FedEx will not renew a contract with Amazon to provide express delivery for the e-commerce giant’s packages in the United States.
FedEx, which made the announcement Friday, said in a statement the change would not affect other existing contracts with Amazon or international services. FedEx Express only impacts air services. FedEx will still serve as a carrier for Amazon for last-mile deliveries.
Amazon said in a statement that it respects FedEx’s decision and thanked them for its “role serving Amazon customers over the years.”
FedEx tempered the news by stating that Amazon is not its largest customer. The percentage of total FedEx revenue attributable to Amazon.com represented less than 1.3% of total FedEx revenue for the 12-month period ended December 31, 2018, according to FedEx.
The decision follows an explosion in e-commerce, a trend that is expected to continue. FedEx estimates that e-commerce is expected to grow from 50 million to 100 million packages a day in the U.S. by 2026.
That growth, along with the logistical gymnastics required to make, not lose, money pursuing the opportunity, has led FedEx and Amazon and others to look for efficiencies in their businesses as well as develop and deploy new technology.
For instance, FedEx unveiled in February an autonomous delivery device called SameDay Bot. The bot, which will be tested this summer in select markets, including FedEx’s hometown Memphis, is being developed in collaboration with DEKA Development & Research Corp. and its founder Dean Kamen, who invented the Segway and iBot wheelchair.
The initial test will involve deliveries between selected FedEx Office locations, the company said. Ultimately, the FedEx bot will complement the FedEx SameDay City service, which operates in 32 markets and 1,900 cities.
Amazon has made its own moves, from investing in electric vehicle company Rivian and developing a fully electric delivery drone to acquiring urban delivery robot startup Dispatch and warehouse robotics startup Canvas Technology.