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Amazon Overtakes UPS and FedEx to Lead U.S. Private Logistics Market

Eugene Park Views  

Amazon Surpassed 5 billion packages last year
Massive investment started a decade ago after the logistics crisis

Amazon, the world’s largest e-commerce company, has claimed the throne of the U.S. private logistics market. A decade after building its logistics network, Amazon has surpassed traditional logistics giants UPS and FedEx. It is expected to consolidate its top position further by widening the gap with these companies.

On the 27th (local time), The Wall Street Journal (WSJ) reported, citing documents it obtained, that Amazon’s shipments last year reached 5.2 billion, surpassing UPS to become the top private logistics company in the U.S. regarding parcel delivery volume. While the U.S. Postal Service still leads in total parcel delivery, Amazon tops the list among private companies. Amazon surpassed FedEx in terms of delivery volume as early as 2020.

According to WSJ, UPS delivered 5.3 billion parcels last year. Still, since some of these shipments went through the U.S. Postal Service, the assessment is that UPS delivered fewer parcels than Amazon. FedEx delivered 3.4 billion parcels in the 2022 fiscal year (June 2021 to May 2022) and 3.3 billion in the 2023 fiscal year (June 2022 to May 2023). Like UPS, FedEx also utilized the U.S. Postal Service network for some of its deliveries.

The main factor that enabled Amazon to surpass traditional logistics giants was its investment in its logistics network, which began in 2014. After a logistics crisis during the 2013 holiday shopping season, when orders piled up, and logistics companies failed to deliver on time, Amazon realized the importance of a logistics network and began to build its own.

Despite this, Amazon was no match for UPS and FedEx in the early stages of its logistics network investment. In 2016, Fred Smith, then-CEO of FedEx, laughed off speculation that Amazon was a threat to logistics companies, saying it would be “a huge deal” if that were the case. At the time, Amazon ranked third in logistics, behind UPS and FedEx.

Reuter/Yonhap

Turning Point Amid the Pandemic

However, the atmosphere changed just before the COVID-19 pandemic. As Amazon showed growth, FedEx stopped delivering Amazon’s e-commerce goods in 2019. Yet, less than a year later, FedEx fell behind Amazon in delivery volume by 2020.

Amazon has grown at an even faster pace amid the COVID-19 situation. As the demand for e-commerce goods expanded during the pandemic, Amazon doubled the size of its network from 2020 to the end of 2021 and strengthened its logistics network by localizing it to increase delivery speed and profitability. WSJ reported, “As Amazon has grown its logistics network and increased its delivery volume in recent years, FedEx and UPS have focused more on increasing profitability per delivery.”

Amazon’s Rapid Growth

Amazon plans to solidify its position as the top private logistics company in the U.S. further this year.

As of November 23, just before Thanksgiving, Amazon has delivered over 4.8 billion parcels this year and projects to reach 5.9 billion by the end of the year, marking an increase of more than 13% from last year. UPS reported that from January to September this year, its U.S. parcel delivery volume hit 3.4 billion and is expected to fall short of last year’s record of 5.3 billion.

However, some point out that while Amazon has surpassed the two companies in the U.S. residential parcel delivery sector, it still has to catch up with them in global business and other sectors. Brian Ossenbeck, an analyst at J.P. Morgan, said, “While Amazon has well-established one-way networks that deliver goods quickly, it is not building the same level of pick-up or delivery range.”

By. Jeong Hyun Jin

Eugene Park
content@www.kangnamtimes.com

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