedEx noted that less than 1.3% of its total revenue was attributable to e-commerce giant during the 2018 calendar year.
Amazon combated FedEx’s plan in June by announcing a Delivery Service Partners program in an effort to attract entrepreneurs who can create their own local delivery networks with up to 40 vans each. There has been no word yet on how Amazon will combat this most recent strategic move by FedEx.
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It is worth pointing out that Amazon already has expanded its air fleet and has some plans going forward. Amazon also has a $1.5 billion hub opening in northern Kentucky in 2021, where it’s expanding its Amazon Air fleet to include 50 planes. Amazon said its air network can make “two-day shipping possible almost anywhere in the U.S.”
Shares of FedEx traded down about 2% on Wednesday, at $157.89 in a 52-week range of $150.68 to $259.25. The consensus price target is $187.84.
Amazon was down about 1% to $1,769.72 a share. The 52-week range is $1,307.00 to $2,050.50.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
