Why would a business entirely built around prompt package delivery go out of its way to fire the single largest customer

As the pandemic took hold in the U.S. in March, the juggling expanded to diverting employees and packages away from facilities in the hardest-hit areas, like New York City, and finding a way to move personal protection equipment to health care organizations. The company directed more than 150 flights and 1,000 ocean cargo containers to move PPE into and around the U.S., and set up 28 new flight legs just to process Covid tests. “We can flex our networks better than anyone in the business,” boasts Smith.,The climbing prices have opened the door to a reckoning in the fast-growing residential shipping industry. As the highest-cost provider, FedEx may be at the biggest risk of being left behind by the e-commerce explosion — thanks in large part to Amazon’s relentless, masterful efforts to drive down the costs of online retail shopping, which have played against FedEx’s strengths in higher-value, B-to-B shipping.,The breakup, it turns out, had been the culmination of years of a combative and eroding relationship between the two giants. Six years earlier, frustrated with FedEx and UPS delivery delays during the 2013 holiday rush, Amazon began building out its own delivery network for the products it sells and ships. As its network grew, Amazon steadily shrunk its dependence on outside carriers, and especially on FedEx, whose prices tended to be higher than UPS’s. So when FedEx formally severed its relationship with Amazon, they were breaking up with a customer that had essentially already dumped them.,FedEx’s business is already soaring, according to the company’s 2021 first quarter earnings released in mid-September. Revenues were up 14% over the same quarter last year, while profits were up a whopping 60%. The profit gains were almost certainly due to a series of price increases the company has been rolling out nearly nonstop since the start of the pandemic. Last week, the company’s stock price hit an all-time high of more than $291 a share. UPS and the Postal Service have likewise seen a boost in volume and revenues, and have also raised prices.,Now Amazon is greasing its delivery network to deliver a much bigger blow: Going into business as a third-party shipper looking to steal business from FedEx and other shippers. “They’ve got tons of cash to subsidize going to go toe-to-toe with FedEx,” says Dean Maciuba, a career-long FedEx manager who is now a managing partner with logistics consultancy Last Mile Experts.,Meanwhile, FedEx’s customer help lines were being flooded with callers mostly looking for the answer to one question: Are you delivering packages? In spite of some initial delays, the packages were still getting through — even on Sunday, a new service FedEx happened to roll out just before the pandemic hit, and which turned out to be a special boon for shipments of perishable food items to consumers who were cut off from in-person shopping. It didn’t hurt that FedEx employees were also declared essential workers.,FedEx may be at the biggest risk of being left behind by the e-commerce explosion — thanks in large part to Amazon’s relentless, masterful efforts to drive down the costs of online retail shopping.,But FedEx has no intention of letting Amazon push it around. Long known as the highest-tech shipper, FedEx is preparing to roll out a range of schemes for making residential shipping more efficient, from shifting when and where consumers get their packages, to sending delivery robots to their doorsteps. “We’re going to be weaponizing data,” says Richard Smith, president of FedEx’s operations in the Americas, executive vice president of the company’s global Express division — and the son of FedEx founder and CEO Fred Smith, a decorated former Marine. As it prepares to engage Amazon in an all-out battle for shipping dominance, FedEx is hoping it can get ahead of the one company that has managed to upend virtually every industry it’s touched.,Even after the formal split last year, third-party merchants that sell on Amazon were still free to choose FedEx delivery — until December last year, when Amazon further inflamed its new competitor by banning merchants on its platform from using FedEx during the month-long holiday rush. It rescinded the ban in January, but the damage was done. On March 16, FedEx’s stock hit a nine-year low of $90 per share, as the company first struggled to come to grips with the onrushing pandemic.,FedEx’s reputation for fast or reliably on-time shipping services goes back to its founding by Fred Smith in 1971, famously inspired by a paper he wrote as a Yale undergraduate. The paper described a delivery service for urgent or valuable items — think medicine, jewelry, or high-tech parts — that involved flying all packages to one central location every night for sorting, and then flying them back out for delivery the next day. In other words, Smith had dreamed up a service that was almost comically inefficient, but fast and dependable. (Legend has it that Smith received a “C” on the paper, but he himself has never made that claim.),After founding Federal Express to do just that, Smith ensured the company became one of the first in the world to exploit information technology strategically, pioneering then-radical innovations such as bar-code scanning and sharing tracking data online. That tech-forward sensibility continues today, including the company’s September announcement that it can now use Bluetooth sensor chips on packages to let customers track almost every inch of the journey in real time.,But the profitable shipping boom hides a looming threat to the major shippers, and to FedEx in particular. As more consumers embrace online shopping — a long, steady trend that was goosed by the pandemic — the cost of shipping packages has become unsustainable for most retailers and especially to smaller ones. Not to mention the consumers who are paying for it, often without realizing it.,With classic tracks such as Everyday Is Like Sunday, Suedehead, The More You Ignore Me, The Closer I Get and Spent The Day In Bed, Morrissey has certainly proven his credentials time and time again as one of the greatest wordsmiths of a generation. A relentless talent, the singer refuses to rest on his laurels, prolifically moving forward with exciting new works as opposed to cashing in on the nostalgia gravy train of his legendary back-catalogue as so many of his contemporaries have.,FedEx CEO Smith was taking a week off with his family in February when emails suddenly started flooding his inbox. “It wasn’t much of a vacation,” he recalls. “I was on the phone day and night.” The immediate crisis was that China and other Asian countries were grounding flights and quarantining pilots who landed there, throwing operations at FedEx — the world’s largest cargo airline — into turmoil. Smith, a self-proclaimed “logistics network geek,” oversaw a massive juggling of the company’s 670 aircraft, 5,000-odd package sorting facilities, 180,000 ground vehicles, and half million employees, in order to try to work around the restrictions.,At the moment, FedEx doesn’t seem to need Amazon’s business. Largely due to the pandemic, in the six months between April and September, the company’s shipping volume was up some 20% over last year’s numbers during the same time period. That’s expected to climb over the next month to as much as a 70% increase over last year’s holiday rush volumes in an unprecedented and potentially chaotic “shipageddon”—the collision of the two online shopping surges. Early data from Black Friday suggests online sales jumped more than 20% over last year’s event, setting a record, even as in-store Black Friday retail sales plunged to less than half last year’s number.