Another thing that I think I heard somewhere, FedEx Ground's contract with Amazon runs until 2021. I would not be surprised to see them leave after Express decided not to renew. It appears FedEx does not want Amazon's business and wants to help others compete with them.
I respectfully disagree. It isn't that "Fedex doesn't want Amazon's business". It's that FedEx didn't want to build out its Express infrastructure to meet future anticipated demand, and wasn't willing to charge a market price for the Amazon Express business. The ground business model and infrastructure are entirely-separate from Express, unlike UPS which is integrated. Fedex was getting on average a couple of bucks more per Express package from Amazon than UPS was, and didn't want to get in line with the market. It takes 2 to tango, and what happened was that FedEx and Amazon couldn't come to terms on price.
Amazon may be reducing its reliance on FedEx Ground, but not because Fedex doesn't want that business, which is profitable. Indeed, I was interested to see in one article about Prime Day that Amazon is now delivering over 50 percent of its packages itself. Wow.
Since the Amazon contract ended, Fedex has done a number of very-telling things to cover how bad this contract loss is for it.
Most importantly, they have cut the price, for big customers, of the slowest-boat Express product to the same price as sending it by Ground. Same delivery time, but now delivered by one side of the company rather than the other.
This is KEY: because Ground and Express are separate entities, they are trying to divert a huge chunk of very-lowest-margin business from Ground and onto Express.
Why? So the financials don't reflect that gaping hole that the loss of Amazon left. It's super-inefficient, environmentally-unsound, blah-blah, but they don't care. Look in the quarters ahead for stories about how FedEx is concerned that Ground isn't growing as fast as expected all of a sudden. FedEx has big problems financially on the Express side, and Ground was printing money. So they are making the kind of ass-covering business decisions that shareholders should be massively-pissed about (because you are a shareholder of the overall company and benefit or lose based on overall profitability), hitting Ground to steal business for Express to hide how badly the loss of Amazon affects that business.
Presumably, over time that hole will fill organically, and business that should be on Ground will move back to Ground. But I plan to laugh my tuckus off when I see articles in future quarters about how FedEx can't figure out what has happened to Ground while the impact of Amazon doesn't seem to have been felt at Express. Uh-huh.
PS Don't get me started about how stupid the coverage of Prime Day is. Amazon sold ten kabillion products each Prime Day, dwarfing anything humanly imaginable. When people bought those products, Amazon carefully indicated how fast they would arrive. Because a zillion per day were being ordered, Amazon in several cases gave itself up to 4 days to deliver. Don't want the product on that timetable? Don't buy it then. These are unscheduled impulse buys; it's hard to imaging that anyone needed them in 2 days. Nevertheless, media articles were talking about how packages were "LATE" because they didn't arrive in 2 days, even if Amazon had SAID before purchase that they would arrive in 4. I think the shark has jumped and nonprofessional media are now so-often providing more accurate information and storylines than the so-called "professional" media.