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.
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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.
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.”
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.
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.
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.
|UPS||UNITED PARCEL SERVICE INC.||168.00||-3.90||-2.27%|
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.