We analyze the company’s existing relationships with UPS and FedEx. As US shipping volumes rise to 4.3BN packages in five year’s time, Amazon will need to ensure sufficient capacity and capabilities. We estimate Amazon will ship ~2.0BN US packages this year, at a cost for last mile delivery of ~$15 billion. We also delve into the broader economics of providing US shipping and logistics services to Amazon. Postal Service, and, as such, if USPS shipping rates will increase to a point that will affect Amazon’s margins. Recent comments by President Trump have raised questions over whether Amazon is “taking advantage” of the U.S. One of the most active Amazon investment debates centers on the company’s delivery costs and fulfillment infrastructure. As part of our work, we held discussions with several companies and/or gov’t entities directly involved in AMZN’s last mile delivery as well as delivery consultants. In the report, we assessed AMZN’s (Outperform, $1,572.08) US last mile delivery capacity requirements over the next five years and expect AMZN’s last mile delivery package mix to shift to an Other bucket of carriers comprised of Independent 3PLs, Amazon, and DHL, with USPS, UPS (Market Perform, $109.81), and FedEx (Outperform, $242.15) losing share either by choice or AMZN’s intentions. Underpinning our work is expected strong sustained growth of AMZN’s US eCommerce biz.ĪMZN US Delivery Analysis (Blackledge, Becker)Ĭowen’s Internet, Airlines and Air Freight, and Washington Research teams collaborated on what we believe to be the most comprehensive analysis of Amazon’s US delivery and infrastructure to date. 3PLs, AMZN, DHL) will gain significant share of AMZN’s US last mile delivery volume (2BN packages in ’18 rising to 4.3BN in ’23), while USPS, FedEx, and UPS share declines, in our view. We expect AMZN’s continued shift to faster, costlier delivery speeds to drive the Prime value prop. Insight by John Blackledge, Helane Becker, Jason Seidl, Nick Yako, Conor Cunningham, James Kopelman, William Kerr and Tyler Seidman
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