Amazon has entered into a multi-year agreement with FedEx to handle residential deliveries of select large packages, the companies announced on Monday. This deal comes weeks after UPS announced it would be halting its less-profitable deliveries for Amazon and cutting 20,000 jobs.
FedEx shares surged 7% on Monday, outperforming Wall Street benchmarks. The Memphis-based delivery company stated that the agreement, signed in February, provides Amazon with “cost favorability” compared to UPS, according to a report by Business Insider citing an internal Amazon document.
The partnership will see FedEx join Amazon’s network of third-party delivery partners, which includes UPS and the USPS, alongside Amazon’s own last-mile delivery network. Amazon emphasized that this new agreement will not replace UPS.
FedEx described the deal as “mutually beneficial” in a statement. This move may indicate a shift in relations between FedEx and Amazon, which had cut ties for residential deliveries in 2019 as Amazon expanded its delivery services.
The development comes after UPS announced in January that it plans to reduce shipment volumes for Amazon by more than 50% by the second half of 2026, focusing on more profitable deliveries. As part of this plan, UPS revealed it would slash 20,000 jobs and close 73 facilities.
The deal between Amazon and FedEx is significant amid the intense competition between FedEx and UPS for market share over the past five years, with both companies often poaching customer accounts from each other.
