How Amazon will beat UPS and FedEx at shipping – or Not

How Amazon will beat UPS, FedEx at shipping: Driverless trucks – https://www.bizjournals.com/seattle/news/2018/02/23/how-amazon-will-beat-ups-fedex-at-shipping.html?ana=e_me_set1&s=newsletter&ed=2018-02-26&u=l8ZrcdM1tBcwfbYcoSNXmQ00417653&t=1519672590&j=80196851

“Shipping with Amazon” (SWA) actually puts “SmartPost and to a lesser extent SurePost in Amazon’s cross hairs, and opens up a major USPS opportunity, if (and a Big IF) Amazon and the Postal Service can engineer a major alliance involving a.) USPS retail and mail processing and distribution hub footprints, b.) Investment in a USPS fleet leasing agreement and c.) USPS can negotiate a a unique third-level flexible labor agreement with the two key labor associations, NALC and APWU.

Granted, there are multiple moving parts that need to come together in a non-legacy environment, but the alternatives are not encouraging. The USPS is facing accelerating decline in FCM volumes and revenues, it has not re-engineered its operating model quickly enough away from letters and flats to parcels, nor sufficiently leveraged its key assets and thrown off the yoke of the PAEA pre-funding mandates’, and labor agreements, although the NALC, from past observations seems more open to such asymmetrical concepts, and puts pressure on the APWU to take the forward step.

UPS and FedEx are constrained and locked in by their size and operating models and both have unique exposure to Amazon.

Amazon on the other hand faces the double edge sword of accelerating eCommerce growth success; i.e., business is great, but it can’t expand fast enough to meet volume demand and customer expectation (“Demand Driven Delivery”, “D3”) which it created, and its rising shipping costs – even with its moves into taking control of and streamlining its end to end supply chain and delivery networks are still above historical industry norms for B2C marketplace – 14 to 17%.  The relative weight of fulfillment and shipping costs on Amazon’s bottom line has increased over the past decade. Last year, the two cost factors amounted to 26.4 percent of the company’s net sales, up from 16.6 percent in 20071.

  1. https://www.statista.com/chart/12893/amazon-fulfillment-and-shipping-costs/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.