(Reuters) – FedEx Corp said on Friday it has decided to not renew its contract with Amazon.com Inc for U.S. cargo delivery through FedEx Express.
FILE PHOTO: A FedEx delivery worker carries a package for a delivery in Wilmette, Illinois, October 27, 2015. REUTERS/Jim Young
The decision does not impact any existing contracts between Amazon.com and other FedEx business units or relating to international services, the package delivery company said.
Amazon accounted for less than 1.3% of FedEx’s revenue for last year, the company said in a statement.
FedEx Express refers to the company’s delivery via planes.
Amazon has steadily grown its fleet of delivery aircraft in recent years, which Air Transport Services Group Inc (ATSG) and Atlas Air Worldwide Holdings have operated. The company is investing $1.5 billion to build an air cargo hub in northern Kentucky, setting it up to rely less and less on others for air shipping.
Amazon has 40 leased cargo planes and has signed an agreement to induct 10 more planes to join the fleet in the next two years.
A task force set up by President Donald Trump recommended in December that the United States Postal Service should have more flexibility to raise rates for packages, a move that could hurt profits of Amazon and other large online retailers.
Shares of FedEx pared gains and were up nearly 1% at $158.01 in afternoon trading.
Amazon shares were up 2.6% at $1,800.19.
Amazon did not immediately respond to request for comment.
Reporting by Akanksha Rana in Bengaluru; Editing by Shinjini Ganguli