Amazon Logistics Could Overtake Large Courier Companies
Amazon’s ability to deliver its own packages is apparently surpassing expectations and should worry UPS, USPS, and FedEx as the company could eventually offer delivery services to non-Amazon FBA clients.
According to a report by Morgan Stanley published on Thursday to clients, the robust shipping performance of Amazon’s logistics arm is an indication that it will soon overtake large courier companies’ shipping capacity.
In the report, Morgan Stanley says that Amazon Logistics is already delivering about half of its total packages across the U.S. during this holiday season. Furthermore, the company has more than doubled its share of package volume from 20% in 2018.
Amazon Logistics is now shipping roughly 2.5 billion packages annually, which is close to United Parcel Service Inc.’s (UPS) shipping volume of 4.7 billion and FedEx’s 3 billion.
“Our AlphaWise analysis shows that Amazon Logistics already delivers ~50% of Amazon US volumes, focused on urban areas. We see more of this going forward as our new bottom-up US package model assumes Amazon Logistics US packages grow at a 68% [compound annual growth rate from 2018 to 2022].” said the report by Morgan Stanley.
At this rate, Amazon Logistics will be shipping 6.5 billion parcels annually by 2022, surpassing UPS’s 5 billion packages per year and FedEx’s annual parcel volume of 3.4 billion.
Urban vs Rural
Amazon Logistics focuses more on densely populated areas compared with other couriers whose focus is on rural areas, says Morgan Stanley.
The investment firm found that 61% of the total package volumes of Amazon are from suburban areas, 28% are from urban areas, and only 11% are from rural areas.
Other courier companies, including UPS and FedEx, get 20% of package volume from rural areas.
What do you think about Amazon’s aggressive move to bypass the traditional shipping couriers?
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Richard Meldner
Richard is co-founder of eSeller365. He has over 17 years of experience on eBay which includes tens of thousands of sales to buyers in over 100 countries and even has experience with eBay’s VeRO program enforcing intellectual property rights for a former employer. And for about two years Richard sold products on Amazon using Amazon FBA in the US.
To “relax” from the daily business grind, for a few weekends a year, he also works for IMSA as a professional race official.
Right now for Christmas Amazon is using the Postal Service to get its deliveries done. when the crush of packages rises Amazon can’t handle all the deliveries themselves, they RELY on the Postal Service. I am a Letter carrier and know this first hand. So I don’t think Amazon is in a position to Handle even more packages from other companies. the Postal Service delivers 20 % of Fed ex and Ups Parcels because the Postal Service Delivers EVERYWHERE. now even more Ups parcels on Sundays
That’s true, they rely on them right now but as the article states that isn’t the trend we are seeing. UPS was founded in 1907 Amazon Logistics was founded in arguably 1997.
So in 20 years Amazon are delivering over half of what UPS do, which took them 110+ years.
By 2022 predictions are using growth predictions that Amazon logistics will be delivering more than both UPS and FedEx.
The postal service might be able to deliver EVERYWHERE right now, but don’t sleep on Amazon, they have history of taking over industries, and unless USPS is investing heavily in technology along with drone deliveries as just one example, they should be worried.
If companies like ups usps and fed ex said no to delivering amazon goods Amazon would not be able to fulfill its next day service, therefore failing customer expectations which would men shoppers would look elsewhere, so by delivering amazon goods the big 3 are effectively destroying themselves
Amazon will be delivering all parcels soon. They don’t have union wages and benefits to pay. They are schedule to start their own air network in 2021.
USPS will be left with the unprofitable scraps- UPS and FedEx will have to change their models to compete or be run off the market.
I don’t know how you can compete with an Amazon contractor making $17/hr versus UPS $30+hr/ benefits. Like taking candy from a baby; instead of paying wages they are making profit.