Inside Amazon's delivery business and its ambitions, which FedEx and UPS privately fear
For UPS and FedEx, Amazon's been great for business. Now it's taking business away from them. — Photographs by Jake Stengel for Bloomberg Businessweek — Last fall, when he was running for mayor …
Context & Ripple Effects
This feature lands at the midpoint of an arc the corpus has been tracking since late 2015, when rising package volumes and costs pushed Amazon toward alternative delivery routes and strained its ties with UPS. By February 2016 Amazon was openly building a global delivery business aimed at taking on Alibaba, and this Bloomberg Businessweek piece lays out how far that buildout had come — and why FedEx and UPS now privately treat their biggest customer as a rival.
First-order effects
- Amazon's own delivery network begins absorbing volume that previously flowed to FedEx and UPS, converting the carriers' largest revenue source into direct competition.
- FedEx and UPS face a squeeze on their most profitable e-commerce lanes: keep carrying Amazon's packages and fund a future competitor, or cede the volume.
Second-order effects
- The carrier-customer relationship breaks down structurally rather than gradually — three years later FedEx confirms the split by declining to renew its ground-delivery contract with Amazon outright.
- Other large shippers gain negotiating leverage with FedEx and UPS, who must backfill lost Amazon volume by courting retailers that were previously priced as captive customers.
Third-order effects
- If the pattern holds, US parcel delivery restructures around vertically integrated shippers that own their last mile, leaving traditional carriers competing for the residual long tail of retail volume.
- Amazon's delivery arm extends beyond domestic fulfillment into cross-border competition with Alibaba, making logistics infrastructure itself a product line rather than a cost center.
The trend: E-commerce platforms are verticalizing into full-stack logistics providers, turning their former carrier partners into displaced competitors.