Morgan Stanley estimates Amazon is delivering half of its US packages, will soon pass UPS and FedEx in total volume, at a current rate of 2.5B packages a year
- Amazon Logistics is the e-commerce giant's in-house logistics operation. — “Our AlphaWise analysis shows …
Context & Ripple Effects
This Morgan Stanley estimate caps a year of mounting evidence that Amazon was pulling its volume in-house: six months earlier, Rakuten pegged Amazon's share of its own US packages at 48%, up from 15% two years prior when the Postal Service carried most of them. Research from May had already shown the logistics infrastructure behind that shift growing roughly 3X in four years, enough for next-day reach across most of the US population.
The significance is that the half-way mark Morgan Stanley identifies is not a steady state but a waypoint on the way to parity with UPS and FedEx — meaning the largest customer of the US parcel industry was becoming its largest carrier.
First-order effects
- UPS, FedEx, and the USPS face the direct loss of their single largest volume source as Amazon moves packages onto Amazon Logistics at a run rate of 2.5B a year, eroding the density that underpins their network economics.
Second-order effects
- With the network built, Amazon can sell capacity to third parties — the later move to carry shipments for companies like Etsy and even Walmart turns the in-house operation into a competitor inside UPS's and FedEx's own customer base.
- Incumbents are pushed toward pricing and service responses aimed at the remaining commercial parcel base, since the anchor tenant is leaving the building.
Third-order effects
- If the trajectory holds, the US parcel market restructures around Amazon as both the biggest shipper and a full-scale carrier, with legacy players competing for a shrinking residual — a pattern the corpus suggests played out, with Amazon passing FedEx and then UPS by 2022 on US package volume.
- Dependence runs both ways: the Postal Service, long Amazon's biggest partner, eventually faces the downside of that concentration when Amazon plans to cut USPS volume sharply at contract expiry.
The trend: E-commerce vertical integration is converting a retailer's shipping spend into captive logistics capacity that graduates from cost center to competitive threat against the carriers that once served it.