Amazon has turned to FedEx for the delivery of larger packages; this decision comes shortly after UPS announced it would be discontinuing some of its less-utilized delivery services for e-commerce companies and laying off around 20,000 workers.
Following the announcement, FedEx’s stock rose significantly, even outpacing broader Wall Street gains, with a close up of 7%. The Memphis-based firm noted that this long-term agreement will focus on home delivery of certain large packages for Amazon.
The deal, established in February, reportedly provides Amazon with a more favorable cost structure when compared to UPS. This is according to sources from internal documents, as mentioned by Business Insider.
Amazon emphasized that it won’t be completely replacing UPS. Instead, FedEx will collaborate alongside other third-party partners, such as UPS and USPS, and also utilize Amazon’s own last-mile delivery network.
FedEx described the arrangement as a “mutually beneficial multi-year agreement.”
This shift could indicate a thawing in the previously strained relationship between FedEx and Amazon. Back in 2019, the two companies had scaled back their home delivery partnership as Amazon was developing its extensive delivery services.
Moreover, UPS had stated in January that it would be reducing the volume of Amazon shipments, particularly as major clients pivot towards smaller, more profitable deliveries, forecasting a growth of over 50% in the latter half of 2026.
Last month, UPS revealed plans to cut 20,000 jobs and shut down 73 facilities, which are part of a broader effort to enhance efficiency and address Amazon’s planned service reductions.
For the past five years, FedEx and UPS have engaged in a fierce competition for market share, frequently vying for customer accounts.
