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Investing.com -- FedEx (NYSE:FDX) shares climbed 2% after-hours following a report by Business Insider that Amazon (NASDAQ:AMZN) has entered into a new partnership with the shipping company after reducing its reliance on UPS. This development comes as a significant shift since FedEx and Amazon had previously ended their relationship in 2019 amidst growing competition.
The internal document mentioned in the Business Insider report, obtained in late February, suggests that Amazon will leverage FedEx’s delivery network to fill in the gaps left by UPS’s scaled-back services. The partnership is reported to offer Amazon "cost favorability" compared to its previous arrangements with UPS, hinting at potential cost savings for the e-commerce giant.
Although the specifics of the deal, including which Amazon packages FedEx will handle, remain undisclosed, the document emphasizes that engaging FedEx is a strategic move to address capacity constraints. An Amazon spokesperson confirmed the partnership via email, stating, "We’ve reached an agreement with FedEx to serve as one of several third-party partners to deliver packages to our customers."
The spokesperson added that FedEx would join other third-party partners like UPS and the United States Postal Service, working alongside Amazon’s own last-mile delivery network to optimize capacity and customer service.
This renewed collaboration between Amazon and FedEx introduces a notable dynamic within the shipping industry, potentially altering the competitive landscape and distribution strategies for major players. The news has been well-received by investors, as evidenced by the uptick in FedEx’s stock price.