Amazon Ascends as Top US Logistics Company, Surpassing UPS and FedEx

WSJ Reports Citing Proprietary Data
Amazon Surpasses 5 Billion Parcels Last Year
Started Large-Scale Investment 10 Years Ago Amid Logistics Crisis

The world's largest e-commerce company, Amazon, has claimed the throne of the U.S. private logistics market. Ten years after starting to build its own logistics network, it has surpassed traditional logistics giants UPS and FedEx, and is expected to further solidify its number one position by widening the gap with them.

On the 27th (local time), The Wall Street Journal (WSJ), citing documents it obtained, reported that Amazon's delivery volume last year reached 5.2 billion packages, surpassing UPS to become the number one private logistics company in terms of parcel deliveries in the U.S. Although the U.S. Postal Service, a public entity, still holds the top spot in total parcel deliveries, Amazon has taken the number one position among private companies. FedEx was already surpassed in delivery volume since 2020.

UPS reportedly delivered 5.3 billion parcels last year, but some of these deliveries utilized the U.S. Postal Service network, so WSJ evaluated that UPS actually delivered fewer parcels than Amazon. FedEx's parcel delivery volume was 3.4 billion in fiscal year 2022 (June 2021?May 2022) and 3.3 billion in fiscal year 2023 (June 2022?May 2023). Like UPS, FedEx also used the U.S. Postal Service network for some deliveries.

The main factor behind Amazon's ability to surpass the traditional logistics giants is analyzed to be its investment in its own logistics network since 2014. After a shopping frenzy at the end of 2013 caused order backlogs and logistics companies failed to deliver on time, Amazon realized the importance of the logistics network and began building it directly.

Nevertheless, until the early stages of its own logistics network investment, Amazon could not compete with UPS and FedEx. In 2016, Fred Smith, former CEO of FedEx, laughed off speculation that Amazon might become a threat to logistics companies, saying, "(If that happens) it would be a huge deal." At that time, Amazon remained the third-largest logistics company behind UPS and FedEx.

[Image source=Reuters Yonhap News]

However, the atmosphere changed just before the COVID-19 pandemic. As Amazon showed growth, FedEx stopped delivering Amazon's e-commerce goods in 2019. But less than a year later, in 2020, FedEx was ultimately overtaken by Amazon in delivery volume.

Amazon has grown even faster during the COVID-19 pandemic. As 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 own logistics network by regionalizing it to improve delivery speed and profitability. WSJ reported, "While Amazon expanded its delivery volume by growing its logistics network in recent years, FedEx and UPS focused more on increasing profitability per delivery."

Amazon plans to further solidify its position as the number one private logistics company in the U.S. starting this year. As of November 23, just before the U.S. Thanksgiving, Amazon's parcel delivery volume this year exceeded 4.8 billion, and it is expected to reach 5.9 billion by the end of the year, an increase of more than 13% compared to the previous year. UPS reported that its parcel deliveries within the U.S. from January to September this year totaled 3.4 billion and is expected not to surpass last year's record of 5.3 billion.

However, some point out that Amazon has only surpassed the two companies in the U.S. residential parcel delivery sector, and still needs to catch up with them in global business and other sectors. Brian Ossenbeck, a JP Morgan analyst, evaluated, "Amazon has built a well-established one-way network for fast delivery of goods, but it has not built the same level of pickup or delivery coverage."

This content was produced with the assistance of AI translation services.