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Amazon Overtakes FedEx and UPS as the Top Delivery Business
November 27, 2023
Amazon has emerged as America’s No. 1 delivery business. Not only has the e-commerce powerhouse surpassed both UPS and FedEx, but it is continuously widening the gap, becoming the go-to choice for parcel deliveries in the United States. However, the U.S. Postal Service still holds the title for the biggest parcel service by volume, processing hundreds of millions of packages for Amazon, UPS, and FedEx.
This development comes after Amazon used to be a major customer for FedEx and UPS a decade ago, and “some executives from the incumbents and analysts mocked the notion that it could someday supplant them. Amazon’s outsize growth combined with strategy shifts at FedEx and UPS have changed the balance.”
As the holiday season approached this year, Amazon had already delivered a whopping 4.8 billion packages in the U.S. alone. Predictions from internal documents suggest an estimate of around 5.9 billion packages by the end of the year, marking a significant increase from the 5.2 billion packages shipped in 2022.
One key difference to note is that Amazon’s figures only include packages that the retailer handles from start to finish. When calculating their volumes, UPS and FedEx also count packages they pass to the postal service for final delivery.
In contrast to Amazon, UPS has suggested that its domestic volume is unlikely to exceed last year’s 5.3 billion, which includes parcels delivered through the postal service. In the first nine months of this year, UPS processed about 3.4 billion parcels domestically. FedEx reported that its domestic Express and Ground parcel volume reached approximately 3.05 billion for the fiscal year ending May 31, 2023.
As Amazon’s delivery market share gets more potent, FedEx and UPS maintain that they aren’t simply racing for volume. Instead, these traditional delivery giants aim to focus on delivering more profitable parcels. FedEx severed its ties with Amazon in 2019, while Amazon still accounts for about 11% of UPS’s revenue.
Capitalizing on the early stages of the pandemic, Amazon significantly expanded its e-commerce influence. The company almost doubled its logistic infrastructure, marked by the launch of numerous warehouses and sorting hubs. This ambitious expansion, led by former consumer CEO Dave Clark, also included a strategic shift toward regionalizing Amazon’s logistic network.
“These delivery speed improvements have been a key driver of growth and are resulting in increased purchase frequency by our Prime members.”
Amazon CFO Brian Olsavsky, via The Wall Street Journal
Although Amazon has outperformed both UPS and FedEx in terms of residential delivery, it hasn’t matched their global reach or the return aspect of their operations. While JP Morgan analyst Brian Ossenbeck elaborated on how Amazon can deliver their products quickly one way, he noted that they are lacking in pickup and delivery coverage.
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