FedEx opt out of Express contract with Amazon may be good thing, analysts say

Analysts support FedEx Corp.’s decision not to renew its Express U.S. domestic contract with Amazon.com Inc., saying it will benefit the delivery service company in the long run even if it causes a near-term squeeze.

“FedEx’s decision to no longer provide FedEx Express U.S. domestic services for Amazon.com makes perfect sense given expectations of strong e-commerce growth across the retail sector,” says Jonathan Root, Moody’s senior vice president and lead FedEx analyst.

Moody’s estimates that Amazon’s value to FedEx is about $850 million in revenue, with a daily volume of about 200,000 packages out of 2.9 million, “if the entirety of Amazon’s business was in the Express segment.

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