Category: Industry News

Amazon.com’s shares have rallied this year for the obvious reason that e-commerce is accelerating as a result of the Covid-19 pandemic, while before the arrival of coronavirus, the story was more about the company’s industry-leading cloud-computing business. Now, there could be another leg to the stool: package delivery.

In a research note Monday, BofA Global Research analyst Justin Post argues that Amazon’s (ticker: AMZN) enormous investment in logistics has created a valuable asset that will allow the company to become a major player in the package-delivery sector —and not just for goods sold on Amazon.com. Post contends the company’s delivery capabilities could be worth $100 billion to $230 billion by 2025.

If delivery drivers aren’t near the top of your list of unsung heroes during this coronavirus crisis, we suggest you reconsider.

Not only are these essential workers keeping the economy churning during a near-national shutdown, they’ve made the “stay at home” mandate bearable by delivering to our doorstep everything from mail to meals.

But this great convenience comes at a cost. One local UPS driver told a member of our Editorial Board that since Gov. Jay Inslee issued his stay-home mandate March 23, he and his fellow drivers have been delivering upwards of 250 packages a day and working 60 hours per week.

Amazon.com Inc has put on hold a new delivery service that competes with UPS and FedEx, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

Amazon is suspending the service because it needs people and capacity to handle a surge in its own customers’ orders, the Journal reported, citing sources.

The company said here in March it would hire 100,000 warehouse and delivery workers in the United States to deal with a surge in online orders.

While Amazon is the beneficiary of a spike in new business as store closures move even more shopping online, the eCommerce giant told the WSJ it is spending hundreds of millions of dollars to hire additional workers and pay its existing workers more.

And delivery companies like FedEx and United Parcel Service (UPS) Inc. are in the midst of the kind of boom in home deliveries that comes at Christmas, while shipments to businesses have slipped with most businesses closed. Delivering to homes is less profitable because drivers ferry fewer packages across many more stops, UPS told the paper.

FedEx and UPS workers could face layoffs if the flow of packages continues to slow.

Its union has told UPS workers that there could be job losses during the slump, the report said. Some of the FedEx Ground division’s contractors have already laid off delivery drivers.

FedEx Corp said on Friday it would slash its chief executive officer’s pay and draw down $1.5 billion from a credit facility as parcel delivery services take a hit from coronavirus-led lockdowns across the globe.

The company also plans to tap debt markets to bolster its reserves as the pandemic compounds its own troubles, including integration issues with its TNT Express acquisition, higher costs related to launching Sunday home delivery and the loss of Amazon.com Inc as a customer.

FedEx and larger rival United Parcel Service have asked the U.S. Treasury to move quickly to release billions of dollars in government grants and loans to support the sector amid falling demand.