Dive Brief:

• Shipping giant FedEx Corp. said Tuesday it would boost capital spending for its fiscal 2017 by 6% to $5.1 billion in an effort to meet e-commerce product delivery demand and update its fleet of aircraft.

• FedEx reported a loss of $0.26 per diluted share for the fourth quarter ended May 31, compared to a loss of $3.16 per diluted share in fiscal Q4 2015. With adjustments, FedEx’s fourth quarter earnings increased to $3.30 per diluted share, compared to adjusted earnings of $2.66 per diluted share a year ago. Its adjusted per-share earnings and revenue beat expectations, according to the Wall Street Journal. 

• Speaking Tuesday on a conference call with analysts, FedEx's EVP of Market Development and Corporate Communications Mike Glenn dismissed Amazon’s moves to bulk up its own shipping capacity and downplayed reports that Wal-Mart is moving to work more with regional shippers, saying that it works closely with both retailers and that no one FedEx customer accounts for more than 3% of its revenue.

Dive Insight:

Although much has been made of Amazon’s eye-popping investments in shipping capacity, including truck fleets, air cargo and even ocean freight—and though Amazon identified itself as a “transportation service provider” and its competitors as “companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline” in its recent annual report—shippers FedEx and UPS, trucking companies and even Amazon itself have all downplayed the notion that Amazon would ultimately become a shipper itself.

Some observers are not so sure, and Baird Equity Research analyst Colin Sebastian is among them. In February, Sebastian told the Wall Street Journal that while he believes that Amazon is building its vast fulfillment capabilities for its own sake, its shipping capacity will naturally become a line of business for them. The move might help them trim some of its rising shipping costs, which drew concern from one analyst during its most recent earnings call. Amazon’s overall shipping costs in the fourth quarter jumped 37% to $4.17 billion, which the company attributed to "demand from Prime members" and higher inventory from third-party sellers in its warehouses, according to the Journal. 

“We continue to expect Amazon to add logistics primarily to meet its own growth, but over time, and in incremental fashion, we believe it is likely that Amazon will offer this expertise to third parties to help subsidize those costs,” Sebastian said. 

Those kinds of sentiments—plus Amazon’s continued investments in shipping as well as in last-mile delivery—are becoming increasingly difficult for FedEx and UPS to dismiss. FedEx's profit-dinging investmetns are a sign that it plans on leaving little to chance in an environment where Amazon is, at minimum, flexing increasingly more robust fulfillment muscles. 

FedEx said on Tuesday's conference call that it will continue to work alongside Amazon. “Because of our close relationship with Amazon and close collaboration, we have a very clear and specific understanding of their needs across the FedEx portfolio during FY17, and further we expect them to be a significant customer for many years to come,” FedEx's Glenn said.