Dive Brief:
- Amazon still lacks the requisite logistics capabilities to be a top competitor to FedEx, Brie Carere, FedEx's EVP and chief customer officer, said at a Bank of America conference earlier this month.
- Carere said Amazon's shipping services still have catching up to do in terms of pickup offerings. She added that the company doesn't have the sortation operations needed to compete with FedEx's Express portfolio and falls short in terms of large-package and rural deliveries.
- "So right now, no, I don't see them as a pure competitor," Carere said. "I'm not trying to be dismissive or defensive … when we think about who I have to compete with, they're not at the top of my list."
Dive Insight:
Amazon Shipping, which offers delivery services for sellers to use across channels, could become a force in the parcel industry, experts told Supply Chain Dive upon its relaunch in 2023. But for now, FedEx is brushing off concerns that Amazon’s offering could draw away its customers.
"We'll continue to prepare for that moment, but it's not imminent from my perspective," Carere said.
For one, Carere cast doubt over Amazon's current ability to provide package pickups at scale. Amazon Shipping offers warehouse pickups in 16 U.S. metro areas, according to an October post from EasyPost, a partner of the service.
"For the most part, those drivers get up in the morning and they run a straight optimized route," Carere said of Amazon. "Trust me, putting pickups in your routing capability is very difficult. You also then have to be prepared to wait and manage the customer expectation."
Amazon did not respond to a request for comment about Carere's remarks, but the e-commerce giant is making strides in some of the shortcomings she pointed out. Beyond its launch of Amazon Shipping, the company is pushing to expand its rural delivery network, accelerate shipping speeds and make its sorting operations more efficient with automation.
Despite Amazon's growing in-house delivery capabilities, the company also uses UPS, the U.S. Postal Service and FedEx to handle a portion of its website's orders. Amazon tapped FedEx specifically for large-package delivery to residential addresses under an agreement announced earlier this month.
By focusing on heavier parcels that tend to be more profitable, the deal will increase FedEx's average per-package revenue and weight, Carere said. However, the arrangement won't result in Amazon volume flooding FedEx's network like it has historically at UPS.
"This will not be our largest customer, period," Carere said.
