- FedEx CEO Fred Smith said on a call with analysts Tuesday he does not believe the "prospects" of FedEx will be "disrupted" by Amazon Air.
- Analysts on FedEx's quarterly earnings call pressed FedEx executives about potential competitor Amazon Air with no less than three questions on the subject. Executives answered that the company is not a threat, but a customer, countering a recent analyst warning.
- "We look at Amazon as a wonderful company in service and they're a good customer of ours. We don't see them as a peer competitor at this point in time for many reasons. We think it is doubtful that, that will be the case," said Smith.
"Have you seen any impact from Amazon Air, Raj?" asked analyst Ken Hoexter of Merrill Lynch in writing.
"Ken, the short answer to that question is no," responded Raj Subramaniam, executive vice president and chief marketing and communications officer, and soon to be president and CEO of FedEx Express. After more questions regarding the e-commerce giant, Subramaniam added:
"I think it's also important to recognize, and again, there is a significant misunderstanding, the Amazon Air network is set up to move inventory within the Amazon system, which is prodigious. It's big, it moves not-in-stock and low-turn SKUs and forward stocked items for their third-party customers, who can't duplicate inventory every place. So it's scheduled differently than FedEx or UPS's system."
Worry about the growth of Amazon Air and its possible effect on the entrenched 3PLs are in part due to Amazon's history as a disruptor, but also from a Morgan Stanley analyst's warning earlier this month that Amazon Air is "encroaching" on UPS and FedEx in the skies.
At the time, FedEx declined to comment on the report, but executives' comments Tuesday suggest they do not share these concerns. Similarly, UPS told Supply Chain Dive in an email at the time: "There are a variety of assumptions in the Morgan Stanley report that we disagree with ... We are confident in our strategies and believe there is tremendous opportunity for continued growth."
In terms of air service infrastructure, Amazon is years behind either UPS or FedEx and though some scenarios for "encroachment" have been thrown out by analysts, both UPS and FedEX appear confident that a new challenger is not a near-term problem.
Still, the concern from analysts displayed on this week's call seems to suggest that even if the threat of Amazon Air is not imminent, the questions are here to stay.