(Reuters) -Amazon has signed up FedEx to handle some parts of its package deliveries, it said on Monday, days after rival UPS cited reduced shipping volumes from the e-commerce giant as a reason to cut 20,000 jobs.

FedEx shares rose 1.2% after the closing bell after the delivery company said the multi-year agreement covers residential delivery of select large packages for Amazon.

The deal with FedEx, signed in February, gives Amazon “cost favorability” compared to UPS, Business Insider, citing an internal document, had reported.

The agreement will not replace UPS, Amazon said as FedEx will join its third-party partners, including UPS and the USPS, and work alongside its own last-mile delivery network.

UPS said in January it plans to shrink shipment volumes for Amazon, its largest customer, by more than 50% by the second half of 2026 to focus on fewer, but more profitable deliveries.

Late last month, UPS said it would slash 20,000 jobs and shut 73 facilities as a part of its planned reduction in Amazon deliveries, as well as cost-cutting and efficiency projects under a major operational restructuring.

(Reporting by Christy Santhosh and Aishwarya Jain in Bengaluru; Editing by Leroy Leo and Arun Koyyur)