
Amazon’s Shipping Empire Is Challenging UPS and FedEx - prostoalex
https://www.wsj.com/articles/how-amazons-shipping-empire-is-challenging-ups-and-fedex-11567071003?mod=rsswn
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miker64
Both UPS and FedEx deliveries arrive at my front door in good condition, the
delivery drivers bag the packages up if I'm not home and it looks like rain.

USPS consistently rings my doorbell and makes sure packages are handed to me
rather than left outside.

Amazon delivered packages have been: thrown from the street; arrive crushed,
punctured, or otherwise damaged; left in the driveway; left in the neighbors
yard; never ring the doorbell, unless it's after dark, and then they ring and
run.

Amazon's last mile service is a complete shit show, impressively worse than
the random cut rate last mile delivery services they used when they were
trying to force UPS and FedEx to lower prices.

~~~
ChicagoBoy11
Am I correct in thinking that the last mile delivery solution from Amazon
strictly relies on independent contractors or do they have corporate
trucks/drivers?

~~~
lloyddobbler
IIRC, it's all independent contractors. Whether it's an independent company
contracted by Amazon (which is the bulk of it), or a direct Lyft/Uber-style
gig economy model of sourcing contract drivers.

Here's a (somewhat sensationalized, it's Buzzfeed News) article about some of
the negatives that have shown up. It references that all of the delivery
network is decentralized:
[https://www.buzzfeednews.com/article/carolineodonovan/amazon...](https://www.buzzfeednews.com/article/carolineodonovan/amazon-
next-day-delivery-deaths)

------
PorterDuff
I suppose that Amazon, at least the retail sales part of it, is essentially a
shipping company. No surprise that it would build out over time, plus you'd be
silly to trust them as a single huge customer.

One sentence in that article that I like was mentioning Amazon purchasing of
dead malls. I had to thump myself in the head..'of course'. I've always
wondered what would happen to those facilities and mini storage and
fulfillment centers are good ideas.

Maybe we could ship Amazon direct to mini storage and cut out the middle man.
Making 'too much stuff' more efficient seems like a genuine plan.

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dragonsh
In any e-commerce business you have challenges like:

1\. Getting traffic to online store.

2\. Converting it to sales.

3\. Able to deliver it to customers in time.

4\. Service the complaints or product in time.

Out of this website traffic is directly linked to assortment and sales is
directly linked to price (value for money vis a vis quality) and delivery
besides traffic. Logistics i.e. storing, sorting and last mile delivery is one
of the toughest challenges to solve in this business. Amazon used UPS, FedEx
and USPS in the beginning to help them understand how its done, acquire
expertise. They took that knowledge and than applied technology to solve some
of the challenges and reduce costs.

It was just a matter of time they become full logistics company, because in
reality every retailer and distributor is primarily a logistics company with
stores, warehouses and distribution center.

So it's hardly surprising they are competing with them. But I feel UPS, FedEx
still do many other B2B supply chain work like delivering components to
manufacturing site, vendor managed inventory, defence supplies, government
supply chain, Olympics, major events and sports supply chain etc. so there
will still be room for them to grow.

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macintux
Recent piece on the human costs of Prime’s next day delivery promise:

[https://www.buzzfeednews.com/article/carolineodonovan/amazon...](https://www.buzzfeednews.com/article/carolineodonovan/amazon-
next-day-delivery-deaths)

~~~
balaksakrionon
interesting article, thanks for sharing it. I have been seeing more and more
of these 3rd party contractor vans milling about and it makes since they're
skimping on safety, etc. in order to get a piece of amazon's shipping needs,
meanwhile amazon attempts to disclaim all liability while turning the screws
and upping the pressure

~~~
lloyddobbler
Yep. The real question is how prevalent these "skimping on safety" companies
are. When taken individually, no doubt it looks bad - but when considering
that there are thousands of delivery partners, each having 20-500 trucks,
delivering >5 million packages per day (per the article), I would expect to
see a few incidents crop up.

For example, it's reported that FedEx drivers were involved in 41 deaths in 24
months:

> In the 24-month period prior to December 3, 2017, FedEx Express drivers were
> reported to have been involved in 1762 crashes, 575 involving injuries,
> including 41 deaths.

[https://www.frg-law.com/carriers/fedex/](https://www.frg-
law.com/carriers/fedex/)

The big question is just how much Amazon is applying pressure and causing
those sorts of issues, and are they outside of the normal expected incidents
for logistics companies? WRT the Amazon delivery network, is this a matter of
a few bad apple operators trying to squeeze every cent of profit by
overworking drivers and not deploying more vans? Or is it a case of systemic
unattainable expectations from Amazon that force every delivery partner to cut
corners so they can maintain a livable profit margin?

Difficult to say from this article...but in spite of the sensationalism, the
examples it recounts certainly aren't good.

------
Shivetya
I just find it amazing that Amazon found it more profitable to buy tens of
thousands of delivery vehicles and build a service from the ground up than to
find better deals through the available shippers.

Now I see their trucks nearly as often as Fed Ex and UPS.

~~~
drevil-v2
Most of their fleet is private contractors who supply their own vehicles.
Minimal capital investment for Amazon

~~~
baud147258
From the buzzfeedNews article, apparently they are proposing the lease of
vehicles to their contractors

[https://www.buzzfeednews.com/article/carolineodonovan/amazon...](https://www.buzzfeednews.com/article/carolineodonovan/amazon-
next-day-delivery-deaths)

------
devoply
I could see a future where Amazon does general shipping like FedEx as a side
business to subsidize its real business.

~~~
mcpherrinm
Much like AWS spun out of their in-house experience running flexible computing
infrastructure, this would be a natural fit for them to flex their logistics
strengths.

Via their multi-channel fulfillment offerings, you can already use Amazon's
logistics network to ship your products sold on or off of Amazon. This would
just be supporting more type of shipments than just fulfillment.

On the other hand, Fedex, DHL, UPS etc have built a big part of their
strengths of shipping worldwide overnight. That's very different than what
Amazon does, where they try to warehouse products close to customers to
minimize shipping distance and time. Great when you want to buy an iPhone, but
not suitable for shipping a document from New York City to Tokyo.

~~~
muddi900
Yeah, but most ecommerce operators have no incentive to use Amazon, because
you are paying your competitor.

There is a reason most grocery stores are shifting, or have already shifted
to, Google or Microsoft for their cloud infrastructure.

~~~
blevo
>paying the competitor

it's a good point, yet many still use Amazon/AWS regardless. Netflix, for
instance (AWS). Then, on the micro-scale: FBA[0] sellers (Amazon Marketplace).

I assume it has to do with the ultra low barrier to entry which Amazon/AWS
provides. The convenience factor is off the charts. Nevertheless, I assume
Netflix has ideations of following in Dropbox's footsteps.[1]

[0] "Fulfilled by Amazon"

[1] abandoning AWS for self-owned dedicated infrastructure

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gumby
Ronald Coase would have loved Amazon and in particular this case. Amazon is
quite unconventional in regards to what they choose to outsource and what they
keep — or bring — in house.

------
dmoy
Huh, missing from this article is the thousand or so DSP that service Amazon
for shipping, basically contracting companies. A lot of Amazon shipping is
actually Amazon corporate, but a huge chunk is a thousand smaller shops.

Turns out you can also contract with those shops as a private citizen to just
ship random heavy stuff anywhere for super cheap. Because Amazon gives them
enough volume, it's become cheaper for individuals to make their own shipping
purchases too. Strange side effect.

I don't work for Amazon or anything, but my dad has used one of their DSP to
ship some truly heavy stuff (250kg+).

Is all that in the "other"? Or did it get lumped in with Amazon's chunk? I
want to know but the article doesn't help.

~~~
Stratoscope
> _DSP_

Just so I don't misunderstand, does that stand for Delivery Service Provider?

~~~
lloyddobbler
"Delivery Service Partner"

------
TazeTSchnitzel
It's good for Amazon, but is it good for consumers? Isn't a postal service
something of a natural monopoly — the more competing services there are, the
less efficient each is, because instead of one vehicle with one load of
deliveries, you have two or more vehicles with fractions of that amount?

It's certainly not good for the environment at least.

~~~
rerx
I feel delivery companies should bid for providing service for the last couple
of kilometers, then the winner should get an exclusive contract for some time
frame. That's how it's done for other services like regional rail public
transport.

~~~
Nasrudith
Why exclusive contract? What is gained? Rail right of way is exclusive just
from geometry and there are various historical "accidents" involved in
ownership from no longer relevant reasons but there are myraid ways to deliver
mail which may or may not be excluding.

A forced bidding system seems to give gameability and artifical barriers to
entry for little gain. To give an anchhacic example of the sort of problems it
would be akin to requiring a business that can serve all of New York City
competively before bidding. Having a mail room in the lobby of a large
apartment would violate that due to serving only residents.

~~~
rerx
I was thinking of parcel deliveries. Narrowish European inner city streets are
regularly blocked by delivery trucks and fundamentally it's unnecessarily many
of them because there are so many different companies servicing the same
street. Where I live double parking on bicycle lanes is extremely common (the
individual delivery people often see no alternatives), which poses massive
dangers to cyclists. Also these trucks typically are quite large, worsening
all issues, because a full load is meant for a long route.

If there was just a single company responsible for some "last mile" area,
smaller vehicles like this electric model [1] would suffice. They would
distribute parcels from a depot that is filled by larger long distance trucks
that do not need to belong to the same company.

The last point is important: If DHL, FedEx, UPS etc. each have their own final
storage buildings and delivery fleet, those depots could not all be situated
close enough to the target addresses.

[1]
[https://en.m.wikipedia.org/wiki/StreetScooter](https://en.m.wikipedia.org/wiki/StreetScooter)

------
devilsenigma
At some point is it possible that Amazon buys UPS or FedEx to boost its own
fleet?

~~~
tehlike
Fedex contracts out its deliveries. They are more like franchise. This is kind
of what amazon is doing for the past few years.

~~~
walrus01
fedex ground drivers are contractors, fedex express are employees.

fedex ground originated as a totally separate company that they acquired and
re-branded.

[https://about.van.fedex.com/our-story/history-
timeline/histo...](https://about.van.fedex.com/our-story/history-
timeline/history/opco-ground/)

~~~
tehwebguy
FedEx reps _love_ to tell you they are "totally separate" when anything goes
wrong with Ground, too

------
linuxftw
The people that deliver in those amazon vans to my place are clowns. Next-day
and two-day delivery is no longer reliable. It's making me not want to shop
with amazon.

------
dasanman
Amazon is becoming the real Evil Corp!

------
adinobro
What is interesting is that an American company is copying Chinese companies
after pulling out of China because they could not compete with the local
companies.

Both JD & Taobao/Tmall have their own large shipping empires in China. I
suspect that was part of the reason they pulled out. They could not compete
using 3rd part shipping companies.

Now they are doing the same thing in their home market.

~~~
Someone1234
But Amazon started logistical services before some of those companies even
existed. Seems like a creative re-write of history.

~~~
adinobro
When did Amazon start logistics? I know for a fact that Taobao/TMall was doing
it in 2012. There was a distribution hub at the end of my street. I assume
they had been doing it a few years before then but not 100% sure when they
started.

You are correct JD didn't exist back then since it used to be called 360buy
and they used 3rd party shipping companies.

After becoming JD they started shipping themselves. Not sure about the year.

Probably right about JD but as far as I know Amazon didn't start doing
logistics till after 2013.

Am I wrong about the dates?

