Report: FedEx is back in Amazon’s good graces following temporary holiday season ban

Pre-Christmas tension between global e-commerce giant Amazon and freight transportation and logistics bellwether FedEx appears to have thawed.

The tension stemmed from a Wall Street Journal issued roughly one week before Christmas, which indicated that due to what Amazon called a “decline in performance,” it would be blocking third-party sellers from using FedEx Ground delivery for Amazon Prime shipments. That situation followed two separate developments from earlier in 2019, when FedEx announced in June it made a strategic decision not to renew the FedEx Express U.S. domestic contract with Amazon, which was followed in August by a decision to sever its ties with the global e-commerce bellwether on the ground side as well.

The December WSJ report said that this ban would last “until the delivery performance of these ship methods improves,” which was based on an e-mail sent by Amazon to merchants. And it added that the e-mail indicated Amazon said sellers can use FedEx’s quicker and more costly Express service for Prime orders of FedEx Ground for non-prime shipments.

“While this decision affects a very small number of shippers, it limits the options for those small businesses on some of the highest demand shipping days in history and may compromise their ability to meet customer demands and manage their businesses,” a FedEx spokesman told LM in December. “FedEx Ground stands ready to support our customers and will continue to deliver record-breaking volume this holiday season.”

Jerry Hempstead, president of Hempstead Consulting, said that in December that the move by Amazon could have major ramifications for shippers.

“There are a lot of folks that are big shippers that use Amazon to sell their items and ship with FedEx,” he said. “If there are no exceptions then these guys are out of business for the rest of the season because if you don’t have an agreement with UPS or DHL the shipping costs will kill you.”

But now it appears that things between the two global brands have eased.

A CBNC report issued on Tuesday said that Amazon has communicated to sellers that they can now again begin using FedEx ground delivery after temporarily halting access to the service over the holidays. And it added that Amazon resumed using FedEx Ground and Home services as of 5 p.m. ET on Tuesday, with an Amazon spokesman saying FedEx Ground and Home services “have been consistently meeting Amazon’s on-time delivery requirements, so it reinstated the shipping option for Prime orders.”

What’s more, a FedEx spokesman said in the report that the company posted strong Peak Season service level numbers, with an average transit time of 2.4 days for Ground packages and 18% of Ground packages were delivered early.

That improvement by FedEx is also supported by data provided to LM by Convey, an Austin, Texas-based provider of delivery experience management software that helps shippers connect disparate data and processes from parcel to freight in the last mile.

Convey’s data stated that its on-time performance is up 4.7% year-to-date through the first two weeks of 2020, from 83.3% from December 16-29 to 87.9% for the first two weeks of 2020.