Amazon's delivery business is close to becoming a separate enterprise
Amazon's logistics business has now grown to the size of a separate company that provides delivery services to other companies. Amazon is a growing competitive threat to FedEx and UPS.
Amazon's (AMZN) logistics business now exemplifies global leadership in terms of technology and speed of delivery. Meanwhile, analysts and industry experts report that in the five years since its development, this segment of Amazon already has the capacity to fully cover its own delivery needs and to provide services to third parties.
Customers of the Fulfilled By Amazon (FBA) delivery service include companies such as eBay (EBAY) and Walmart (WMT), whose customers receive their packages in Amazon packaging.
Amazon's enormous financial strength has enabled the company to allocate billions of dollars to create robotic, super-efficient distribution warehouses, and technology for efficient and fast delivery. And Amazon continues to allocate large investments last month the company opened a new Amazon Air hub in Kentucky, which took a $1.5bn investment.
Last year, Amazon had more than 400,000 drivers, 40,000 trucks, 30,000 vans and a fleet of more than 70 aircraft.
Market analysts say Amazon's delivery business could replicate the example of Amazon Web Services' (AWS) cloud business, which was also initially created to meet its own needs and later grew to become the world's No. 1 cloud computing provider.
Not least of all Amazon's Logistics division has been a major investment and record hiring during the surge in demand for delivery during the COVID-19 pandemic, which has accelerated the development of this segment of the company.
A Morgan Stanley analyst had previously predicted that Amazon would launch its own delivery service in the US in 2021, just as it has already done in the UK by starting to provide logistics services to third-party firms.
Highland Laboratories, chief financial officer of the food supplement company, said his company uses Amazon Freight because the company provides a more flexible delivery schedule and charges "up to $1700 less than FedEx (FDX) or UPS Freight (UPS) for some of its routes from Oregon to Southern California".
