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From UBS badysts to Morgan Stanley experts to former Amazon executives, the alarm is sounding for Amazon Logistics, which has rapidly built a fleet of 70 aircraft, 10,000 vehicles and access to marine and rail brokerage in a few years.
And, according to these insiders, Amazon is preparing to launch a third-party logistics service that could allow UPS and FedEx to postpone in the same way that the company dominated cloud computing with Amazon Web Services.
"Even Amazon, as big as it is and growing as fast as it is, will not be able to fill this network the first day," said Ravi Shanker, Morgan Stanley badyst, Business Insider. "So similar to what they did with AWS, we think it's very logical that they improve the use of their network and reduce their own costs by opening up." to third parties. "
Read more: Amazon has taken over the $ 176 billion cloud computing market. Now he's using the same log book in logistics.
But a new Goldman Sachs report urges everyone to brake. The Amazon network is still too small to compete with FedEx or UPS. UPS, FedEx and Amazon did not comment.
"(B) over the FedEx and UPS wide area networks, it would seem that currently, the limited size of the Amazon network probably does not have the reach and flexibility to offer worldwide indefinite time capacity to reach almost everywhere, "wrote the team of transport badysts Goldman Sachs in a July 10 report.
In addition, it's still not big enough for Amazon to fully integrate its huge volume of parcel deliveries, Goldman Sachs said. During the 2018 holiday season alone, the retailer shipped one billion parcels.
For Amazon to want to catch up with UPS and FedEx, the company is expected to invest $ 122 billion in its network.
One of the most tedious investments of Amazon would be the construction of aerial platforms. The retailer is currently building a $ 1.5 billion air hub at the Cincinnati / Northern Kentucky International Airport, which is scheduled to open in 2021.
Read more: The chief financial officer of Amazon has emphasized the power of this solution to perfect its own distribution capabilities. This is a clear warning to UPS and FedEx.
But UPS and FedEx already have 13 and 11 hubs respectively. Catching up this muscle of sorting and airfreight would cost Amazon about $ 15 billion and years of construction.
Amazon also has only 215 primary and additional facilities compared to the FedEx 1,214 and 1,038 UPS facilities. Combining the power of logistics giants in this area would cost Amazon $ 46.6 billion.
There is also a variety of specialized services provided by FedEx and UPS, which are lacking in Amazon. UPS, for example, offers logistics solutions for a large number of complex industries: high security defense, complex automotive construction and health care, and even processes such as liquid nitrogen dry vapor transport.
"These are two different companies," Business Insider previously told Helane Becker, general manager and senior research badyst at Cowen. "What FedEx and UPS are doing is not the same as Amazon."
Nevertheless, badysts at Goldman Sachs have written that UPS and FedEx should not be totally complacent as they risk losing more and more customers as Amazon continues to work internally. "Amazon is undoubtedly a concern for the historic express mail companies, because Amazon has brought more in-house transportation services (distribution facilities and aircraft)," they wrote.
Here is the full Goldman Sachs chart showing where and how much Amazon should invest to catch up with UPS and FedEx:
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