- Amazon's market share for U.S. parcel volumes jumped to 21% in 2020 following years of rapid growth, placing it ahead of FedEx and just behind UPS, according to the Pitney Bowes Parcel Shipping Index.
- Revenues and volumes for all major parcel carriers surged last year due to the COVID-19 pandemic driving more demand for e-commerce shipments. But Amazon Logistics' growth in both categories has outpaced FedEx, UPS and the Postal Service every year since 2014, according to Pitney Bowes.
- "It is a time of disruption, which is providing opportunities across the board for lots of different types of players who you haven't seen in this space before, from Amazon Logistics all the way down to the last-mile delivery, crowdsourcing engagements that are starting now," said Jason Dies, executive vice president and president of sending technology solutions at Pitney Bowes.
Amazon's rapid growth puts it among top carriers
Amazon Logistics' growing presence has put a dent in the parcel duopoly's market share, but the market remains highly consolidated despite the growing popularity of other delivery options like regional carriers. Options outside of FedEx, UPS, the Postal Service and Amazon make up just 1% of market share, according to Pitney Bowes.
But there could be opportunities for upstart players going forward, Dies said. Amazon's delivery focus remains with its in-house volume, and FedEx and UPS have become more selective, prioritizing more profitable B2B and small business shipments over a deluge of home delivery volume.
Smaller players like Pitney Bowes — which is shifting its focus to lightweight parcels — have also adjusted their strategies.
"We've found a way to pick retailers and providers that meet our criteria of what we think we can be effective in delivering," Dies said. "And so you're going to continue to see that happen, I think, across the industry as people carve out where they think they can play most effectively."
Emerging entrants have an opportunity to take more share from the dominant carriers as long as volume continues to outpace capacity, Dies said. Pitney Bowes forecasts U.S. volume will nearly double by 2026 to up to 39 billion parcels, and volume during this year's peak season is expected to exceed capacity by 5 million parcels daily, UPS CEO Carol Tomé said in July. Many shippers have more orders to fulfill, but space on delivery vans is limited.
"It's a simple and trite statement: Everyone is challenged with capacity at the moment," Dies said.
Even Amazon can't avoid using other parcel carriers in its supply chain. Amazon is in the midst of building its in-house fulfillment capabilities and still relies on the likes of UPS for some last-mile deliveries.
Parcel shipments originating from Amazon more than doubled to 4.2 billion in 2020. However, it passed twice as many of those parcels on to other carriers for last-mile delivery in 2020 (2.8 billion) versus 2019 (1.4 billion), according to Pitney Bowes.
As Amazon bolsters its capacity to reduce its reliance on other carriers, it has an opportunity to handle outside shipments, too.
"You continue to see these other new entrants come into space trying to fill in niches around the edges, on those gaps, which is what both Amazon and Walmart have said they're trying to do with providing a route to ship other people's parcels," Dies said.