Following a layoff announcement from UPS, reports this week indicate that the online retail giant is partnering with FedEx to get packages to customers.
According to an internal document cited by Business Insider, a deal penned with FedEx this February gives Amazon “cost favorability” compared to UPS. However, Reuters noted that the deal will not replace UPS. Instead, FedEx will join its third-party partner roster and “work alongside its own last-mile delivery network.”
Reuters reported that Amazon said Monday that it had hired FedEx to handle some large package deliveries. That came after Forbes reported last month that UPS announced it planned to lay off 20,000 employees during its first quarter earnings call.
“UPS believes that they are the world’s largest package delivery company,” said Forbes. “The logistics industry is considered a bellwether industry that can provide an advanced warning of a recession.”
Per Bloomberg, the agreement between Amazon and FedEx covers multiple years and that it renews a previous relationship between the companies that ended in 2019. UPS’ announcement included plans to reduce the number of packages it delivers for Amazon by 2026, Bloomberg added.
Another package carrier that announced changes this month is the U.S. Postal Service, which also announced plans last year to save money by making some mail delivery slower. In a May 9 press release, the USPS said the Postal Regulatory Commission (PRC) for shipping services will increase, effective July 13. Prices for domestic shipping services are expected to rise approximately 6.3% for Priority Mail service, 7.1% for USPS Ground Advantage and 7.6% for Parcel Select. Prices are not changing for Priority Mail Express service, however.
Reuters said FedEx shares surged on Monday amid news of the agreement with Amazon.