Amazon and FedEx reach delivery deal following UPS pullback, FedEx will transport some packages that Amazon customers have ordered to their doors on behalf of Amazon

Amazon and FedEx reach delivery deal following UPS pullback, FedEx will transport some packages that Amazon customers have ordered to their doors on behalf of Amazon

In a strategic move to bolster its delivery capacity, Amazon has entered into a partnership with FedEx to transport some packages for its customers. This agreement comes on the heels of UPS's decision to reduce its volume of Amazon packages by more than 50% by the second half of 2026 [2].

According to Amazon spokesperson Steve Kelly, FedEx will join other third-party partners like UPS and the USPS, working alongside Amazon's own last mile delivery network to balance capacity and better serve customers [1]. The deal is expected to provide Amazon with cost savings, as FedEx offers "cost favorability" over UPS [2]. The partnership will see FedEx handle residential delivery of select packages, including large items, which Amazon's in-house logistics network may struggle with [3].

This new arrangement marks a significant shift in the relationship between FedEx and Amazon, following years of competitive tension. In 2019, FedEx ended its ground delivery and air express contracts with Amazon, citing the e-commerce giant's expanding in-house logistics network as a competitive threat [4]. The current deal represents a pragmatic business decision for both parties, with Amazon needing reliable delivery partners during peak seasons and FedEx looking to utilize its available network capacity [4].

The agreement is part of a broader effort by Amazon to optimize its delivery operations. More than two-thirds of Amazon packages are delivered through its in-house logistics network in the U.S., but large packages can be difficult to handle efficiently, even for Amazon and FedEx's highly automated networks [3]. Parcel carriers typically institute fees for bulkier shipments, which have climbed in recent years [3].

The financial markets responded positively to the news, with FedEx shares rising approximately 2% following the announcement [4]. This deal underscores the evolving dynamics of the package delivery landscape, as carriers and e-commerce giants seek to optimize their operations and maximize profitability.

References:

[1] https://www.foxbusiness.com/markets/amazon-fedex-reach-delivery-deal-following-pullback-ups
[2] https://seekingalpha.com/news/4446770-fedex-inks-deal-with-amazon-to-fill-delivery-gaps-left-by-ups---report
[3] https://www.supplychaindive.com/news/fedex-amazon-new-shipping-contract-2025/747942/
[4] https://www.webpronews.com/fedex-delivers-for-amazon-former-rivals-strike-deal-as-ups-steps-back/