
FedEx Ends Ground-Delivery Deal with Amazon - dsgerard
https://www.bloomberg.com/news/articles/2019-08-07/fedex-deepens-pullback-from-amazon-as-ground-delivery-deal-ends
======
habosa
I guess this means more Amazon Logistics deliveries, which is really a shame
because that service sucks.

Amazon keeps optimizing for speed but I think for most people they're fast
enough already. And optimizing more in this one dimension could actually make
the overall experience worse. I'd rather 100% reliable 2 day delivery than 85%
reliable 1 day delivery but that's not where the trend is going.

Reminds me of how apple pursued thin devices until they broke a fundamental
part of the experience (MacBook keyboard). Sometimes you're done.

~~~
srj
As a customer I don't like this as I've had these guys leave packages in my
driveway in pouring rain when the covered front deck was only 20 feet away.
They also frequently deliver my packages to my neighbor's house and speed
around like maniacs.

On a societal level it's a shame that jobs that could actually support a
person or family are being replaced by hustle economy types. My own parents
never went to college and have worked service jobs their whole life, but could
still own a house and eat dinner with us every night. They even bought a
computer when I was a teenager in the 90s. I think in today's world they'd be
driving for Lyft all night and I'd have grown up in a different town with a
worse school system.

"Your margin is my opportunity." -Jeff Bezos

~~~
cptskippy
Amazon put a flag on my old address to not use FedEx fulfillment because they
had 100% failure rate. FedEx always managed to drop the package at a different
but similar house number than mine (e.g. 698 or 588 instead of 598).

It was a single family home in a neighborhood of ~100 homes on 2 intersecting
roads, so not really hard to find.

UPS, USPS, and Amazon had no problems finding my house. Even had a couple
freight companies make deliveries on Amazon's behalf without issues.

I use to standby FedEx as my preferred shipper but they've really gone down
hill since the early 2000s IMO.

~~~
CharlesColeman
> Amazon put a flag on my old address to not use FedEx fulfillment because
> they had 100% failure rate.

Amazon will let you do that with every other carrier EXCEPT Amazon Logistics.
The only way to get them blocked is prove your home is a prison, military
base, or have experiences so horrible they have pity on you.

~~~
bennyg
I need to turn my apartment into a prison then.

It's incredible really. The Amazon logistics folks weren't able to accurately
put packages into the parcel locker system at my apartment, and would
constantly just leave them on the counter in the public area. This happened so
much so that my apartment revoked their courier number to use the parcel
system. The apartment management's idea: instead have them deliver directly to
the door of each resident. As you can imagine, this has tanked successful
Amazon deliveries to anyone in my apartment complex. I'm probably sitting at
about a 66% success rate for getting my packages delivered AT ALL.

On the bright side, their customer service folks have added tons of $5 and $15
credits to my account because of how absolutely terrible their own courier
service is at delivering.

~~~
half-pixel-off
For me it's a treasure hunt I never asked for.

\- Was it left at my apartment door?

\- Was it left in the 2nd floor mail room/lobby?

\- Was it left in the 1st floor main entry/lobby?

\- Was it left outside?

\- Was it left in some side door?

\- Was it left halfway between the 2nd and 3rd floor on a random stairway?

\- Was it left in the office?

\- Will I have to wait 3 more days so I can report it lost/stolen and try
again?

So fun.

Not to get into the "Prime 1-day", which when I order three 1-day things at
the same time means one shows up tomorrow, one the next day, and one the day
after.

------
gok
It's interesting to me that as Amazon and Walmart vertically integrate
shipping, FedEx and UPS haven't responded by integrating fulfillment and
warehousing.

~~~
flavor8
They seem to be dinosaurs. If the UPS website is any indication, they're
deeply dysfunctional. Mind you, they're both worlds above USPS.

~~~
rootusrootus
I adore USPS. They are by far the most reliable carrier for last-mile
delivery, at least in my city. And they have an added bonus that they can
leave smaller packages in my locked mailbox. UPS isn't too bad, to be fair.
But FedEx, good riddance. Usually takes two attempts for them to figure out
how to get something on my front doorstep.

~~~
Consultant32452
The primary function of USPS, as far as I can tell, is to deliver spam. For
the privilege of occasionally getting useful mail or a package, I have to
subsidize USPS by maintaining a box in my yard for them to fill with that
spam.

~~~
Wowfunhappy
Fwiw, junk mail isn't taxpayer subsidized, they pay a different rate. It's
actually a profit center for USPS.

~~~
Consultant32452
I have to subsidize them by maintaining the box so they can save labor and
don't have to walk up to my door to deliver spam.

The spam is a profit center for the USPS, it's what allows them to deliver
other mail cheaper than UPS/FedEx.

~~~
rootusrootus
This must vary by location. My box was purchased initially by the neighborhood
but is maintained by the USPS. My mom's house gets walk-up service with mail
through a slot. Aside from buying stamps or paying to send a package, I have
never directly subsidized USPS infrastructure. Excluding the punitive pension
requirements Congress uses to make USPS look like a money pit, they'd probably
be profitable.

~~~
Consultant32452
In more rural areas there are not neighborhood boxes like that. Each person is
responsible for an individual box by the road.

------
Zenst
Oh I suspect they could just parner with a food delivery service and tap into
all those gig economy resources. May even do a uber like service for
deliveries, as with the volume Amazon has. They have many options. Certainly
the whole gig economy aspect will be one in which ticks many company accounts
departments as avoids so many direct employee costs. It's like having a direct
employee, but at your beck and call standby without any standby pay and the
responsibility you would have with outsourcing. The deniability and
responsibility you can avoid as a business over having a full time employee
are immense. Which is an issue that is only slowly being addressed. Until
then, I'd be supprised if Amazon does not go down this route. Maybe even
partner up with Uber or Just Eat. Amazon and Burgers at the same time anybody?

I do hope gig economy workers are given some fair and equal rights sooner,
been some improvements in some countries, but its modern slavery of our times
in the way so many businesses deploy it.

~~~
panopticon
Amazon is already doing this themselves:
[https://flex.amazon.com/](https://flex.amazon.com/)

Amazon even used to have a food delivery service that it recently shut down
because no one knew it existed
([https://www.amazon.com/restaurants/legacy](https://www.amazon.com/restaurants/legacy)).

------
basseq
On its face, this seems a little like sour grapes from FedEx. "You're going to
leave us, so we're going to leave you first." While Amazon is _absolutely_
becoming a last-mile competitor—I see their blue vans all over the place
now—they aren't there yet, and still worth 1.3% of 2019 sales now. Why not
take the money and extend your runway to "reduce dependence"?

So then to answer my own question, I'd hypothesize that it's a combination of
bad-deal economics (e.g., Amazon contract isn't that profitable in aggregate)
and strategic focus to spend time and energy on the post-Amazon _future_
rather than the present. Which I get.

~~~
ceejayoz
I'd suspect that as Amazon's volume falls, the discounts and special treatment
they've been getting cease to make economic sense.

~~~
sverhagen
Years ago I worked for one of Amazon's shipping operators, whatever we wanna
call them, and the rumor was that Amazon had already squeezed contracts to the
point that on their own merit these contracts were not or only barely
profitable, depending on the math. It was said to be still interesting to have
the contracts, for scale and reputation. But then it may just not be sour
grapes for FedEx, but rather that the numbers weren't compelling them to stay
in a relationship likely to be dumped from anyway, sooner or later.

~~~
londons_explore
I bet amazon exploited the weaknesses in the contracts...

Delivery to San Fransisco - amazon delivers. Delivery to an island off Alaska
- Fedex has to take it for a flat rate that nowhere near covers costs.

------
chiefalchemist
We still can't see the top of the delivery market. Whether it's packages in
boxes, food, or who knows what's next [1]. Both will also embrace autonomous
delivery.

[1] I own a lawn mower. I use it once a week for an hour. Talk about a massive
amount of under utilized capacity.

~~~
asark
_Lawns_ are under-utilized capacity. Mostly too small or poorly laid out
(like, almost all front lawns, for instance) to be much use. A pain to
maintain, and done individually rather than more cheaply and efficiently as a
group. Every other house with a playset rather than having lawns half the size
and a couple much nicer, maintained parks per block. They're absurd.

~~~
dylan604
I understand your premise, but society is litigious for me to be willing to
make a public accessible anything on my property. Little johnny falls off the
slide or swing, and little johnny's parents sue me (or at least my home
owner's insurance policy). I'm not willing to accept that liability.

I'm also not the type to consider lawn work a pain to maintain. Of course, I'm
talking an actual yard, not the back 40. In fact, that's my guaranteed weekly
bit of escape from tech. Once the yard is being cared for, a simple bit of
mowing doesn't take that long. A few times a year, it takes an additional
stroll around the yard with some fertilizer.

~~~
asark
Cities can run parks, I'm not saying open up your lawn to others, our
society's too batshit crazy for that. We have some city-run parks, they're
just way less common than they could be with somewhat smaller lawns and _part_
of the cost savings from smaller yards going toward park upkeep. Could have a
house-lot-sized one every few houses by just squeezing the houses very
slightly closer together, and could have _huge_ ones every few houses with
significantly smaller lawns. Every single house within a two minute walk of a
nice park, maintained at a cost lower than maintaining all that space divided
among a bunch of individual families.

Of course cities seem to quickly be abdicating care of common spaces to HOAs
anyway, with neighborhoods and common spaces laid out by developers with
little or no incentive to fix this problem—another part of the death of the
commons and the atomization of civic life and the growth of "eff you, I got
mine" generally—so I'm just pulling an Old Man Yells at Cloud here. Though
this is _literally_ why we can't have nice things, so it remains frustrating.

------
joncrane
Interesting that Amazon is below (but presumably close to) 10% of UPS's
volume, but only 1.3% of FedEx's volume.

~~~
pardavis
UPS is enthusiastic about working with Amazon, but Fedex is not. Simple as
that. Fedex is a gap-filling option within Amazon.

~~~
JohnJamesRambo
Why isn’t FedEx enthusiastic?

~~~
dsr_
Because FedEx knows that Amazon is planning on being a competitor to them.

Amazon Delivery (or some name similar to that) will eventually handle
warehousing, fulfillment, transshipment, drop shipping, and last-mile
delivery. Delivery is such a large expense to Amazon, it only stands to
reason.

UPS presumably believes that they can compete with that. Maybe they can. Or,
possibly, they believe that they will be purchased by Amazon in the future.

~~~
pardavis
Yes, it is coming (google Ship with Amazon) but UPS will be fine.

In much the same way Amazon has a head start on other e-commerce firms, UPS
has on Amazon. They have been customer-obsessed in one of the hardest spaces
(Meatspace logistics) for literally 111 years. This kind of thing is extremely
difficult to get right, and Amazon has a long, long way to go before they can
compete with UPS.

~~~
penagwin
Coming? Nearly all packages in my area (Grand Rapids, MI) are now delivered by
Amazon.

Which is super annoying for me, I live in an apartment complex, they used to
almost exclusively use USPS where I live, and they have a system where they
put a key in your mailbox, etc.

Amazon's deliverers are literally random people - after talking to one myself
it became apparent that they barely even require much English (I'm only
complaining because that makes it harder to communicate - I don't care if they
speak english or not but if it's impeding their one job - delivering a
package, then I'm kinda erked)

Since it's never the same person, the standards are wild. Sometimes the
package is left in my garage, sometimes by the front apartment door (you have
to be buzzed in)[0], sometimes they're by my specific apartment's door [1].
Other times they take it to the rental office.

Amazon really needs to figure this out, this isn't the only apartment complex
in the city.

[0] [https://i.imgur.com/6GcPI7N.png](https://i.imgur.com/6GcPI7N.png) [1]
[https://i.imgur.com/9RuceQj.png](https://i.imgur.com/9RuceQj.png)

EDIT: Also sometimes they call when they can't get inside, sometimes they just
leave it outside, sometimes they don't call or ring the buzzer and just say
"Couldn't deliver". It's wildly inconsistent.

~~~
chaoticmass
I was picking up my mail at my apartment complex when an Amazon delivery dude
asked if I would let him in (the apartment requires a key fob to open doors to
get access to the building). I told him he can just leave his packages at the
leasing office like the other carriers do. He said his instructions say to
leave the packages at the apartment door, so I told him maybe the people at
the leasing office could help him out.

Back at my apartment, as I'm about to be at my door, I see the guy again, he's
hitched a ride up the elevator as someone else let him on, and he's asking me
where apartment #### is, I pointed to the sign by the stairwell with a map of
the building.

The dude didn't seem very good at his job, and the fact that Amazon is
instructing their delivery people to circumvent building security to leave
packages at people's door is concerning.

~~~
Majromax
> the fact that Amazon is instructing their delivery people to circumvent
> building security to leave packages at people's door is concerning.

Oh, I'm sure that Amazon never _instructed_ delivery agents to ignore building
security. Instead, I expect they just passively incentivize it.

For example, the delivery agent might have been able to mark the package as
undeliverable, but in turn they may have had to pay a penalty if more than a
threshold of deliveries could not be completed as directed. It's not an
instruction to trespass to deliver, just ignorance of what it takes.

In a functional delivery system, there'd be a way for knowledge like this to
percolate back up -- the delivery agent would mark the package as
undeliverable, and then the courier company would investigate the situation
and ultimately refuse to accept deliveries for door-delivery in that building.

However, Amazon's current structure makes this functionally impossible, and a
rotating cast of contractors makes even the knowledge-acquisition step
impractical.

~~~
chaoticmass
After selling on Amazon for a few years, I can say this sounds exactly like
something they're probably doing.

------
pier25
Not sure of this is related but I live in Mexico and I've only had problems
when I receive Amazon US orders via Fedex. The last one happened just a few
days ago when Fedex tried to charge me the taxes that I had already paid.

~~~
jccalhoun
I live in the USA and I'm not a fan of fedex. The last couple times something
was delivered by fedex the guy in the truck had to call me to get directions -
and it isn't hard to find my home. And then it is always a guy in a rental
moving truck not a fedex truck which seems weird.

~~~
mnm1
I wish they'd call for directions. Instead they go to the wrong place, can't
find the house, and return back. The next day, they do it again. And again.
The managers said they have no control over it. That's not a delivery service.
That's just idiots with a truck wasting gas.

------
Donald
This has been true for a few weeks in many Amazon regions. Even as a prime
customer, my one day shipping options, which were previously handled by FedEx,
are completely gone. Best case shipping is now USPS two-day here.

~~~
nightbrawler
I recently lost the one-day Prime shipping option too... seems to have
happened sometime around the early June announcement [0] of "expanded" one-day
shipping for Prime customers.

[https://blog.aboutamazon.com/amazon-prime/prime-free-one-
day](https://blog.aboutamazon.com/amazon-prime/prime-free-one-day)

------
johnward
I used to work for FedEx (ground and smartpost) Corporate. They would take
volume just to fill the hubs at little to no profit. I can't imagine that the
amazon deal was very lucrative. As a side note I don't think people realize
how small FedEx is compared to UPS. UPS is like maybe 4 times the size.

~~~
josu
Just for reference: -FedEx: 41.208B -UPS: 98.159B

Since they are global companies, maybe UPS is 4x bigger in the US. This is not
trying to refute anything.

~~~
johnward
Yeah. that was what I was told by a manager. UPS looks about double the size
now:
[https://www.diffen.com/difference/FedEx_vs_UPS](https://www.diffen.com/difference/FedEx_vs_UPS)

------
mnm1
The only thing worse than Amazon delivery is FedEx. The idiots can't find a
road that's almost three years old and constantly attempt to deliver packages
to the other side of the city. It has led to numerous problems. Calling
doesn't help. The next day, they repeat the same mistake. And the next. And
the next until the package is finally sent back. Managers there can't help and
they never fix their system. Too bad other retailers think this is still a
viable option, a delivery service that can't find an entire street. The pizza
delivery guy doesn't have a problem and neither does ups, usps. Amazon's own
delivery has similar issues but they seem to have corrected after a few tries
although they have other intractable issues.

------
Postosuchus
I'm kind of amused by this news. Based on my (consumer/addict since 1997)
experience, Amazon's logistics is ruthlessly efficient and also easy to
troubleshoot when things go south (extremely rarely).

FedEx quality of service has been pretty abysmal over the last 5 or so years.
I always get a pang of terror inside me every time I see a notice that an item
will be shipped by FedEx. I've had all kinds of nightmare experience with them
(refusal to drop package at the entrance of the condo building is the least of
the problems). Let's just say, I reached out to their CEO at some point,
escalating the issue with a box repeatedly failing to deliver (because they
were trying to deliver it anywhere but my place). I have no love for them and
I think if/when Amazon decides to commoditize their logistics (just like they
commoditized their web services into AWS), they will drive FedEx into the
ground.

So yes, IMHO despite the whole "I dumped you first" attitude, this is an
evidence of Amazon's strength and Fedex's loss.

------
runevault
I don't remember the last time FedEx delivered an Amazon package to me (it HAS
happened, but been a while). Mind you the last like 15 packages I've gotten
(guestimate) were all from Amazon's own delivery service minus one third party
seller that went USPS, so this doesn't surprise me. Just wonder how much
longer they even use UPS (I think for some non-prime deliveries they'll still
use USPS because they're an efficient system for that).

------
blairanderson
I am run a consulting company for Amazon suppliers[0] and honestly "felt" that
FEDEX pricing was too good to be true.

Fedex was probably net-negative on the deal.

We often saw examples where multiple pallets worth of inventory was cheaper to
ship through fedex ground small-parcel. That doesn't happen with UPS.

[0] [https://www.andersonassociates.net](https://www.andersonassociates.net)

------
croh
Sometimes early is not important but on time so amazon customers' don't have
to change their other schedule.

------
dugluak
How can Fedex breakup? I thought Amazon had upper hand in this.

~~~
jld
I would be curious if Amazon is using Fedex for its deliveries which are the
most expensive to perform (rural area) while delivering all the lowest cost
deliveries themselves (urban areas, a few miles from the distribution center).
Fedex maybe losing money on every delivery.

~~~
bitL
This is the real reason. It's the same parasitic approach Amazon has to its
3rd party sellers that are basically doing its price discovery and are
promptly replaced if some goods sell well by either making a deal with the
producer themselves, undercutting them or by making an "almost-clone" and
selling it under Amazon Basics or another label they own.

------
hdpq
makes sense. Amazon has built out their network pretty well.

