Does Amazon use FedEx or UPS?

Amazon is the largest online retailer in the world. They ship millions of packages per day to customers all around the globe. With such a high volume of packages, Amazon relies on major delivery companies like FedEx, UPS, USPS and their own in-house delivery service Amazon Logistics to get packages to customers. But when it comes to FedEx vs UPS, which does Amazon use more?

The Short Answer

Amazon uses both FedEx and UPS extensively for package deliveries. There is no definitive data on which provider handles more Amazon volume. It likely depends on the region, delivery speed and other factors.

How Amazon Ships Packages

Amazon utilizes a complex and diverse delivery network to handle their massive shipping volumes. Their shipping solutions include:

• FedEx
• UPS
• USPS
• Amazon Logistics – Their own in-house delivery service.
• Amazon Flex – The “Uber for packages” where independent contractors deliver packages.
• Regional carriers
• Local couriers

Amazon uses all of these shipping methods to get packages to customers as fast as possible. They leverage the infrastructure and capabilities of the major carriers like FedEx and UPS as well as their own delivery networks.

How Much Volume Does Amazon Give FedEx vs UPS?

Exact details on how much shipping volume each carrier handles for Amazon are not publicly disclosed. However, there are some estimates available:

• A Morgan Stanley analysis estimated that FedEx handles about 20-25% of Amazon’s volume.
• UPS was estimated to handle 10-15% of their volume based on statements from their CEO.
• The remaining 60%+ is split among USPS, Amazon Logistics, Amazon Flex and other carriers.

Based on those estimates, it appears FedEx may handle more packages than UPS for Amazon. But those are analyst estimates only. The real percentages are proprietary information that Amazon does not share publicly.

Why Amazon Uses Multiple Carriers

There are several reasons why Amazon divides their delivery volume among many carriers instead of just one:

• Capacity – Amazon ships so many packages that utilizing multiple carriers gives them more overall capacity and resources to deliver their massive volumes.
• Redundancy – Spreading volume across carriers reduces risk if one carrier has service disruptions.
• Negotiation Power – By diversifying carriers, Amazon keeps each carrier hungry for their business which improves Amazon’s negotiation position.
• Speed – Different carriers have different regional strengths that Amazon can leverage to improve delivery times.
• Economies of Scale – The high volume Amazon provides lets them negotiate better rates and services.

By using a mix of major carriers like FedEx and UPS plus their own delivery networks, Amazon can provide fast, reliable delivery on the billions of packages they ship annually.

Does Amazon Prefer One Carrier Over the Other?

On the surface, it does not appear that Amazon gives preferential treatment to either FedEx or UPS. As discussed earlier, they utilize both carriers extensively which suggests they value both companies as delivery partners.

There are also some key considerations:

• Amazon is not locked into any long term contracts with any carrier. They can flexibly shift volume as needed.
• Their own delivery network, Amazon Logistics, is rapidly growing which gives them leverage and reduces reliance on any single carrier.
• Amazon’s volume and growth provides them substantial negotiating power with FedEx, UPS and other carriers.

While FedEx may handle a bit more of their volume currently, Amazon likely views both carriers as valued partners needed to meet delivery demand. Their own in-house capabilities also give them flexibility to shift volume based on performance, cost and other factors.

How Does Amazon Decide Between FedEx vs UPS?

Amazon makes shipping decisions based on data, analytics and what will provide the best service at the lowest cost. Some of the factors that likely influence their FedEx vs UPS choices include:

• Delivery Speed – Which carrier offers faster transit times to a specific destination?
• Reliability – Which carrier has the best on-time delivery track record for that origin/destination?
• Density – Which carrier has the most volume/presence in a region to consolidate Amazon’s packages?
• Capacity – Which has more capacity available when sorting volume?
• Cost – Who offers better pricing and contract rates? Cost per package is a major factor.
• Performance – Delivery and scanning performance metrics influence choices.

By analyzing this data, Amazon can dynamically route packages based on speed, cost and reliability. Both FedEx and UPS have advantages in different regions which Amazon factors in.

FedEx vs UPS – Who Is Better For Amazon?

Both carriers offer clear benefits that Amazon utilizes to meet customer demands:

Benefits of FedEx for Amazon

• FedEx has very strong air express capabilities and infrastructure optimized for fast overnight deliveries.
• Data shows FedEx handles more of Amazon’s air shipments which prioritize speed.
• FedEx has more volume in western US regions while UPS is stronger in eastern regions.
• Amazon utilizes FedEx heavily for international shipments.

Benefits of UPS for Amazon

• UPS has a very large ground delivery network well suited for standard 2-5 day delivery times.
• UPS trucks can handle more packages per stop which aids efficiency.
• UPS drivers typically deliver more packages per day than other carriers.
• UPS offers strong delivery density in the eastern and midwestern United States.

Both carriers have different strengths that Amazon leverages in their delivery strategy. While FedEx may handle more air shipments, UPS remains a critical player in their ground delivery network. Amazon is likely to continue partnering extensively with both companies.

The Impact of Amazon Logistics

The rapid growth of Amazon Logistics is impacting their use of FedEx and UPS:

• Amazon Logistics handled about 23% of packages in 2019 and is growing fast as they take more volume in-house.
• They now handle the majority of 1-day and 2-day Prime shipments in many regions.
• New air hubs expand their internal air delivery capabilities.
• Flex provides crowdsourced last mile delivery services.
• As their own network grows, Amazon is likely shifting some volume away from FedEx/UPS.

Amazon Logistics gives them more delivery capacity and reduces reliance on third-parties. It’s likely they are strategically shifting volume from FedEx/UPS to their own network as it scales up.

Does Amazon Favor Their Own Logistics?

Amazon does appear to be favoring their own logistics capabilities recently. There are several reasons for this shift:

• Better control over the customer experience and branding when using their own drivers.
• Ability to make quick changes and improvements to their network.
• Reduced shipping costs by eliminating third-party carrier fees.
• Flexibility to focus on speed and efficiency.
• End-to-end visibility into the delivery process.

As Amazon Logistics scales up, it gives them more delivery volume they fully control. This can improve speed, service levels and costs. However, partners like FedEx and UPS are still critical for capacity during peak surges. The carriers also provide key air and international shipping services.

How Reliant is Amazon on FedEx and UPS?

While Amazon is growing their own capabilities, FedEx and UPS are likely to remain crucial long-term partners due to:

• The massive scale and density of carriers’ ground networks would be extremely expensive for Amazon to replicate.
• FedEx and UPS have far more experience handling complex logistics and unionized workforces.
• Carriers provide vital air express and freight solutions for Amazon.
• Partners absorb volume spikes during holidays and events.
• Regional carrier strengths complement Amazon’s own network.

Unless Amazon invested tens of billions into replicating all of FedEx and UPS’ infrastructure, they will remain dependent on the carriers for key services. The carriers also give Amazon flexibility to adapt to new demand patterns.

Recent Changes in Amazon’s Relationship with FedEx

In the past few years, there have been some notable changes in the Amazon-FedEx relationship:

• FedEx declined to renew its express air contract with Amazon in 2019.
• FedEx Ground stopped delivering Amazon packages in 2020 to focus on other clients.
• But FedEx Express is still handling millions of Prime packages.
• FedEx is strategically distancing itself from Amazon reliance.
• UPS has not made similar changes, remaining deeply linked to Amazon.

These changes show FedEx trying to reduce over-reliance on Amazon. But current data indicates FedEx Express still handles significant Amazon air volume. UPS so far has not shifted away from Amazon.

What Does This Mean for the Future?

It’s likely that Amazon will continue leveraging a mix of delivery partners even as their own logistics grows. Some predictions for the future:

• Amazon Logistics will keep expanding and taking share from FedEx/UPS.
• Amazon will utilize each carrier where they have regional strength.
• FedEx will continue distancing from Amazon, while UPS remains tightly integrated.
• Major carriers maintain key roles providing capacity, air delivery and freight.
• New providers could emerge as Amazon partners (e.g. Uber)

Rather than just two carriers, multiple carriers old and new will provide logistics support to fuel Amazon’s growth. But the core competencies of FedEx and UPS will be difficult for Amazon to fully replicate anytime soon.

Conclusions

• Amazon utilizes both FedEx and UPS extensively, with FedEx potentially handling more volume currently.
• There is no data showing Amazon clearly favors one over the other. Each has strengths Amazon leverages.
• FedEx has a stronger air shipment network while UPS dominates ground deliveries.
• Amazon Logistics growth is reducing reliance on any single provider.
• Amazon will continue using a diversified delivery network to meet escalating demand.

In summary, Amazon relies on the vast infrastructure and experience of major carriers like FedEx and UPS to handle their ever-growing delivery volumes. Their own capabilities are complementary to partners, not seeking to fully replace them. This strategy provides customers the fast, reliable delivery they expect from Amazon.