Wall Street commentary on Amazon creating problems for UPS and FedEx may be overblown

Wall Street analysts continue to indicate or suggest that the Seattle-based e-tailer titan Amazon raises significant risks for the parcel duopoly of UPS and FedEx, according to a Bloomberg report published this week.

By ·

Wall Street analysts continue to indicate or suggest that the Seattle-based e-tailer titan raises significant risks for the parcel duopoly of and , according to a Bloomberg report published this week.

The report, citing a research report from , states that Amazon presents a long-term risk for UPS and FedEx, with the company likely to build out its package delivery options, adding that the timing of the expansion is unclear.

Bloomberg also cited a report from , which observed that UPS and FedEx face “underappreciated competitive risks as the tech giant has been building up its freight delivery service.” And it cited Morgan Stanley estimates that stated the opportunity costs of the ramp up of the Amazon air network accounts for 2% of potential revenue losses for UPS and FedEx in 2018, which could grow to 10% or more by 2025.

Even with the potential of Amazon bringing more logistics operations in-house, Wadewitz wrote that “there is a meaningful period of time when competition from an Amazon package delivery offering is unlikely to be broad enough to have a broad impact on UPS and FedEx,” according to Bloomberg, adding that changes in how Amazon uses UPS and FedEx would be gradual. 

An industry observer told LM that the publicity Amazon is receiving focused on speculation of it being a threat to UPS and FedEx is a concern.

“Yes, Amazon could offer a door-to-door pick up and delivery service now that it has 20,000 of its on vans out there, and cell phones could ‘Uberize’ small parcel service, however, I believe this would be harmful to Amazon’s core mission of providing a fast, efficient purchasing platform for purchasing items,” said .

Putting that into perspective, Hemsptead explained that Amazon could divert some traffic from FedEx and UPS, but, at the end of the day, UPS and FedEx are really in a different business than Amazon. 

“FedEx does little business with Amazon, and if UPS considered them a real threat then they should sever ties with them and no longer enable them to be a threat, at least on those packages UPS transports for them,” he said. “At the very least transport then at deeply discounted rates. In any event, I continue to believe that there is a symbiotic relationship between Amazon, USPS, and UPS and they work together to be mutually successful. Amazon is busy being Amazon and taking care of the Amazon customer universe. Yes there may be some overlap of Amazon customers and FedEx and UPS customers but the Amazon business is not the most attractive or profitable business out there for UPS and FedEx, and I’m sure there are days they would appreciate shedding some of it.”

What’s more, he said that most of the business today moves under negotiated contracts between UPS and FedEx, adding that these are long-term relationships between seasoned reps and logistics professionals at major shippers.

“Have you heard anyone who has been called on by their Amazon sales rep yet?” said Hempstead.  “This pondering by Wall Street analysts is all about creating volatility from which they can make money. It is not about any deep seeded understanding of the sales process in the parcel industry.”


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.


Article Topics

Amazon · FedEx · UPS · All Topics
Latest Whitepaper
Six Steps to a Great Technology Stack
Amber Road’s new eBook, Six Steps to a Great Technology Stack, explains how your organization can leverage digital connectivity for multiple benefits.
Download Today!
From the March 2019 Logistics Management Magazine Issue
Shippers are starting to see the incredible advantage that can be gained through the strategic management of e-commerce—especially as logistics professionals move out of their silos and into the C-suite. Industry experts further contend that walls will continue to be torn down before this disruption reaches an advanced and fully evolved stage.
LM Viewpoint on E-commerce Logistics: Time to simplify
Six Warehouse Management Trends to Watch in 2019
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly newsletter!
Latest Webcast
Strategies to Overcome the Labor Shortage and Skills Gap in Distribution
Join logistics industry expert Robert O’Dwyer and technical consultant Shawn O’Brien as they discuss how top companies are developing strategies to do more with less, and identifying technology solutions that will enable managers to overcome their skills gaps. This webinar illustrates how top companies are developing strategies to do more with less and identifying technology solutions that will enable managers to overcome their skills gaps.
Register Today!
EDITORS' PICKS
Ember: Finding the perfect temperature
Inventor of the world’s first temperature-controlled mugs turns to a single third-party logistics...
2019 Rate Outlook: Pressure Builds
In 2019, the world economy will enter a third straight year of broad-based growth, but many...

2019 Transportation Management Systems (TMS) Market Update: Keeping pace with the times
The transportation management systems market is growing right along with the number of challenges...
The Logistics News that Shaped 2018
Every year at this time, group news editor Jeff Berman combs through the mountain of news that was...