Amazon taps FedEx for big-and-bulky residential deliveries
May 13, 2025
Six years after breaking up, Amazon and FedEx are back together. The retail giant has reached a long-term agreement with FedEx to provide limited residential package delivery, the companies have confirmed.
Amazon (NASDAQ: AMZN) recently added FedEx (NYSE: FDX) to its roster of vendors providing last-mile transportation of goods purchased on its marketplace, Amazon said in a statement provided by spokesman Steve Kelly. “FedEx joins our other third-party partners, like UPS and the U.S. Postal Service, that work alongside our own last-mile delivery network to help us balance capacity to best serve customers,” the statement said.
FedEx said in a separate statement that the multiyear agreement covers “residential delivery of select large packages for Amazon.”
FedEx Chief Commercial Officer Brie Carere, speaking Monday evening at a Bank of America investor conference, noted the Amazon contract will be financially accretive with yields and weights above system average in the U.S. ground market, according to a transcript of the event. She said the deal leverages FedEx’s ability to move heavy, hard-to-handle packages across all U.S. ZIP codes.
More than two-thirds of packages shipped by Amazon are delivered by its own network of warehouses and delivery drivers, according to the company.
Few details of the deal, including expected volumes for FedEx, were disclosed.
Amazon vehemently denied that the deal is intended to replace service provided by UPS, which decided in January to reduce Amazon volumes by more than 50% by mid-2026 because the business wasn’t profitable. UPS recently said the decoupling with Amazon, its largest customer in 2024, will result in 20,000 jobs being eliminated.
Business Insider broke the story on Monday with a report, based on an internal Amazon email, that said FedEx will take over the Amazon package business previously handled by UPS (NYSE: UPS).
FedEx offered better pricing than UPS, according to the publication.
The report also said that FedEx will support Amazon’s Extra Large delivery network, AMXL, which is responsible for fulfilling orders, delivery and installation for large, heavy and bulky items, such as furniture and appliances.
Amazon said that “the reference to AMXL is premature at this point.”
In 2019, FedEx ended its domestic ground-delivery contract with Amazon because of what it perceived as difficult service requirements and low yields. Estimates at the time suggested FedEx transported 4% of Amazon’s ground traffic. Prior to the split, Amazon had diverted much of its business from FedEx’s SmartPost service (since removed), in which FedEx Ground tendered packages to the U.S. Postal Service for final deliveries to residences.
“Given this new business [for heavy and large packages] is likely to support above average revenue per shipment, we expect the mix contribution from new Amazon deliveries should support higher yields for FedEx’s core domestic package network operation,” said Barclays’ transportation analyst Brandon Oglenski in a research note. “We suspect this new deal with Amazon is likely to be more favorably priced than in the past and aligns with the company’s broader focus on improving revenue quality within the network.”
Oglenski said he suspected higher pricing from UPS at least partially explains Amazon’s motivation to add another delivery partner.
FedEx is likely able to take a second look at Amazon now because the company’s business optimization and efficiency campaign, combined with the merger of the Express and Ground networks, is significantly reducing its cost structure. With lower operating costs, FedEx can offer more competitive pricing, Oglenski said.
As UPS downsizes domestic capacity to reflect the departure of Amazon volumes, it will likely increase parcel prices with remaining customers to offset reduced economies of scale, he added.
“We expect higher pricing from UPS over the long-run will create incremental opportunities for FedEx to capture market share given the cost disparity we see developing between the two package delivery competitors,” Oglenski said.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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