![]() Amazon heavily relies on UPS for long-haul, typically two-day deliveries of goods normally not stocked in Amazon’s warehouses, according to Jindel. Satish Jindel, founder and CEO of consultancy ShipMatrix Inc., said the relationship works well for both. Both initiatives could cut into UPS’ delivery volumes with the e-tailing giant, Shanker said. Another is Amazon’s service begun in May to enable last-mile deliveries for brick-and-mortar retailers, he said. Other factors that could trigger delivery diversion, according to Shanker, include Amazon’s launch in April of Buy With Prime, which allows selected merchants to offer Amazon’s ubiquitous Prime offering, including deliveries, through their online stores. “Those are huge numbers if they are accurate,” said John Haber, chief strategy officer of Transportation Insight Holding Co., a consultancy. However, in an eye-popping estimate, Shanker said that Amazon could account for between 35% and 40% of UPS’ domestic volumes. UPS never comments on customers’ volume figures. More than half of that came from shedding volumes from large shippers like Amazon. daily package volumes missed its forecast by about 222,000 packages. That percentage will fall under 11% by the end of 2022 as UPS continues to cull lower-margin Amazon shipments from its system. UPS has publicly said that Amazon accounts for about 11% of its annual revenue of $102 billion. However, the gap between Amazon’s fulfillment and logistics capacity has narrowed in recent years, Shanker said.Īs Amazon’s logistics network catches up with fulfillment needs, it is better positioned today to migrate “at least a large part of its volumes” from UPS, he said. Shanker acknowledged that Amazon’s excess fulfillment space doesn’t mean it has the delivery capabilities to support the traffic that could fill its fulfillment centers. Ravi Shanker, Morgan Stanley & Co.’s (NYSE: MS) transportation analyst, said in a Monday note that his firm estimates that Amazon may have excess fulfillment capacity equivalent to 3.3 billion boxes. One way to fill it, the theory goes, is to begin insourcing volumes that have traditionally been handled by UPS. The catalyst is Amazon Logistics, the company’s delivery arm, expanding its operations amid a slowdown in e-commerce volumes that has left it with excess capacity. It has since somewhat receded into the background. ( NYSE: FDX), UPS’ chief rival, parted ways in 2019. The issue has gained on-and-off traction since Amazon (NASDAQ: AMZN) and FedEx Corp. would begin to leverage its expanding delivery network to divert traffic from its largest vendor, UPS Inc., and move it in-house. For several years, questions have surfaced over when, or even whether, Inc. ![]()
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