Amazon’s ability to deliver its own packages is apparently surpassing expectations and should worry UPS, USPS, and FedEx as the company could eventually offer delivery services to non-Amazon FBA clients.
According to a report by Morgan Stanley published on Thursday to clients, the robust shipping performance of Amazon’s logistics arm is an indication that it will soon overtake large courier companies’ shipping capacity.
In the report, Morgan Stanley says that Amazon Logistics is already delivering about half of its total packages across the U.S. during this holiday season. Furthermore, the company has more than doubled its share of package volume from 20% in 2018.
Amazon Logistics is now shipping roughly 2.5 billion packages annually, which is close to United Parcel Service Inc.’s (UPS) shipping volume of 4.7 billion and FedEx’s 3 billion.
“Our AlphaWise analysis shows that Amazon Logistics already delivers ~50% of Amazon US volumes, focused on urban areas. We see more of this going forward as our new bottom-up US package model assumes Amazon Logistics US packages grow at a 68% [compound annual growth rate from 2018 to 2022].” said the report by Morgan Stanley.
At this rate, Amazon Logistics will be shipping 6.5 billion parcels annually by 2022, surpassing UPS’s 5 billion packages per year and FedEx’s annual parcel volume of 3.4 billion.
Urban vs Rural
Amazon Logistics focuses more on densely populated areas compared with other couriers whose focus is on rural areas, says Morgan Stanley.
The investment firm found that 61% of the total package volumes of Amazon are from suburban areas, 28% are from urban areas, and only 11% are from rural areas.
Other courier companies, including UPS and FedEx, get 20% of package volume from rural areas.
What do you think about Amazon’s aggressive move to bypass the traditional shipping couriers?
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