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Strategist Says FedEx Was Right To Part Ways With Amazon

Jayson Derrick

Shipping giant FedEx Corporation (NYSE: FDX) "fired" Amazon.com, Inc. (NASDAQ: AMZN) as a customer ahead of the 2019 holiday season, and it was the right move, Broughton Capital managing partner Don Brouhgton said Friday on CNBC's "Squawk Box."

Broughton Highlights Walmart Partnership 

FedEx said in early August it decided against renewing its ground shipping contract with Amazon, and it wasn't an easy decision to make, Broughton said. 

FedEx CEO Fred Smith is the "quintessential American entrepreneur" and made the decision to put an end to a multibillion-dollar annual contract, the CNBC guest said. 

FedEx has a partnership with Walmart Inc (NYSE: WMT), a larger retailer than Amazon by total volume, and is looking to boost its online business, Broughton said.

Walmart recognizes the threat of Amazon stealing share and sees FedEx as a key partner, he said. 

Amazon's Effect On USPS, UPS 

FedEx may have also realized that Amazon's incremental interest in its own shipping initiatives would first impact the U.S. Post Office, followed by United Parcel Service, Inc. (NYSE: UPS), Broughton said.

It will be a while until FedEx competes head-on with Amazon, he said, adding that FedEx has no issue with Amazon hurting its competitors in the meantime. 

What's Next

For now, UPS may have no choice but to offer its services to Amazon, Broughton said. 

Related Links:

No Holiday Gift From FedEx, But Some Analysts Still See Delivery Around The Corner

Analyst: Amazon Blocking FedEx Ground Good News For UPS

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