In a surprise move, FedEx (FDX) - Get Report on Wednesday said it plans to end its ground-delivery contract with online retail giant Amazon.com (AMZN) - Get Report and won't renew it at the end of the month.
FedEx announced in June that it was ending its express U.S. shipping contract with Amazon, which only affected air services. At the time, FedEx said that it was a "strategic decision" that would not affect its other contracts with Amazon.
Wednesday's announcement, first reported by Bloomberg News, indicates a more rapid severing of ties between the two companies as Amazon shifts its focus to its own delivery network.
In late June, Amazon announced a new "Delivery Service Partners " program in an effort to attract entrepreneurs who can create their own local delivery networks with up to 40 vans each. It also debuted a new delivery drone in early June, which it hopes will eventually speed up delivery for its North American Prime members.
Amazon also has a $1.5 billion hub opening in northern Kentucky in 2021 where it is expanding its Amazon Air fleet to include 50 planes. Amazon said its air network can make "two-day shipping possible almost anywhere in the U.S."
FedEx and Amazon were not immediately available for comment. Neither company had formally posted a statement on their respective websites.
Shares of FedEx were down 2.3% at $157.49 on the New York Stock Exchange. Shares of Amazon were down 0.56% at $1,777.80 on the Nasdaq Stock Market.
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