Smith said the industry disruption discussed since Amazon announced plans to lease 20 Boeing 767 planes from Air Transport Services Group has been “fueled by fantastical articles … and reports which are devoid of in-depth knowledge of logistics systems and the markets FedEx serves,” Smith said, emphasizing that he specifically chose the term “fantastical.” Smith also said he doesn’t see the big three of e-commerce shipping – FedEx, UPS and the U.S. Postal Service – changing. “It is highly likely these entities will remain primary carriers for e-commerce shipments in the U.S. for the foreseeable future,” Smith added.(Fantastical or not, here's a recent report on Amazon's expanding in-house operations.)
Smith actually never uttered the word Amazon. But his meaning was clear enough. It was also clear that Fedex was signaling whoever would listen that its own strategy is not keen on loss-leading behavior.
In an interview with the Wall Street Journal related to Wednesday's quarterly results, Smith said: "There’s an enormous interest in people having things delivered to themselves. It does not change, one iota, the input costs of the delivery."
One way that FedEx intends to boost its e-commerce returns is by increasing fees attached to the growing number of large shipments such as kayaks and other items that don’t fit into its ground network.
Mr. Smith blamed some of the trend in low-cost e-commerce expectations on the U.S. Postal Service, which it and other delivery companies, including UPS and Amazon, use to deliver packages the most expensive leg of the trip—to resident’s doors.
“The postal service’s rates, which are the primary driver of e-commerce…they’re going to have to go up as mail service goes down,” Mr. Smith said.According to several reports Amazon does not constitute more than three percent of revenue for Federal Express.
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