By Paul Ziobro 

Amazon.com Inc. is blocking its third-party sellers from using FedEx Corp.'s ground delivery network for Prime shipments, citing a decline in performance heading into the final stretch of the holiday shopping season.

The ban on using FedEx's Ground and Home services starts this week and will last "until the delivery performance of these ship methods improves, " according to an email Amazon sent Sunday to merchants that was reviewed by The Wall Street Journal.

Amazon has stopped using FedEx for its own deliveries in the U.S., but third-party merchants had still been able to use FedEx. Such sellers now account for more than half of the merchandise sold on Amazon's website, including many items listed as eligible for Prime.

FedEx said the decision impacts a small number of shippers but "limits the options for those small businesses on some of the highest shipping days in history." The carrier said it still expects to handle a record number of packages this holiday season. "The overall impact to our business is minuscule," a FedEx spokeswoman said.

In its email to merchants, Amazon said sellers can use FedEx's speedier and more expensive Express service for Prime orders or FedEx Ground for non-Prime shipments. Amazon declined to comment.

Daily package volumes double during the holiday season compared with the average volume throughout the year, and carriers have battled difficult weather in recent weeks. FedEx, United Parcel Services Inc. and Amazon are facing a challenging calendar this holiday season, with six fewer days between Thanksgiving and Christmas to deliver millions more packages than last year.

During the week after Black Friday, UPS deliveries were on time 92.7% of the time, while FedEx's deliveries were 90.4% on time and deliveries that Amazon made itself were 93.7% on time, according to ShipMatrix Inc., a software provider that analyzes shipping data.

UPS has faced delays due to winter storms in Colorado, Utah, the Upper Midwest and the Northeast, and has deployed resources and extended work schedules as a result. A spokesman said that a "vast majority" of UPS packages are meeting service-level commitments and that the network overall is performing well.

FedEx said it is experiencing weather challenges and some of the highest-volume days in its history, but "our networks are flexing as designed to accommodate the surge of packages." When packages have been delayed, FedEx said it is working to get them quickly delivered with a focus on ensuring holiday deliveries make it on time.

Earlier this year, Amazon and FedEx ended two major shipping contracts, totaling some $900 million in revenue for FedEx. The overnight-delivery pioneer is shifting its focus to retailers such as Walmart Inc. and Target Corp. that compete with Amazon.

The breakup came as Amazon is increasingly building up its own delivery network. The Seattle giant is poised to deliver twice as many packages to homes during the holiday season compared with last year, according to parcel research firm SJ Consulting Group Inc.

FedEx is slated to report its latest quarterly results on Tuesday.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

 

(END) Dow Jones Newswires

December 16, 2019 15:31 ET (20:31 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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