FedEx CEO Fred Smith, who has often said Amazon is not a competitive threat, said during Tuesday's earnings call that Amazon is one of the five major players in the logistics space — and a company he thinks about every day.
Here's what he said:
"The last thing I'm going to say is we basically compete in an ecosphere that's got five entities in it. There's UPS, there's DHL, there's the U.S. Postal Service, and now increasingly, there's Amazon. That's who we wake up every day trying to think about how we compete against and give the best services to our sales force."
Smith's comment represents a major shift in stance for FedEx, which has long downplayed Amazon's growing presence in the logistics space.
In March, for example, FedEx President Rajesh Subramaniam said during the company's earnings call that Amazon is "not a threat to our business" or "our future growth," despite all the media attention on Amazon's potential to disrupt the industry. Last September, Subramaniam said Amazon's move into the logistics space "should not be confused as competition with FedEx."
The change in tune follows FedEx's decision to end its ground delivery and express delivery contracts with Amazon earlier this year. On Tuesday, FedEx missed on earnings and lowered its full-year guidance for 2020, in part due to the loss of a "large customer," likely in reference to Amazon.
FedEx shares are down more than 13% as of midday Wednesday.
Amazon, meanwhile, has significantly expanded its delivery network in recent years. Earlier this year, it launched a new Delivery Services Partners program and expanded its air fleet to include 50 planes so it wouldn't have to rely on FedEx and UPS. It also added "transportation and logistics services" to its group of competitors for the first time in its annual filing in February.
During Tuesday's call, Smith hinted that competition is only going to intensify, stressing the competitors' operational excellence.
"We can't make the competition go away — I wish they would, you know, just leave the field," Smith said. "They're very good operators."