Amazon Reunites with FedEx for Oversized Home Deliveries

Amazon has signed a multi-year agreement with FedEx to resume collaboration for residential delivery services of oversized packages, according to recent foreign media reports. The deal, signed in February, comes shortly after UPS announced it would significantly scale back its Amazon-related operations and cut 20,000 jobs.

Earlier this year, UPS disclosed plans to reduce its business volume with Amazon by more than half by late 2026. This strategic move aims to prioritize fewer, higher-margin orders. Despite this shift, Amazon remains one of UPS's largest clients, contributing approximately 12% of UPS's revenue in 2023—an estimated $1.07 billion. In response to the expected decrease in shipments, UPS also announced the closure of 73 facilities and a large-scale workforce reduction to restructure operations and manage costs.

Under the newly announced partnership, FedEx will become one of Amazon's third-party delivery partners, joining the broader network that includes UPS and the U.S. Postal Service (USPS). This network complements Amazon's own last-mile delivery infrastructure. Amazon clarified that the new FedEx agreement will not replace its partnership with UPS but will serve as a strategic addition to boost overall delivery capacity.

Although the financial details of the deal remain undisclosed, internal Amazon documents suggest the agreement is more cost-effective compared to UPS. FedEx described the arrangement as a "mutually beneficial multi-year agreement" and confirmed it will handle residential deliveries of select oversized items ordered through Amazon.

Following the announcement, FedEx shares surged by 7%, outperforming the broader market for the day. Investors viewed the deal as a positive sign of FedEx expanding its market share and competing more aggressively for Amazon's shipping business. In recent years, FedEx and UPS have been locked in intense competition, frequently vying for major accounts and specific delivery contracts.

Currently, more than two-thirds of Amazon's U.S. packages are delivered through its proprietary logistics network. As UPS reduces its share of Amazon deliveries, the e-commerce giant is strategically expanding its third-party delivery network. Strengthening its collaboration with FedEx reflects Amazon's diversified approach to maintaining logistical stability and cost efficiency in a shifting delivery landscape.