DC Velocity - November 2019

Tr a ns p ort at i o n P AR C E L EX P R E S S

fillment-services program. Both of which have basically redrawn the landscape for parcel express shipping.

Amazon itself says that its goal all along has been to build a world-class customer experience with top-notch resources, talent, and technology that allow it to get as close to customers as possible. The company says its U.S. logistics network has grown to include more than 110 fulfillment centers, 40 package sortation centers, 100 delivery stations, and 20 air gateways.

It’s gone all in on its Prime program, which the company says offers members the fastest free-delivery options on the largest selection of “need it now” items as well as the most convenient delivery options, whether it be a doorstep, home or business, a drop-off locker on the recipient’s way home, or even the trunk of his or her car.

With the launch of its “Delivery Service Partner” pro-
gram in 2018, Amazon started creating new parcel delivery
capacity dedicated exclusively to handling Amazon ship-
ments—and doing so at a cost less than what it had been
paying third-party parcel carriers. In the program’s first
phase, the e-commerce giant enlisted a cadre of new busi-
ness owners to operate local package delivery fleets as inde-
pendent contractors. The company then doubled-down on
the program this year, encouraging Amazon employees to
start their own package delivery businesses, sweetening the
deal with an offer of up to $10,000 to cover startup costs
and the equivalent of three months of the former employ-
ee’s last gross salary to help these new business owners get
their fleets up and running.

The program, the company says, has created hundreds of new small businesses, about one-third of which are owned and led by military veterans.

It’s also allowed Amazon to pull in-house a huge chunk of parcel shipments formerly handled by third-party carriers and the U.S. Postal Service. “We see Amazon becoming a full-fledged delivery player for its own business,” says SJ Consulting’s Jindel. He estimates that Amazon is now handling over 50 percent of its own parcel shipments, or about 6 million a day. “That’s three times more than DHL was delivering in the U.S. when it left the [domestic parcel delivery] market in 2008,” he adds.

FEDEX CHANGES COURSE

Meanwhile, at FedEx, the company is aggressively positioning itself as a carrier of choice for e-commerce retailers going forward. Earlier this year, FedEx elected to terminate its parcel delivery contract with Amazon. Despite its decision to forgo the giant e-retailer’s business, FedEx remains bullish about its future. Citing the projected growth in overall e-commerce shipments through the next decade,