It's no secret that FedEx Corp. (NYSE: FDX) believes that Amazon.com, Inc. (NASDAQ: AMZN) doesn't hold a candle to FedEx when it comes to transport and logistics capabilities. In that vein, FedEx has said it doesn't consider Amazon a rival. "We don't see them as peer competition at this point," said Frederick W. Smith, FedEx's founder, chairman and CEO, in mid-December 2018. At the same time, Smith labelled the notion of Amazon's encroachment on FedEx's share "fantastical."
However, two Securities and Exchange Commission (SEC) filings made by FedEx over the past two years paint a somewhat different picture. The filings, which addressed the departures of two top executives, T. Michael Glenn and David J. Bronczek, in both cases forbade either executive from working for other companies in the transportation and logistics industry for five years. One of the companies on the list was Amazon.
The reference is the latest two-step in the kabuki dance between FedEx, UPS Inc. (NYSE: UPS) and Amazon over how they classify each other. At varying times, UPS has considered Amazon a valued customer, Amazon has considered UPS and FedEx to be valued partners, while FedEx has alternated between labelling Amazon a valued customer and snubbing its nose at the Seattle-based e-tailer. In recent weeks, though, Amazon has referred to FedEx and UPS in an SEC filing as "rivals," UPS Chairman and CEO David P. Abney has verbally acknowledged that Amazon is a competitor, and FedEx has, in its own way, expressed the same sentiments.
UPS handles about 20 to 25 percent of Amazon's deliveries, according to consultancy ShipMatrix. Amazon accounts for as much as 10 percent of UPS' $70 billion in annual revenue, according to Rob Martinez, CEO of Shipware, LLC, a consultancy. FedEx at one time handled a decent, albeit unspecified, amount of Amazon traffic. Over the years, however, that business has greatly diminished.
In a statement posted in late January on its website, FedEx said Amazon accounted for less than 1.3 percent of its total revenue for the 2018 calendar year. It is highly unusual for customer information of that nature to be publicly disseminated. (FedEx reports results on a fiscal year basis from June 1 to the following May 31. Its annual revenue is about $69 billion).
So-called co-opetition is not new in transport and logistics. In parcel, the U.S. Postal Service (USPS) has been bedfellows with FedEx and UPS for years. The private carriers rely on USPS' last-mile network, which delivers to every address, to induct packages into the USPS infrastructure for delivery to final destinations. At the same time, the three compete for market share separately from the last-mile relationship.
The SEC filing concerning Glenn was made in late December 2016. Glenn, who for years was effectively the right-hand man of Smith, retired at the end of that year. He was retained starting January 1, 2017 through December 31, 2021 as a consultant to the Memphis-based company. The contract can be terminated by either side with 90 days' notice, according to the filing. A FedEx spokesman did not respond to a request for comment.
Bronczek, who became the first FedEx executive other than Smith to hold the president's title, retired from the company as president and chief operating officer on February 28. Bronczek also retired as a FedEx director just three months after being named to the board. He also retired from the board of industrial giant International Paper Co.
Raj Subramaniam replaced Bronczek on March 1. Subramaniam, a 27-year FedEx veteran, continues to serve as president and CEO of FedEx Express, the company's air and ground operation and its largest unit, which he took over on January 1, 2019. He also continues as co-president and co-CEO of FedEx Services, which provides support services to the various units.
According to the SEC filing, Bronczek cannot be re-employed by FedEx. In language that was not found in the Glenn filing, the company said it has the right to go to court to obtain an injunction should Bronczek obtain work with a competitor during the five-year period.
See more from Benzinga
- Automating Container Matchbacks In The Maritime Industry Would Reduce Deadhead Miles
- Blizzard To Batter The Great Plains By Midweek
- Retail Activity Stabilizes, Easing Concerns About Consumer Spending
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.