Near the turn of the last decade, Inc. planned seriously to extend its delivery services to businesses outside its retail sphere. Then the pandemic hit, and those plans, which could have levied a big hit on FedEx Corp. (NYSE: FDX) and UPS Inc. (NYSE: UPS) by going right into their wheelhouse of business, were shelved.

The question is whether Amazon (NASDAQ: AMZN) has now begun to reengage in the process. If so, the catalyst could be the potential for a Teamsters union strike against UPS, whose actions could idle most of UPS’ U.S. operations, and put millions of packages out there for the taking. A strike by the Teamsters, which could occur when the current contract expires July 31, would likely result in permanent market share loss for UPS and permanent wins by others, experts say. 

“All boats will rise except for UPS,” said Andrew Townsend, president and CEO of LSO, a regional parcel delivery carrier based primarily in the Southwest. 

Amazon absolutely has capacity to tap into,” said Townsend. “In a pinch, I would be willing to bet that retailers would give in to using their longtime competitor as a carrier.”

Amazon is UPS’ largest customer by revenue, with a bit more than 11% based on the most recent annual data. If the Teamsters strike against UPS, Amazon would bring that business in-house for delivery via its delivery partners, according to Satish Jindel, head of consultancy ShipMatrix. 

According to ShipMatrix data, that revenue translates into 1.85 million parcels per day, about 9% of UPS’ overall daily U.S. volumes.

Not only would that business go back to Amazon, but then so could shipments from third parties and other Amazon merchants that are handled by UPS, Jindel said.

As the days pass without an agreement, people will be looking for capacity, he said. Amazon declined comment for the story.

Jindel said a strike would be a timely way for Amazon to enter the door-to-door fray for non-Amazon online orders. Amazon already delivered 13 million parcels per day in 2022 using its network of contracted drivers. It will be ready with enough capacity, Jindel said, to handle UPS’ volume just as it tested door-to-door service prior to the pandemic, he said.

Dean Maciuba, head of U.S. operations at Crosswinds Parcel Consulting, doesn’t buy any of this. “First of all, Amazon does not have the capability to pick up any slack as a last-mile delivery company. They would need to be an integrated carrier” — meaning being involved in the pickup portion of a move–“to make a difference and they are not,” Maciuba said. “Also, Amazon does not want to screw up their service by trying to deliver UPS packages before or during a strike.”

Josh Taylor, senior director of professional services at Shipware LLC, a consultancy, shares that view. “I don’t think Amazon is super-interested in doing all of this,” Taylor said. “They have the funds and experience to do it. It’s just that it has better places to spend the money.”

Taylor said Amazon will find a much more attractive return in continuing to market itself as a fulfillment/delivery partner to its third-party customer base and taking an estimated 15% cut from the services rendered.

Jeremy Tancredi, partner of the supply chain practice at management consultancy West Monroe, believes Amazon will make a play for UPS business on the outbound delivery side. However, because Amazon lacks the ability to make pickups, there will be no chance of it spinning out a service in time to manage what would be an integrated operation, he said.

“Still, from everything I see, it’s an opportunity,” Tancredi said in reference to Amazon pursuing UPS’ outbound deliveries.

The post Amazon may go after parcel share amid UPS labor issues-or not appeared first on FreightWaves.

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