AMAZON shoppers are set to see a major packaging change as the retail giant has done a deal with a mega shipping firm.
FedEx will start delivering large packages to Amazon’s residential customers in a multi-year agreement.
GettyAmazon shoppers are set to see a major packaging change[/caption]The breakthrough agreement symbolizes the fresh start of the two company’s relationship almost six years after FedEx announced it wasn’t renewing its Ground Express domestic shipping contracts with Amazon.
FedEx said it wanted to focus on the broader e-commerce market at the time, ending the partnership.
But while e-commerce remains a priority customer segment, FedEx is making gargantuan changes to its network to allow it to handle those specific deliveries better.
This is especially important when serving a customer like Amazon.
Managing director of SLB Performance Jay Kent said in a LinkedIn post: “Did UPS miss an opportunity here or is FedEx ahead in the network optimization race and is able to deliver these package types at a lower price compared to UPS and still make a profit?”
It comes after UPS revealed in January that it would slash its Amazon volume by more than half by the second half of 2026 as a result of profitability concerns.
But the FedEx agreement isn’t supposed to replace delivery capacity from UPS, Amazon says.
The founder of LPF Spend Management Nate Skiver said on LinkedIn that the arrangement meets a need for both companies.
He added that there’s a small amount of large-package delivery options for Amazon available in the US parcel market – especially when it comes to loner-distance shipments.
Skiver said: “There’s nowhere else to turn if UPS won’t take it.”
At the end of April, UPS announced it is axing 20,000 positions this year, citing deepening economic woes and fading demand from its biggest customer.
A potential pullback from Amazon, UPS’s largest customer, is also putting pressure on the business.
The sweeping cuts will hit 73 facilities across the US, with closures set to be completed by June.
The move comes as UPS reels from the fallout of President Trump’s global trade tariffs, which have shaken up markets and driven up shipping costs.
“We’re facing massive disruptions we haven’t seen in a century,” CEO Carol Tomé said during the earnings call.
“The macro environment may be uncertain, but with our actions, we will emerge as an even stronger, more nimble UPS,” she added.
In January, UPS announced that it had reached a deal with Amazon to reduce its shipping volume by more than 50% by the second half of 2026, ABC News reported.
Tomé said during the company’s Q4 earnings call that UPS had reassessed the partnership as the contract came up for renewal this year.
“Amazon is our largest customer but it’s not our most profitable customer,” she said at the time.
“Its margin is very dilutive to the US domestic business.”
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