FedEx shares climbed up to 3 percent on January 14, 2020, following Amazon’s decision to reinstate FedEx as an authorized carrier for third-party sellers using its marketplace. The stock gain reflected investor confidence that the logistics company had recovered from a significant setback.
The ban, which took effect December 16, 2019, prohibited sellers from using FedEx Ground and FedEx Home Delivery services for Amazon orders. Amazon cited performance failures during the holiday season as the reason for the restriction. Sellers could still utilize FedEx Express for faster shipping, but the ground network remained off-limits, cutting off a major revenue stream for FedEx.
Effective January 14, Amazon notified sellers that FedEx had met its delivery requirements, though no specific details were provided about what improvements were made. The reinstatement allowed FedEx to resume handling shipments through Amazon’s Seller Fulfilled Prime program, which many merchants rely on for timely delivery.
During the ban, sellers had to seek alternatives, primarily turning to UPS and the U.S. Postal Service. This reduced their shipping options and flexibility. The lifting of the ban restores those choices for merchants who depend on FedEx Ground for their Amazon orders.
For FedEx, the stakes extended beyond immediate revenue. The company had already announced in August 2019 that it would not renew its contract with Amazon for express delivery services, a strategic decision to distance itself from a competitor. However, the ground ban was imposed externally, not chosen, exposing FedEx to potential long-term losses from Amazon’s vast marketplace.
An Amazon spokesperson described the reinstatement as “good news for our mutual customers who have come to rely on the FedEx Ground offering.” A FedEx spokesperson expressed enthusiasm about working with Seller Fulfilled Prime merchants and delivering outstanding service.
Despite the apparent reconciliation, underlying tensions remain. Amazon continues to build its own delivery network, positioning itself as a direct competitor to FedEx. The express contract is ending, and while the ground ban was temporary, the relationship between the two companies remains complex.
FedEx now faces the challenge of consistently meeting Amazon’s performance standards, as the e-commerce giant has demonstrated it will impose restrictions when those standards are not met. Sellers and investors alike will monitor the situation closely. For the moment, the immediate impact is clear: FedEx trucks are again authorized to deliver for Amazon sellers, the stock has risen, and the market has responded positively to the resolution of the dispute.
