In a significant shift in the package delivery landscape, FedEx has reportedly struck a deal with Amazon to help fill delivery gaps created by United Parcel Service’s recent pullback from handling the e-commerce giant’s packages. The agreement, first reported by The Information, marks a notable reversal in the relationship between FedEx and Amazon, following years of competitive tension.

The partnership comes after UPS announced in April that it would reduce its business with Amazon, citing the need to prioritize more profitable customers. According to sources familiar with the matter, FedEx will now handle a portion of Amazon’s delivery volume previously managed by UPS, though the exact scale of the arrangement remains undisclosed.

This development represents a remarkable turnaround for FedEx, which had previously distanced itself from Amazon. In 2019, the Memphis-based carrier ended both its ground delivery and air express contracts with Amazon, as the e-commerce company was increasingly viewed as a competitive threat due to its expanding in-house logistics network.

“This is a pragmatic business decision by both parties,” said Marc Wulfraat, president of logistics consulting firm MWPVL International, according to PYMNTS. “Amazon needs reliable delivery partners during peak seasons, and FedEx has available capacity in its network.”

Financial markets responded positively to the news, with FedEx shares rising approximately 2% following reports of the agreement. Investors appear to view the deal as a potential growth driver for FedEx, which has faced challenges in maintaining package volumes amid economic uncertainty.

For Amazon, the arrangement provides additional delivery capacity as it continues to manage its complex logistics network. Despite building out its own delivery infrastructure—including a fleet of aircraft, delivery vans, and sortation centers—Amazon still relies on external carriers for a significant portion of its package volume, particularly during peak shopping periods.

The timing of the deal is strategic, coming ahead of the crucial holiday shopping season when delivery networks face their most severe stress tests. According to data from MWPVL International cited by AllSides, Amazon shipped approximately 5.9 billion packages in the United States last year, with about 87% handled by its own delivery network and the remainder distributed among various carriers.

UPS’s decision to reduce its Amazon business reflected its “Better Not Bigger” strategy under CEO Carol Tomé, who has prioritized higher-margin packages over sheer volume. The company had been handling approximately 400,000 Amazon packages daily, representing about 7% of its U.S. package volume, according to industry analysts cited by Investing.com.

Industry experts suggest that the new arrangement could benefit both FedEx and Amazon. “FedEx has excess capacity in its network following the pandemic-era surge, and this deal allows them to utilize that capacity more efficiently,” noted an industry analyst quoted by MSN.

The agreement also reflects the evolving competitive dynamics in the e-commerce delivery space, where former rivals are finding ways to collaborate amid shifting market conditions. While Amazon continues to expand its own logistics capabilities, the company appears to recognize the value of maintaining relationships with established carriers to ensure delivery reliability, particularly during demand surges.

Neither FedEx nor Amazon has officially commented on the reported agreement, leaving questions about contract terms, volume commitments, and duration unanswered for now.