Will Amazon become the next UPS, or is there a possibility? If so. How soon, how will this impact UPS? Let’s take a closer look at the info that we were able to gather.
In this day and age, almost everyone has done some form of online shopping. And if technology is your thing, you probably even prefer it. One of the most notable companies to take the online sales and delivery industry by storm has been Amazon.
Amazon CEO, Jeff Bezos, started the company in 1994 and initially set out to create one of the biggest online bookstores. While the company has taken a turn over the years, it remains one of the most convenient places to buy books, with its’ competitive prices and quick arrival times, and even leads the E-book Kindle industry.
However, books are not the reason most people love Amazon. Amazon has become a fan-
favorite due to its prime membership benefits. Amazon Prime not only comes with many perks such as access to streaming platforms like Amazon Video and Amazon Music but shopping deals with Whole Foods Market as well. Arguably, their most beneficial prime Membership perk is the two-day shipping guarantee for any eligible item on the site.
This includes items sold by third parties and even grocery items through Prime Pantry. While two-day delivery is the guarantee to its’ loyal members, it seems as if they have found a way to start offering one-day shipping on select items as well recently. This new shipping option does not come as much of a surprise when they have their own warehouses and sprinter vans popping up all over the country.
Will Amazon Become the Next UPS or
FedEx raised many questions in 2019 when they announced they would be officially cutting
ties with amazon and would not renew any of their Amazon contracts. When Amazon relied heavily on outside sources like FedEx and UPS to ship their parcels, they contributed to these companies’ success. Now that they are transitioning to more independent service, it seems FedEx felt the need to draw a line in the sand finally.
UPS continued their partnership, presumably deciding that it is better to grow with them than be against them. It seems that this decision paid off, with Amazon paying UPS $11.3 billion, making up 13.3% of its’ revenue. No other customer contributes more than 10%, making Amazon their top earner. It could be said that this could backfire if/when Amazon decides to cut off third-party delivery companies altogether.
Amazon Air Takes Off
Amazon again sparked discussions this January when they purchased 11 used Boeing 767-300
jets from Delta and WestJet. The aircraft are expected to be up and running by 2022. These purchases garnered attention because while Amazon still leases most of its cargo, they are set to have doubled their fleet size between May 2020 and June of this year.
While they will still be far away from the fleets of FedEx (679 planes) and UPS (572 planes), this is still significant growth. Experts believe that while most investors are focused on the shares of their last-mile deliveries, the challenge Amazon Air presents to FedEx and UPS is “just as relevant.”
Today FedEx still has the largest all-cargo air fleet (in freight tons-kilometers flown), with UPS coming in third place only after Qatar Airways Cargo, an international cargo company located in Doha, Qatar. Watching Amazon’s success on the ground brings about the question, how long would it take for Amazon Air to be among the top companies in the air as well?
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