Having already seem FedEx dump Amazon air deliveries in June this year, it’s now been announced that FedEx will dump Amazon small package ground deliveries as well. FedEx will end their contract and leave Amazon to fend for themselves. This will leave FedEx delivering some of Amazon’s International packages but not domestic US deliveriers.
“This change is consistent with our strategy to focus on the broader ecommerce market.”
– FedEx statement
The move won’t bother Amazon too much, who now have a private fleet of around 70 planes criss crossing the US, along with thousands of independent courier companies, each with hundreds of drivers, forming part of Amazon Logistics fleet. As Amazon build out more warehouse capacity, increase stock volumes to enable them to split inventory and hold it in smaller quantities closer to customers and roll out their one-day delivery across the US, their reliance on third party carriers shrinks.
We’ve already seen in the UK the vast majority of Amazon’s own deliveries are now via Amazon Logistics, putting them as one of the top three carriers in the country and the largest private delivery firm. This is a similar pattern to Hermes who started out as the logistics arm of OTTO in Germany but now carry millions of third party packages on a daily basis. Amazon’s next move with Amazon Logistics will be to step up Shipping by Amazon.
Shipping by Amazon is when Amazon pick up parcels not sold on Amazon from retailers and delivery them direct to consumers. Amazon Logistics will explode from being a private operation delivering Amazon parcels to a full blown courier and that will make them a direct competitor to FedEx in a very short space of time.
The next interesting step will be how well integrated Shipping by Amazon becomes in multi-channel management software and in shipping consolidators solutions where consumers and small sellers can book ad hoc deliveries. As soon as it’s as easy to book an Amazon Logistics delivery as it as DPD, Hermes or Yodel, it’s likely that volumes diverted to Amazon will explode.