Amazon delivers threat to FedEx, UPS with surge in shipments
'Sudden and significant loss of business'
Amazon gears up for the holiday season with quick delivery on millions of items. FOX Business' Ashley Webster with more.
Amazon is taking a bite out of the U.S. package-delivery business long dominated by UPS and FedEx, companies so well-known that their brands became the industry's equivalent of "Googling" a topic on the internet.
As of August, the world’s largest online retailer was delivering 46 percent of U.S. packages bought on its online platform through Amazon Logistics, the company’s in-house shipping and delivery service, according to research by the investment bank Morgan Stanley.
UPS TO BEGIN DELIVERY, PICKUP SERVICES SEVEN DAYS A WEEK
(AP Photo/Ted S. Warren, File)
The growth in Amazon Logistics "has been the most disruptive event within transportation in the last five years," Morgan Stanley said in the report. "The collateral impact of the disruption has been obvious, a sudden and significant loss of business at several parcel companies.”
USPS EYEING DRONES FOR MAIL, PACKAGE DELIVERY
The bank, which analyzed roughly 70,000 Amazon transactions from 300 U.S. shoppers over a nine-year period to measure the changes, noted that Logistics volume more than doubled from 20 percent of the company's shipments to 46 percent in past 12 months alone.
WANT TO START AN AMAZON DELIVERY BUSINESS? WHAT TO KNOW
This exponential growth is driven by "Amazon's core e-commerce growth and the company moving a rising percentage of its business in-house," Morgan Stanley said.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Amazon Logistics now ships more than 2.5 billion packages a year in the U.S., while FedEx ships 3 billion and UPS delivers 4.7 billion, Morgan Stanley estimated. Amazon's deliveries will probably swell to 6.5 billion by 2022, for a cost of $10 a package, the analysts said. That represents a loss of $65 billion in revenue for UPS, FedEx and the U.S. Postal Service from Amazon's business, less if the company gets a discount.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMZN | AMAZON.COM INC. | 202.61 | -8.87 | -4.19% |
| FDX | FEDEX CORP. | 294.45 | +2.17 | +0.74% |
| UPS | UNITED PARCEL SERVICE INC. | 134.09 | +1.46 | +1.10% |
CLICK HERE TO READ MORE ON FOX BUSINESS
Rival firms could lose as much as $35 billion more with the potential launch of Amazon's third-party service fulfilling orders from independent web companies that pay Amazon to handle time-consuming deliveries, Morgan Stanley said.
Overall, bank analysts predict Amazon Logistics will ship more U.S. packages than FedEx in 2020 and more than UPS in 2022.