Competition in the logistics sector – Can Amazon really become a threat to FedEx and UPS?

• Amazon is expanding its business model and opening its logistics network to other companies
• Logistics market has so far been dominated by FedEx and UPS
• Experts see major challenges for Amazon

Amazon is now positioning the logistics infrastructure it has built up over the years directly against established parcel and freight companies. According to the company, Amazon Supply Chain Services is no longer just aimed at retailers on its own marketplace. In the future, companies from areas such as healthcare, industry, retail and the automotive sector will also be able to use the group’s infrastructure. This includes warehousing, transportation, customs clearance, freight management and last mile delivery. The first customers include Procter & Gamble, American Eagle Outfitters and 3M.

Amazon relies on the well-known AWS pattern

Amazon’s logistics plans show parallels to the development of Amazon Web Services. MarketWatch, for example, writes that analyst Colin Sebastian sees ASCS as a possible “AWS of Logistics”. The Baird analyst therefore believes that the project could develop into a $25 billion business.

24/7 Wall St. also describes the strategy as a typical Amazon pattern: The company first develops infrastructure for its own business and then opens it up to external customers. Similar steps have previously been taken with cloud services, loans for retailers and pharmaceutical sales. However, it remains to be seen whether logistics will develop as disruptively as AWS.

Why the competition reacts nervously

In any case, the new offensive hits a sensitive point. Amazon itself was a significant customer of FedEx and UPS for years. Now the group is becoming a direct competitor.

24/7 Wall St. points out that Amazon can now rely on a high network density and enormous capacities. This could enable the company to make prices cheaper than the competition. In addition, Amazon already enjoys the trust of many corporate customers through its AWS cloud business.

UPS has already addressed the risks. According to 24/7 Wall St., CEO Carol Tomé said that “after the Amazon phase-out is complete, 2026 will be a turning point.” The group has already cut around 48,000 jobs and closed 93 locations.

There are also doubts about the Amazon model

But despite this escalation in competition with the previous market leaders, analysts do not see the situation clearly. MarketWatch quotes William Blair analyst Dylan Carden as having doubts about whether Amazon can actually quickly gain large market shares. He pointed out that an earlier, similar offering called “Supply Chain by Amazon,” which launched back in 2023, has not yet found widespread acceptance.

24/7 Wall St. also points to the structural advantages of established providers. FedEx and UPS had decades-long customer relationships and customized integrations with enterprise customers that couldn’t easily be replaced. In addition, international air freight networks such as FedEx Express or UPS Worldport are extremely capital intensive and difficult to copy.

There is also a possible conflict of interest: According to 24/7 Wall St., many companies could shy away from entrusting their entire supply chain to a direct competitor in online trading. This has already been shown in other areas such as Amazon Pharmacy.

What this means for private investors

For investors, the development should show one thing above all: competition in the logistics sector is becoming significantly more intense. According to 24/7 Wall St., the decisive factor for FedEx or UPS will be whether larger corporate customers actually shift contracts to Amazon and how the established providers react to the price pressure. At Amazon, on the other hand, it will be relevant whether the new offer develops into a profitable additional business or whether high investments initially put a strain on margins.

Thomas Zoller, editorial team at finanzen.net

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