Possible seasonal boost for UPS after FedEx cuts ties with Amazon

UPS may get a boost in holiday e-commerce traffic following the FedEx-Amazon split, according to The Wall Street Journal.

Amazon will need to make up for capacity after being dropped by FedEx, and UPS, USPS and regional carriers are set to pick up the slack.

According to FedEx, Amazon accounted for only 1.3% of its total revenue last year—and industry analysts have suggested that FedEx had not taken on much ground volume for Amazon anyway due to tight margins.

However, Amazon will still need to act quickly to meet demands. In July, its annual Prime event saw a record-breaking 175 million items purchased, but the company had to up its standard transit times for Prime members from two to four days, leading to some complaints.

Credit: Thijs van der Weide

This was after FedEx decided not to renew their Express contract for domestic deliveries in the US, but before FedEx Ground dropped Amazon entirely.

UPS hasn’t commented on the situation other than to state that no customer is responsible for more than 10% of its revenue.

Nevertheless, Amazon is progressively taking on more of its own logistics operations—likely to be a major factor in FedEx’s decision not to renew the contracts—and analysts are speculating that the benefits for UPS may be short-lived as Amazon becomes a full-fledged rival.

Source: The Wall Street Journal