FedEx dumps Amazon from air cargo service as rivalry grows

Companies competing more directly

By Matt McFarland, CNN Business
Justin Sullivan/Getty Images

Amazon packages will take their last US flight on FedEx planes later this month.

FedEx announced Friday that it isn't renewing its US contract with Amazon to transport packages on FedEx Express. The move comes as FedEx and Amazon compete more directly in delivery logistics.

Amazon is under increased pressure to deliver packages quickly. In April, Amazon said it planned to begin delivering packages to Prime customers in one day rather than two. FedEx followed up in May with plans to deliver seven days a week.

FedEx said in a press release it plans to focus on serving the broader e-commerce market with continued partnerships with brands such as Walmart and Target. The company said Amazon accounted for less than 1.3% of its total revenue in 2018.

A FedEx spokeswoman told CNN Business the decision impacts only air transportation. Other contracts between FedEx and Amazon remain intact.

"We respect FedEx's decision and thank them for their role serving Amazon customers over the years," Amazon said in a statement.

The contract ends June 30.

The two companies increasingly compete across several areas. For example, both companies are developing autonomous ground robots that drive on sidewalks to deliver packages in neighborhoods. Earlier this week, Amazon unveiled its latest drone that is months away from making deliveries.

Amazon also has said it will invest $1.5 billion in a hub for its cargo planes near Cincinnati, Ohio.

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