Amazon has built significant logistics infrastructure to work and competes with traditional 3PL providers. For the parcel market, we estimate Amazon’s value at $95-$100 billion. This market is dominated by UPS, FedEX, and the United States Postal Service, while other services including Amazon make up only 11%. For the less-than-truckload market, FedEx and UPS are major carriers. Amazon is a significant customer of both UPS and FedEx. Amazon accounts make up for 6.5% of total UPS revenue and 4.7% of FedEx.

When comparing capital expenditures, UPS has tended to devote about 4.7% of revenue to capital expenditures. This drives it to increase its volume capacities and lower costs through technological efficiencies. Amazon has only increased its capital expenditures in the last five years. Within the fulfillment and Sortation space, UPS owns and leases more than 1,000 package operating facilities. On the other hand, FedEx Ground has 601 total facilities. However, Amazon contains 124 facilities in the U.S. which comprise 124.7 square feet.

UPS has increased theirs dramatically to $5.2 billion in 2017.  FedEx’s Ground increased capital expenditures 28% from 2015 to 2016. Upon reviewing facility capabilities and automation, FedEx ground facilities are newer than UPS on average. These 130 facilities include capabilities to flex and accommodate peak volume, handle network distribution, reroute packages in transit, and sort packages at any hub. Following its lead UPS plans to have all eligible packages moving through automated facilities by 2022.  Amazon’s facilities were built and equipped within the last 20 years and are also highly automated. This is a summary of the Amazon Logistics Report published in 2019, for more information please visit: https://www.3plogistics.com/product/amazon-logistics-market-estimates-benchmarking-and-predictions/

 

By Katelyn Dano

July 17, 2019