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Amazon Overtakes UPS, Set to Dominate US Deliveries
November 28, 2023
The Rise of Amazon in U.S. Logistics
In the resilient U.S. economy, powered by unwavering consumer demand, a seismic shift is underway within the vast logistics industry. Amazon, a titan in e-commerce, is on the brink of dominating the package delivery market. The company’s internal data indicates it is on track to deliver a remarkable 4.8 billion packages domestically, right before the onslaught of Black Friday and Cyber Monday shopping. By the end of 2023, Amazon anticipates breaking a record with around 5.9 billion deliveries. UPS, Amazon’s closest rival, is reported to have handled 3.4 billion packages in the United States during the first nine months and is not expected to exceed its previous year’s tally of 5.3 billion. FedEx, trailing further behind, also factors in the parcels handed to the U.S. Postal Service for final delivery within their figures.
A Skeptical Past: The Underestimation of Amazon
Not long ago, many in the industry doubted Amazon’s potential to reshape the logistics landscape. FedEx CEO Fred Smith, back in 2016, labeled the idea of Amazon as a major logistics player “fantastical.” He assured analysts that the triad of FedEx, UPS, and the U.S. Postal Service would continue to lead in delivering e-commerce orders for the foreseeable future.
The Parting of Ways with FedEx
The narrative took a sharp turn by 2019, as tensions led to an overt separation between FedEx and Amazon. With Amazon aggressively expanding its in-house delivery network, its dependence on traditional carriers has diminished. Although still engaged with UPS for a fraction of its shipments, roughly equating to 11% of its revenue, Amazon’s innovation in areas such as employing flex drivers, launching same-day delivery hubs, integrating warehouse robotics, and harnessing AI, propelled it to the forefront of logistics. Even as retail heavyweights like Walmart and Target shorten delivery times by using their physical stores, Amazon’s lack of brick-and-mortar outlets affords it unmatched flexibility, reinforcing its lead in the industry.
Amazon’s Future Outlook
With the help of a strong one-directional operations model and a vast network, Amazon continues to expand its dominance in home deliveries as the industry dynamics change. The company is addressing this growth by extending its international footprint and partnering with various service providers to maintain its high standards, which include multiple convenient return options. Contrary to initial apprehensions of a drop in Prime memberships due to increased subscription costs, SA analyst Bluesea Research posits a positive forecast. The analyst points out that Amazon’s subscription service is experiencing consistent growth, and the introduction of new features suggests a promising trajectory for Amazon’s further ascension and sway in the market.