Amazon and FedEx Reunite for Oversized Home Deliveries

Publish Time: July 07,2025

In a significant realignment of the e-commerce delivery landscape, Amazon has signed a multi-year agreement with FedEx to resume the delivery of oversized residential packages. This strategic partnership, finalized in February, comes as Amazon seeks to fortify its delivery network following UPS's recent announcement to significantly reduce its own Amazon-related business.

This move marks a renewed collaboration between two giants and signals a dynamic shift in how bulky items reach consumers' homes.

The Context: Why UPS is Scaling Back

The catalyst for this new deal is UPS's strategic pivot away from high-volume, low-margin shipments. Earlier this year, UPS announced plans to cut its delivery volume with Amazon by more than half by late 2026. While Amazon accounted for approximately 11.8% of UPS's revenue in 2023, the orders were less profitable.

To manage costs and focus on higher-margin sectors, UPS is restructuring its operations, which includes the closure of 73 facilities and a workforce reduction of 20,000 jobs. This created a significant capacity gap that Amazon needed to fill, particularly for specialized deliveries.

Details of the New Amazon-FedEx Partnership

Under the new agreement, FedEx rejoins Amazon's network of third-party delivery partners, which also includes UPS and the U.S. Postal Service (USPS). This network complements Amazon's extensive in-house logistics infrastructure.

Key details of the deal include:

Focus on Oversized Items: FedEx will specifically handle the residential delivery of select large and bulky items ordered on Amazon.
Multi-Year Agreement: The partnership is designed for the long term, ensuring stability.
Cost-Effectiveness: While financial terms were not disclosed, internal documents suggest the deal is more cost-effective for Amazon compared to previous arrangements.

FedEx officially described the partnership as a "mutually beneficial multi-year agreement," confirming its role in enhancing Amazon's delivery capabilities.

Market Reaction and The Bigger Picture

Investors reacted positively to the news, with FedEx shares surging 7% following the announcement. The deal is seen as a major win for FedEx, allowing it to capture market share directly from its primary competitor, UPS, and re-engage with the world's largest e-commerce platform.

Currently, Amazon delivers more than two-thirds of its own U.S. packages. However, this move underscores its diversified logistics strategy. By strengthening its collaboration with FedEx, Amazon ensures it has a robust and cost-efficient network to maintain delivery speed and reliability, even as its relationship with UPS evolves.

Frequently Asked Questions (FAQ)

1. Why did Amazon and FedEx stop working together before? In 2019, FedEx ended its air and ground delivery contracts with Amazon. The decision was part of FedEx's strategy to focus on the broader e-commerce market and avoid over-reliance on a single, powerful customer that was also building its own competing logistics network.

2. Why are Amazon and FedEx partnering again now? The primary reason is UPS's decision to significantly reduce its Amazon delivery volume. This created a need for Amazon to find a reliable partner with a nationwide network capable of handling specialized deliveries, particularly for oversized items.

3. Will this new deal affect my regular Amazon package deliveries? For the average customer, this change is unlikely to cause any disruption. Regular-sized packages will continue to be delivered by Amazon's own network, USPS, and UPS. The FedEx partnership is an addition to the network, specifically designed to handle large items, which should improve the delivery experience for those types of products.

4. What kind of "oversized" items will FedEx deliver? While not explicitly defined, "oversized" items typically include products that are too large or heavy for standard conveyor belts and delivery vans. This could include furniture, large electronics, exercise equipment, and other bulky goods.

5. Is this deal bad for UPS? Not necessarily. While UPS is losing some volume, this is a deliberate strategic choice. UPS aims to increase its profitability by focusing on higher-margin deliveries from other clients, such as healthcare and small-to-medium-sized businesses, rather than low-margin, high-volume Amazon packages.

Conclusion: A New Chapter in E-commerce Logistics

The renewed partnership between Amazon and FedEx marks a new chapter in the competitive e-commerce logistics market. It demonstrates Amazon's agile approach to building a resilient and diversified supply chain, while providing FedEx with a significant opportunity to grow its market share. As the delivery landscape continues to evolve, collaborations like this will be key to meeting consumer demand for fast and reliable home delivery of all types of products.