Amazon Wants To Crush FedEx And UPS - Now Delivering 50% Of Its Own Packages

Amazon has been quietly bulking up its logistics muscles over the years. But the extent of the expansion of its in-house logistics operations is a bit shocking as it is now revealed that the company actually ships half of its own packages in the U.S.

“Our AlphaWise analysis shows that Amazon Logistics already delivers ~50% of Amazon US volumes, focused on urban areas,” Morgan Stanley revealed, according to CNBC. The delivery service is done via its in-house logistics operations called Amazon Logistics.

What’s even more surprising is that Amazon only shipped around 20 percent of its packages a year ago. This means that the company more than doubled its capacity within just one year.

Amazon Logistics is now shipping around 2.5 billion packages per year. The two other big players in the sector, UPS and FedEx, are shipping 4.7 billion and 3 billion packages respectively.

While Amazon’s logistics business is still a long way from toppling UPS’s 4.7 billion annual capacity, analysts from Morgan Stanley believe that it’s only a matter of time before it comes out on top. This is true if it can support its current growth trend.

“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],” Morgan Stanley added.

Considering this 68 percent annual growth rate scenario, Amazon Logistics will be shipping around 6.5 billion packages by 2022. Meanwhile, FedEx will be shipping 3.4 billion while UPS at 5 billion based on estimates.

One factor that significantly contributed to Amazon Logistic’s massive growth is its one-day Prime shipping offer, according to The Verge. For the company, the huge expenditure while expanding its fleet of cargo planes and freighters is a long-term investment that would benefit the company in the long run.

“Customers love the transition of Prime from two days to one day — they’ve already ordered billions of items with free one-day delivery this year,” Amazon’s Jeff Bezos said in October. “It’s a big investment, and it’s the right long-term decision for customers.”