Despite talk of budding rivalry, Amazon and UPS may find they’re stuck with each other

[cheryl]

Despite talk of budding rivalry, Amazon and UPS may find they’re stuck with each other - Freightwaves

For all its symbolism, FedEx Corp.’s (NYSE:FDX) June 7 announcement that it would not renew its U.S. air delivery contract with Amazon.com, Inc. (NASDAQ:AMZN) was relatively small potatoes. The decision only affects $150 to $200 million in annual revenue for Memphis-based FedEx, whose fiscal year 2019 top-line will approach, if not exceed, $70 billion.

The real story, instead, may percolate some 400 miles to the southeast in Atlanta, home of UPS Inc. (NYSE:UPS). Unlike FedEx, which had little to lose by dumping the domestic flying portion of its Amazon business, UPS has much more at stake. Amazon tendered 397 million parcels to UPS last year, the vast majority of which were delivered by UPS’ ground network, according to data from ShipMatrix, Inc., a consultancy. By some estimates, Amazon accounts for 5 to 8 percent of UPS’ $72 billion in annual revenue, compared with 1.3 percent for FedEx prior to its recent move. UPS is more deeply involved in e-commerce than is its rival, elevating the importance of its arrangement with Seattle-based Amazon, which, depending on the source of the data, has around a 40 to 50 percent share of U.S. e-commerce.

 

[LarryBird]

I personally think that UPS should wait until a week or two before Thanksgiving, then drop Amazon as a customer totally. Let them deal with the fallout of not being able to service their customers for the holidays, and make them realize just how important UPS is/was to their bottom line.

If we don't have the balls to do that, we should at least drastically raise their rates, at the time when they're in no position to argue about it - peak.

Why we continue to prop them up, as they build out a competing delivery network, while saddling us with their least desirable parcels/delivery areas is beyond me. It doesn't seem smart. We barely make a profit off each package we get from them - the margin is tiny.

The argument that they keep the trucks full and guys working would be hold more weight if e-commerce wasn't exploding already anyway - there's gonna be more than enough work to keep us busy, and we don't even have the capacity for too much more as we stand. We should focus on delivering for companies that aren't trying to become a competitor and that we are more profitable shipping for.

Maybe I don't have an understanding of what UPS' ultimate long-term strategy for dealing with Amazon is, but this is what my thoughts are, based on what I do know.

 

[Netsua 3:16]

I personally think that UPS should wait until a week or two before Thanksgiving, then drop Amazon as a customer totally. Let them deal with the fallout of not being able to service their customers for the holidays, and make them realize just how important UPS is/was to their bottom line.

If we don't have the balls to do that, we should at least drastically raise their rates, at the time when they're in no position to argue about it - peak.

Why we continue to prop them up, as they build out a competing delivery network, while saddling us with their least desirable parcels/delivery areas is beyond me. It doesn't seem smart. We barely make a profit off each package we get from them - the margin is tiny.

The argument that they keep the trucks full and guys working would be hold more weight if e-commerce wasn't exploding already anyway - there's gonna be more than enough work to keep us busy, and we don't even have the capacity for too much more as we stand. We should focus on delivering for companies that aren't trying to become a competitor and that we are more profitable shipping for.

Maybe I don't have an understanding of what UPS' ultimate long-term strategy for dealing with Amazon is, but this is what my thoughts are, based on what I do know.

The stock took such a hit right after Christmas that I honestly believe UPS was THRILLED when FedEx "pulled out." Now we're running both ours and FedEx's Amazon, and even though it's blowing us out, the stock price has climbed back to a pre-Christmas level. This is exactly what Atlanta wanted.

 

[Fred's Myth]

Ironically, it was only the Express Division of FedEx that discontinued its contract. All other divisions, especially Ground, are ramping up in anticipation of increased volume.

 

[DriverNerd]

I personally think that UPS should wait until a week or two before Thanksgiving, then drop Amazon as a customer totally. Let them deal with the fallout of not being able to service their customers for the holidays, and make them realize just how important UPS is/was to their bottom line.

Might be nice to imagine, but there is no way we could do that without violating our contract with them (and no, I don't know when it's set to expire so I could be wrong), and Amazon would be sure to put it all over the internet and their web site that UPS is responsible for this action. Yeah, I'm sure the American public will be just throwing money at us after hearing that.