UBS and Morgan Stanley warn of Amazon’s logistics competition

UBS has joined Morgan Stanley in warning that Amazon could pose a serious competitive threat to companies such as UPS and FedEx, despite these companies trying to downplay Amazon’s potential impact.

Amazon “remains a meaningful long term risk,” said UBS analyst Thomas Wadewitz, even though the timeframe of its impact is not clear.

“While the path is increasingly clear, the velocity is more difficult to gauge,” said Wadewitz. “There is still likely a meaningful timeframe of limited direct impact.”

Wadewitz was speaking at a UBS-hosted panel on Amazon’s latest logistics operations and discussed how the company was on track to become its own dominant provider of deliveries alongside USPS.

However, one of the next steps would be for Amazon to add delivery stations to build up its network, which would take time. According to Wadewitz, this means “there is a meaningful period of time when competition from an Amazon package delivery offering is unlikely to be broad enough to have a direct impact on UPS and FedEx.”

In December, Morgan Stanley estimated that the opportunity cost of Amazon Air represented 2% of potential revenue loss for the two parcel delivery companies in 2018, which could grow to over 10% by 2025.

Source: Bloomberg