Memphis, Tennessee - FedEx Corp. has announced that it wouldn't renew its domestic contract with Amazon for delivery of retailer's parcels through its cargo carrier FedEx Express.
FedEx said the decision was taken to focus on serving the broader e-commerce market in the United States.
"There is significant demand and opportunity for growth in e-commerce which is expected to grow from 50 million to 100 million packages a day in the US by 2026. FedEx has already built out the network and capacity to serve thousands of retailers in the e-commerce space," the company said in its statement.
FedEx has been reluctant for some time to carry Amazon's increasing discounted cargo with low margins.
The company said that Amazon accounted for less than 1.3% of the FedEx's earnings in 2018.
According to FedEx, the decision stands for the domestic contract only between the two companies and international services wouldn't be affected.
The move of FedEx will likely boost amounts carried by UPS, another freighter supplier of the American e-commerce giant.
Amazon has been expanding its own freighter fleet for a while with the Amazon Air to reduce its dependency to the other cargo operators.
Last month, Amazon announced that it would build its own cargo facility for its freighter planes at the Cincinnati International Airport with a 1.5 billion investment. The facility is expected to be operational in 2021.
Amazon Air's current freighter fleet consists of 46 aircraft, including Boeing 737-800Fs, Boeing 767-200Fs, and B767-300Fs operated by ABX Air, ATI - Air Transport International, Atlas Air, and Southern Air.
The company uses two B737-400F from ASL Airlines France for its operations in Europe.