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 How Amazon is Winning the Delivery Game: 3PLs and Parcel Carriers Face Competition

February 1, 2019

3PLs and parcel carriers

E-commerce is the world in which Amazon shines. But, the huge corporation also impacts other areas of the trucking industry. For example, parcel carriers, less-than-truckload carriers, and third-party logistics markets. And, not surprisingly, Amazon is growing. Recently, Armstrong & Associates came out with a report with some logistics and predictions about the industry with Amazon in the lead.

Competition for Parcel Carriers

According to the report, E-commerce actually accounts for about 30% of the parcel market in North America. And the estimate is that Amazon accounts for about 6.5% of the total UPS revenue and 4.7% of the FedEx revenue. Recently, the two companies have made investments in expanding and growing. For example, network optimization and automation, as well as adding new facilities and expanding others. So, these parcel-carrier companies are growing.

However, many reports demonstrate how Amazon is taking control of its own last-mile delivery. They do this with a fleet of at least 4,000 trailers used for transport between warehouses and fulfillment centers. In addition, the company does not own tractors. Instead, they use truckload and LTL carrier partners, 3PL partner capacity, parcel carriers, independent contractors using their own vehicles, or other partnerships for their transportation. By the end of this year, they expect Amazon will have a fleet of 20,000 vans.

According to Armstrong, this “allows Amazon to expand delivery days and hours.” Essentially, “Amazon could push the envelope and put pressure on its competitors with its own delivery schedule.” And, with Amazon’s plans to go even further with deliveries – bringing packages inside the homes and not just to the door, they are pushing the competition even further. Perhaps FedEx and UPS should be aware of this for the future. However, Armstrong believes that it is still unlikely for Amazon to fully rival the big ground capabilities of the two big competitors at this time.

Competition for 3PLs

But… 3PLs may face harsher competition with Amazon. According to Armstrong’s report, Amazon is essentially acting like a 3PL for 12% of e-commerce shipments that are business-to-consumer. In fact, more than half of the units sold through Amazon come from third-party sellers on their marketplace. And, about half of those sellers use Amazon’s Fulfillment program.

As this continues and the third-party market on Amazon grows, the company becomes more aggressive for competitors. Only time will tell if Amazon will come on top when it comes to 3PLs and parcel carriers in the industry. What do you think of Amazon’s role in the industry?

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