FedEx CEO Raj Subramaniam recently addressed concerns surrounding Amazon’s new supply chain offering, asserting that the e-commerce giant’s venture is “completely different” from FedEx’s extensive global logistics network. Despite the market’s initial apprehension, Subramaniam emphasized that Amazon remains a “very valuable customer” for FedEx, highlighting an ongoing mutually beneficial relationship between the two companies.

Amazon’s announcement on May 4 introduced “Amazon Supply Chain Services,” designed to provide companies beyond its marketplace sellers with access to its full suite of shipping, distribution, and fulfillment capabilities. This development immediately triggered investor worries that Amazon could replicate its success in cloud computing within the logistics sector, posing a significant competitive threat to established shipping firms. Following the news, shares of FedEx saw a 9% decline, while rival United Parcel Service experienced a 10.5% drop on the same day. Both stocks have since recovered a portion of these losses.

However, Subramaniam clarified that comparing Amazon Supply Chain Services to FedEx’s core business overlooks a fundamental distinction. He described FedEx as a “true end-to-end global network,” capable of picking up shipments in one part of the world and delivering them to another within days—a capability he believes Amazon’s recent announcement does not encompass. The FedEx CEO characterized Amazon’s new service primarily as a third-party logistics (3PL) offering, a segment in which FedEx already participates but represents only a minor portion of its overall operations, generating approximately $2 billion compared to FedEx’s projected annual revenue exceeding $93 billion.

This perspective aligns with analyses suggesting Amazon’s move might be more of an expansion or rebranding of existing logistics capabilities rather than an entirely new competitive force. Subramaniam’s remarks also come as FedEx prepares to spin off its freight division, which handles bulk shipments, into an independent public company, allowing the remaining FedEx entity to focus on its core logistics, parcel delivery, cargo airline, and residential businesses. The CEO reiterated the strong “win-win relationship” with Amazon, underscoring its continued importance as a client.