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UPS and FedEx Face Challenge by Amazon

Jan. 13, 2016
Amazon is acquiring excess delivery capacity in a move that could disrupt the delivery market and generate a lot of revenue.

Amazon is taking steps in what is considered to be a bid to become a player in the package delivery field. Sometime this quarter Amazon will fully acquire Colis Privé, as reported by Jay Green of the Seattle Times.

In 2014 the company acquired the right to purchase 4.2% of Yodel, which is based in the UK.

These moves signal Amazon’s plan to launch a delivery service that will one day compete again UPS, FedEx and others, according to analysts.

Further evidence of this, as reported by Green, is that last month Amazon negotiated to lease 20 Boeing 767 cargo jets. This is a considerable expansion of the company’s cargo trial in Wilmington, Ohio, operated by Air Transport on the company’s behalf.

Green points out that during the past holiday season FedEx failed to delivery some packages and UPS had some issues two years ago. Amazon wants to avoid this in the future.

And on the trucking side the company announced last month that it would add thousands of trucks to its U.S. fleet.  

All of this capacity will be more than Amazon needs and the company is looking to disrupt the market and generate a lot of revenue, explained Colin Sebastian an analyst with Robert W. Baird & Co., as reported by Green.  Sebastian points out the global fulfillment market, which includes shipping and warehousing goods, represents a $400 billion to $450 billion business.

More on Amazon’s plans in the Seattle Times. 

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