Category: Industry News

The U.S. Postal Service (USPS) reported on August 9 a net loss of nearly $2.3 billion in its fiscal 2019 third quarter, an increase of $767 million from the same period in 2018 – and up from a $2.1 billion loss in the previous quarter – as its first-class and marketing-mail revenue continue to pressure operations.

The service reported total revenue of $17.1 billion in the quarter (April 1 – June 30), down $16 million, or essentially flat, from the same quarter last year.

One of the few bright spots for the agency continues to be shipping and packages revenue, which increased by $250 million, or 4.8 percent, despite a volume decline of 47 million mail pieces, or 3.2 percent, compared to 2018. Shipping and packages also grew as a percentage of total revenue year-on-year, from 29 percent in 2018 to 32 percent in the current quarter.

FedEx Corp.’s retreat from handling packages for Amazon.com Inc. signals that the lines are being drawn in the battle over surging e-commerce shipments.

The end of two delivery contracts with Amazon means FedEx will have to make up for the lost sales by extending a push to serve other customers such as Walmart Inc. Amazon will have to rely more on United Parcel Service Inc. and the U.S. Postal Service as it seeks to fulfill a pledge for next-day delivery to top customers — and build out its own shipping network.

The decision “represents the continued ‘drawing of a line’ in the sand between FedEx and arrangements/partnerships that do not fit its network,” Ben Hartford, an analyst with Robert W. Baird, said in a note to clients Wednesday. “FedEx will work to optimize and protect its network, while strengthening relationships with more strategically important customers.”

FedEx Corp confirmed on Wednesday it would terminate its contract with Amazon.com Inc for small-package ground deliveries, as the online retailer focuses on building out its own delivery network.

Many traditional companies would be scared enough to find themselves facing threats from either Amazon or Uber Technologies — but FedEx is dealing with both.

As the Memphis, Tennessee-based shipping giant prepares to report earnings on Tuesday, FedEx’s cancellation June 7 of its contract with Amazon to deliver packages in the U.S. is just one of a range of threats the world’s second-biggest courier company (behind United Parcel Service) is facing.