• Amazon has partnered with FedEx to fill some delivery gaps left by UPS.
• UPS announced earlier this year that it would significantly reduce deliveries for Amazon.
• FedEx and Amazon had cut ties in 2019 due to rising competition between the two companies.

Amazon is going back to FedEx after falling out with UPS.

According to an internal document obtained by Business Insider, Amazon signed a new partnership deal with FedEx in late February to handle some parts of its package deliveries.

The FedEx deal gives Amazon "cost favorability" compared to UPS, the document said, indicating the retail giant stands to save money from the transition.

The document doesn't specify the extent of the deal or which Amazon packages will be handled by FedEx.

"Securing FedEx capacity is our primary solution for these capacity constraints," the internal document said.

FedEx shares popped in after-hours trading on Monday, following BI's exclusive reporting.

Amazon comments

In an email to BI, Amazon's spokesperson confirmed the new partnership.

"We've reached an agreement with FedEx to serve as one of several third-party partners to deliver packages to our customers," the spokesperson said in an email statement. "FedEx joins our other third-party partners like UPS and the USPS, that work alongside our own last mile delivery network to help us balance capacity to best serve customers."

Amazon's spokesperson told BI that the company regularly works with third-party delivery partners to "balance capacity," and the FedEx deal is not meant to replace UPS entirely.

FedEx weighs in

A FedEx spokesperson told BI the company remains "focused on driving profitable growth,'" and that the two companies have been discussing this partnership for more than a year.

"FedEx has the global network, capacity, and expertise to serve the shipping needs of thousands of retailers in the e-commerce space," FedEx's spokesperson said in a statement. "We have reached a mutually beneficial, multi-year agreement to provide residential delivery of select large packages for Amazon."

This new deal will be "net positive" for FedEx's average system yields, the company added. That's an industry metric that measures the efficiency and profitability of a shipping network.

A twist

The renewed alliance between Amazon and FedEx adds a notable twist to the broader shipping industry.

FedEx and Amazon cut ties in 2019 as the two companies increasingly competed in the logistics and delivery space. At the time, FedEx said it would focus on other e-commerce customers instead. Amazon's then-operations lead Dave Clark downplayed the fallout, writing on X that FedEx was a "very small piece of our network and vice versa."

Logistics consulting firm MWPVL estimates FedEx currently handles no Amazon packages in the US. (Third-party sellers on Amazon's marketplace are still able to use FedEx as a shipping option).

The FedEx deal follows UPS's announcement earlier this year that it would reduce its shipping volume for Amazon packages by more than half by the end of 2026. Despite Amazon being its largest customer, the company cited profitability concerns as the reason for slowly winding down the partnership.

According to the internal document obtained by BI, Amazon's Extra Large delivery network, which ships bulky items like TVs and furniture, expects to get some delivery support from FedEx through this new deal. In the second half of this year, Amazon's Extra Large delivery team plans to "leverage FedEx for 100%" of any capacity risks, it added.

Amazon's spokesperson told BI that the Amazon document's reference to the extra-large delivery team's plans was "premature at this point."

Meanwhile, Amazon's in-house logistics service has since surpassed FedEx and UPS in shipping volume.

According to Pitney Bowes, Amazon shipped 6.3 billion parcels in 2024, up 7.3% from the year before, and far ahead of UPS's 4.7 billion and FedEx's 3.7 billion. USPS was the only carrier ahead of Amazon at 6.9 billion packages.

Amazon previously disclosed that more than two-thirds of its packages are delivered through its own logistics network in the US.

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• FedEx revised its outlook downward, citing "weakness and uncertainty" in the US industrial economy.
• The shipping giant said its freight and business-to-business demand were soft in the third quarter.
• Shares of FedEx stock fell roughly 5% in after-hours trading.

FedEx is flashing a yellow light on the economy.

The company on Thursday revised its financial outlook downward, citing "continued weakness and uncertainty" in the US industrial sector.

CEO Raj Subramaniam said in a third-quarter earnings call that freight and business-to-business demand were less soft in the period than in the one prior, but not by enough to support the company's December guidance.

"I think it's reasonable to assume that the macro environment is not going to significantly improve, at least for the first half of 2026," CFO John Dietrich added.

Shares of FedEx stock fell roughly 5% in after-hours trading.

The company highlighted several cost cutting and efficiency initiatives it said would help to counter the economic headwinds, as well as the reduction in revenue from the end of a contract the carrier had with the US Postal Service.

With respect to tariffs, chief customer officer Brie Carere said customers have mostly not elected to ship goods early to get ahead of new import charges.

"We did see a little volatility in APAC, kind of at the end of February, early March, but for the most part, a pull forward is really hard," she said. "I've actually only met one customer who attempted it, and they regretted it because they ended up storing some excess inventory."

In addition, Carere hinted that higher prices are likely on the way once again: "We are talking to a lot of customers who are anticipating that they will increase prices or already have."

• FedEx will spin off its freight business into a new publicly traded company.
• FedEx Freight will separate from FedEx over the next 18 months.
• Express delivery services have seen slowing demand for their services.

FedEx is spinning off its freight arm into a new publicly traded company.

Called FedEx Freight, the new company will handle large cargo, while FedEx will continue to handle the parcel shipping business that shoppers might be more familiar with as their holiday packages arrive.

The separation will happen over the next 18 months, FedEx said in a statement on Thursday. Shares of FedEx jumped about 9% in after-hours trading.

"Through this process, we will unlock value for our Freight business and position FedEx to create even greater value for stockholders," CEO Raj Subramaniam said in the statement.

FedEx also cut its profit estimates for its 2025 fiscal year in earnings released on Thursday and cited a "challenging demand environment." It said it had seen lower-than-expected FedEx Freight revenue and profit as "sustained weakness in US industrial production continued to pressure less-than-truckload industry demand."

The spinoff will allow FedEx to focus more on the parcel shipping market, it said in its statement.

Bloomberg reported in October that the company, along with rival UPS, has faced less demand this year for next-day shipping as many customers look to save money with slower options.

• Americans should send packages early to meet holiday shipping deadlines and avoid delays.
• UPS hires thousands of seasonal workers to manage increased holiday shipping demand.
• Here are FedEx, USPS, and UPS' specific deadlines for Christmas delivery.

The holiday season is here, and while delivery drivers work hard to ensure parcels reach their destinations on time, gift-givers can help by sending them before the shipping deadlines.

With Christmas less than two weeks off, there are mere days left to mail gifts to your loved ones. Carriers prep for the busy holiday time by hiring seasonal employees to assist drivers or deliver packages themselves.

In 2023, UPS said it'd hire 100,000 seasonal workers for the busy holiday season; this year, they said they're hiring more than 125,000. Although many carriers' deadlines allow for last-minute shipments — 48 hours before December 25 — it's best practice to get your gift shipped off as early as possible.

Here's when three big mail carriers say you need to ship your gifts by.

FedEx

There were five fewer shopping days between Thanksgiving and Christmas this year, FedEx Executive Vice President and Chief Customer Officer Brie Carere noted in a press release. As such, FedEx says it is doing what it can to cut down on holiday shipping chaos.

FedEx is giving consumers until December 23 to ship their packages within the US, Mexico, Canada, or Puerto Rico for next-day delivery.

USPS

If using the United States Postal Service, consumers should mail their gifts by December 21 to arrive before Christmas in the US, but those shipping to Alaska and Hawaiian must have packages in by December 20.

December 16 is the deadline for shipping internationally to Asian and European countries.

It's unclear if shipping to Canada in time for Christmas is possible. USPS previously said mail service to Canada was suspended due to the ongoing postal worker strike, but Labor Minister Steven MacKinnon asked for Canada Post union employees to be ordered back to work on Friday, according to the Toronto Star.

UPS

Those shipping with UPS have until December 23 to mail their packages within the US or Canada using its Next Day Air service. Rates will depend on when you ship and where you're shipping to.