
Amazon to suspend delivery service that competes with UPS, FedEx - JumpCrisscross
https://www.wsj.com/articles/amazon-to-suspend-delivery-service-that-competes-with-ups-fedex-11586296112
======
paxys
Key part is "for non-Amazon packages". I didn't even know this was a thing.
They are having a hard time keeping up just with in-house demand, so this is
likely the right move.

~~~
ksec
>Amazon told shippers the service, known as Amazon Shipping, will be paused
starting in June. It was available in just a handful of U.S. cities. Under the
program, Amazon drivers would pick up packages from businesses and deliver
them to consumers, rather than ship orders from Amazon warehouses.

How does that work? So it is like Instacart but with Amazon picking it up and
delivering it? I don't see how could that scale.

Edit: Incase this isn't clear, I have placed an order for 6 items in 6
different shops. If all these items were in Amazon Warehouse, they would have
packaged together and shipped from One Destination. Just reading from the
sentence it seems Amazon Shipping will have to go to 6 different places to
pick up the package. It is the case that One to Many scale, many to many / one
is difficult.

~~~
leoedin
In the UK pretty much every courier offers a pickup service. You book it in,
they give you a label to print, they turn up and take it. It's probably
exactly like that. If you order from 6 shops, they ship 6 packages to you.

~~~
sigwinch28
Some couriers (DPD? UPS?) in the UK take this a step further and will even
come with the label ready to stick on the box.

Great if you don't have access to a printer.

I recall (perhaps incorrectly) that Royal Mail once offered a service where
you could buy an "online stamp", then you would write a long string of letters
and numbers above the address on the envelope to send it. It was distinct from
freepost.

~~~
vinay427
The Swiss Post currently has a stamp-by-SMS service for normal letters where
upon sending an SMS to an automated system, you are charged the normal stamp
price using the premium SMS system, and you receive a sequence (8-10
characters long IIRC) which you write where a stamp would normally go at the
top-right of the envelope. It's far more convenient than having to remember to
buy stamps in advance or typically going out of your way to a post office just
to mail a letter as mail boxes, by contrast, exist seemingly all over the
place.

~~~
101404
"So, what's your hobby?"

"I collect 10 character long strings."

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bdcravens
Reuters non-paywalled [https://www.reuters.com/article/us-amazon-com-delivery-
idUSK...](https://www.reuters.com/article/us-amazon-com-delivery-
idUSKBN21P3EB)

~~~
haggy
Thank you so much. The amount of paywalled WSS articles on HN is too damn
high.

~~~
hittaruki
[https://archive.md/Xo8tn](https://archive.md/Xo8tn)

------
hirundo
This is just to deal with the current surge. They'll be back, with drones.

~~~
root_axis
Will drones as a delivery method to customers be viable within the foreseeable
future? I just don't see how the economics work out. Even if you ignore all
the unsolved software, logistical and legal (zoning) hurdles, seems to me like
the ongoing security and maintenance costs of a drone fleet would be
prohibitively expensive for a long time.

~~~
ggreer
Some economists studied this[1] and found that even if you assume incredibly
expensive drones and a rather small, spread-out city (Chattanooga TN), drones
are signifacantly cheaper than delivery trucks. This is true even if delivery
trucks cost $0 to purchase. Most of the cost of delivery is labor &
maintenance, not upfront capital costs.

The main reason we don't have drones deliver things is because the FAA bans
it. No state or municipality can override the FAA, so we're all stuck until
the feds change the law.

1\.
[https://libjournals.mtsu.edu/index.php/jfee/article/download...](https://libjournals.mtsu.edu/index.php/jfee/article/download/1512/1090/)

~~~
kaydub
I think this study jumps to many unsubstantiated conclusions in their
estimates.

> We assume that operating costs for personnel, loading, and monitoring will
> be approximately the same per package for truck as for drone delivery.

but at least they included

> There are additional drone costs such as: setting-up and running the drone
> delivery stations, the investment in research and development, and lobbying
> the FAA. Other costs include: buildings and land associated with the drone
> stations, computers and monitoring software systems for drone flights,
> computer technicians and drone monitors on site, robotics engineers for
> maintenance and upgrades to drones on site, utility costs of running the
> building, logistics management team to oversee operations, potential
> insurance and legal fees associated with drones, and potential air and/or
> radio frequency rights for drones, etc. There is also the potential for
> legal costs in some of the following situations: drones are found operating
> in unauthorized airspace, drones are shot down by civilians, a drone lands
> in an unauthorized space, etc

There's also mention that the drones can only deliver up to 5lb packages.

~~~
ethagknight
Also, I prefer my packages delivered to my door on the porch, not the middle
of the yard.

~~~
dannyw
Nothing stopping a drone from delivering a package to your porch.

~~~
grogenaut
My porch roof and rail and that huge ass rhododendron do. I'd have trouble
landing a drone there myself without a 1" box attached

~~~
dsfyu404ed
For durable packages there's no technical reason the drone can't sling it
between the roof and rail and it's not like delivery drivers don't routinely
lob small packages not marked as fragile. Considering how fun to test that one
would be I doubt the team responsible is gonna let that feature request ticket
sit around collecting Jira dust for long.

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neonate
[https://archive.md/Xo8tn](https://archive.md/Xo8tn)

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deegles
There's a perception that Amazon built their in-house delivery services,
"sortation" hubs, airplanes etc. to compete with UPS/Fedex... the reality is
that it had to be done to handle the shipping volume. Amazon will continue to
saturate all available capacity. Cannibalizing this service's capacity for
internal usage is further evidence of that.

------
Hokusai
"Amazon told shippers the service, known as Amazon Shipping, will be paused
starting in June. It was available in just a handful of U.S. cities."

I was going to list my opinion why this is not relevant in any measure. But,
that it just be another instance of "Old man yells at cloud".

As, I am still interested in the HN meta. I have a question for you readers,
why did you voted up this story?

~~~
rabbiterm
Because it's an early indicator that Amazon doesn't have the logistics and
operational advantage over fedex/ups that it claimed to have...

~~~
grogenaut
Or maybe they're all moving so much toilet paper that they have to cut less
essential deliveries.

~~~
rabbiterm
I'm not sure if you are joking or not, but toilet paper is in no way an
'essential' delivery. Any company that would think so gets a fail in
logistics....

~~~
grogenaut
Tell that to someone who doesn't have any and can't go out due to health
conditions.

~~~
jatone
order a bidet instead.

~~~
grogenaut
try, they're sold out still

------
canada_dry
Meanwhile in Canada, the Federal Gov't has entered into an agreement with
Amazon to be a distributor of various PPE equipment.

[https://www.newswire.ca/news-releases/postal-workers-wary-
of...](https://www.newswire.ca/news-releases/postal-workers-wary-of-federal-
government-s-partnership-with-amazon-canada-896181152.html)

------
A4ET8a8uTh0
I think overall this is good news for Amazon. I know I am personally condering
not renewing Prime due to constant delays on just about anything. If it
improves the situation, I might reconsider

~~~
jonfw
Yeah I just cancelled prime. There is no value proposition anymore-
competitors have faster shipping, competitive pricing, and don't require
membership

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backtoyoujim
I thought this was proto-union-busting.

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catalogia
I kind of had the impression the purpose of their delivery service was to help
negotiate better rates from USP/FedEx. Is that what happened?

~~~
LyndsySimon
I have good contacts within FedEx, and as I understand it the general
consensus there is that while losing the Amazon contract hurt, UPS is doing it
so cheaply there's no way they're even close to breaking even on it. What's
more, it's a substantial part of their network volume - so when Amazon pulls
their business to go it alone, UPS is going to end up cash poor and having to
deal with aging infrastructure and inflated costs from overcapacity.

~~~
crazygringo
> _UPS is doing it so cheaply there 's no way they're even close to breaking
> even on it_

That doesn't make sense to me... why would UPS sign a contract with Amazon
that it wouldn't make money on?

I can see accepting a relatively low profit, but not negative. Even as some
kind of strategic defensive move. There's no winning scenario for them to lose
money on delivering packages for Amazon.

~~~
LyndsySimon
FedEx and UPS live and die by volume. The more packages they move in total,
the cheaper it is to move each individual package. They can then make their
profit in sales to companies and individuals with far less volume and pricing
leverage than Amazon.

For the sake of argument, let’s say that Amazon makes up 50% of UPS’s
business, and those packages are shipped by UPS at a 10% loss. If the other
50% of their business averages a 20% profit, then they’re averaging a 10%
profit across the board.

Without the Amazon packages, let’s say UPS can cut their operating costs by
25%. Now they’re shipping 50% as many packages, though, so the per-package
operating cost has increased by about ~33%. Those customers that were
generating 20% profit when the network was larger are now a losing
proposition. UPS then faces the choice of downsizing their operation or
raising prices. Both of those options are about equally bad when you consider
that their competitors are not impacted by the loss of Amazon’s business
(well, to be totally correct, their competitors have already absorbed the
disruption to their operations when Amazon pulled their business to move it to
UPS in the first place).

To be clear, I’m not saying the above numbers are correct - or even close to
being representative. I’m merely illustrating why it makes sense for
transportation companies to take large-volume customers even at a loss.

~~~
crazygringo
That is an absolutely fascinating analysis that never would have occurred to
me. That makes perfect sense.

Thanks so much for explaining!

------
jldugger
Who would voluntarily use Amazon shipping? They're bad enough with their own
packages.

~~~
derision
I've never had an issue with anything shipping from Amazon

~~~
kenhwang
I've rarely not had an issue with shipping from Amazon. Turns out when you
randomly gig-hire a different person every day for delivery, they never learn
how to get into an office/apartment building.

USPS/UPS/FedEx have been sending the same person for years. They know where
the mail room is, what the building hours are, who to call for building access
when codes rotate, where the elevators are, where the emergency stairs are
when the elevators are down, and where the units are.

Half the time Amazon delivery just leaves the package somewhere in the lobby
or not even in the building.

~~~
derefr
They're bad at last-mile, yeah. (All the providers seem to be, for one
consumer-group or another.)

But if you can _cut off_ the last mile, Amazon's "pick-up point" service beats
UPS's or FedEx's hands down.

Amazon Lockers are 24hrs; never have line-ups; there's one outside every
grocery store near me; and in a pinch, my own post office can be used as one,
too. (Though I don't do that, because my post office is _not_ 24hrs, and
because there's a Locker directly on the way between my home and my office.)

FedEx and UPS, meanwhile, both bounce my packages to a warehouse at the
airport (40 minutes away) or in a neighbouring exurb (50 minutes away), and
only after first attempting to deliver them to my house (which will never
work), with no option to send them straight to the pick-up location. (Yes, I
_can_ get the packages redirected _from_ the airport warehouse _to_ a pick-up
location once they're already _at_ the airport warehouse, but that means an
extra two days of waiting for my package, and then I have to go to a pick-up
point that's 20 minutes away from me anyway. I may as well go to the airport!)

I live in an apartment building with a flaky buzzer entry system and no lobby
mailroom. "Pick-up from a nearby location" is the only viable option for me.
Amazon nails it. Everybody else is way behind.

~~~
U8dcN7vx
You might look into UPS' My Choice, which allows you to set a permanent
preferred delivery redirection. Alas it is not available for all shipments,
e.g., signature required or a shipper can tell UPS not to allow redirection.
There's a charge (per delivery) unless redirected to a UPS store/access-
point/center or you are a premium (paying) member. FedEx Delivery Manager is
similar.

~~~
TulliusCicero
I'm not sure "you might want to look into this service that's unreliable and
costs extra money" makes for a very compelling proposition.

This is exactly the kind of example that makes vertical integration so often
more consumer-friendly.

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hef19898
No idea what's going exactly, but something seems strange at Amazon right now.

\- extremely long delivery times of up to 3 weeks

\- Quite a fes out-of-stocks (only anecdata from the last wesks)

\- Shutting out FBA inbound deliveries

\- Major changes for Amazon Logistics

No idea what's going on exactly, but as an ex-Amazonian I am puzzled by all
this. Sure, the situation is extreme and it hit right after peak 2019, when
Amazon operations are in the usual post-peak down. But still, that cannot be
the only reason. maybe inventories are all wrong as demand patterns changed,
and Amazon is over stocked on not-needed stuff and short stuff in high demand.
Or they have trouble ramoing up to peak-levels again without the normal
preparation period. I don't know, but to me at least, it seems Amazon is less
flexible than it was a couple of years ago. But maybe that's just me, so.

~~~
m463
I think this is an attempt at underpromise-overdeliver in uncertain times.

They don't know if they will lose all their delivery drivers or if their
warehouses will have anything inbound with shipping stopped...

