Amazon has signed a multi-year agreement with FedEx to handle some residential deliveries of large packages.

This deal, finalized in February, adds FedEx to Amazon’s network of third-party delivery partners, complementing UPS and USPS.

The collaboration revives a relationship that ended in 2019 when Amazon expanded its own delivery operations.

The deal follows UPS’s decision to reduce its deliveries for Amazon by over 50% by mid-2026, prioritizing more profitable shipments.

Following the news, FedEx shares rose by 7%, outperforming Wall Street benchmarks.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ The pendulum swings: Amazon’s carrier strategy shifts from building to partnering

Amazon’s new agreement with FedEx represents a notable strategic shift in the company’s approach to logistics partnerships.

This deal follows a pattern that began in 2013 when delivery failures during the holiday season prompted Amazon to start building its own logistics capabilities after previously relying heavily on carriers like UPS and FedEx1.

By 2019, Amazon had grown its logistics network so substantially that it was handling more packages than either FedEx or UPS, an estimated 6.3 billion parcels compared to UPS’s 4.7 billion and FedEx’s 3 billion1.

This growth led to FedEx terminating its ground delivery partnership with Amazon in August 2019, explicitly stating they would focus on serving the broader e-commerce market rather than supporting a rising competitor2.

The new FedEx partnership suggests Amazon is now strategically balancing in-house capabilities with third-party partnerships based on cost efficiency, with Business Insider reporting the deal provides Amazon “cost favorability” compared to UPS3.

2️⃣ Competitive realignment reshapes the delivery landscape

The logistics industry is undergoing a significant competitive realignment as traditional carriers recalibrate their relationships with Amazon.

UPS recently announced plans to cut its Amazon delivery volume by more than 50% by 2026, followed by slashing 20,000 jobs and closing 73 facilities, moves expected to save the company approximately $3.5 billion45.

Recent Amazon developments