Amazon is suspending FedEx amid a slip in delivery performance.
Amazon notified its third-party sellers that, for now, they won’t be able to ship Prime packages via FedEx’s ground delivery network, according to The Wall Street Journal.
All Major Prime Carriers Experienced A Performance Drop During Cyber Week
Business Insider Intelligence
The e-commerce behemoth cites FedEx’s lackluster performance during this peak holiday season as the reason for the temporary ban, which will last until FedEx’s delivery performance improves. In the meantime, Amazon sellers can still use FedEx’s ground service for non-Prime packages and the logistics company’s premium Express service for Prime packages.
FedEx delivered just 90% of packages on time during Cyber Week in 2019, down from 99% during Thanksgiving week, per ShipMatrix data cited by the Journal. This decline in performance can be attributed to several factors, including record package volumes and severe winter weather. Amazon’s own performance slipped in the same time frame from making 98% of deliveries on time during Thanksgiving week to 94% during Cyber Week, though Amazon disputes these numbers.
*Other competitors in the logistics market, like UPS, have been put on notice, as the suspension indicates Amazon’s ability to increasingly rely on its own network. Amazon’s willingness to suspend FedEx during peak season indicates the company has increasing confidence in its own network as it handles more of its own packages. Amazon has gradually been building up its logistics network, which now handles around 50% of US shipments from its e-commerce platform, up from 20% in 2018, according to Morgan Stanley. Suspending FedEx’s ground service from Prime could help speed Amazon’s growth in the logistics space, threatening the business of legacy logistics providers currently working with third-party Prime sellers.
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