Amazon lifts FedEx ground-delivery ban for sellers, FedEx shares rise

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A worker handles a package at the Amazon fulfillment center in Baltimore, Maryland, April 30, 2019.

Clodagh Kilcoyne | Reuters

Amazon is telling sellers they can begin using FedEx’s ground delivery after the company temporarily halted access to the service during the holiday shopping season. Shares of FedEx climbed as much as 2.7% following the news.

The company will resume FedEx’s Ground and Home services on Tuesday at 5 p.m. ET, according to an email Amazon sent Tuesday to merchants that was viewed by CNBC.

An Amazon spokesperson confirmed to CNBC that the company is resuming ground-delivery service on Tuesday. The spokesperson said FedEx Ground and Home services have been consistently meeting Amazon’s on-time delivery requirements, so it reinstated the shipping option for Prime orders.

A FedEx spokesperson also confirmed that Amazon lifted the ban and said FedEx’s service levels have been strong during the peak holiday season, with an average transit time of 2.4 days for Ground packages and 18% of Ground packages were delivered early.

“This is good news for our mutual customers who have come to rely on the FedEx Ground offering,” the spokesperson said. “We look forward to working with Seller Fulfilled Prime merchants and providing outstanding service.”

Sellers have been unable to use FedEx’s ground delivery services to ship Prime packages for almost one month. In December, the company suspended third-party sellers’ access to FedEx’s ground and home delivery services for Prime orders. Amazon blamed the decision on FedEx’s poor delivery performance, noting it would resume access once the service improved.

The decision caught some third-party merchants off guard during the busiest shopping period of the year. Some sellers were forced to find a new carrier and potentially face higher upfront costs as a result. Other sellers said they had grown frustrated with FedEx’s service delays.

Tensions had been heating up between Amazon and FedEx before the company suspended ground-delivery services. FedEx announced plans last August to end its ground-delivery contract with Amazon. Last September, FedEx started mentioning Amazon as a competitor, after denying the company posed a threat. Amazon has gradually distanced itself from FedEx and UPS by building up its own delivery network.

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