With Memphis as the world hub for FedEx, it's worth paying attention to the fact that there could be serious competition on the horizon for the shipping giant. Of course, FedEx already has competition from UPS and the U.S. Postal service but others such as Amazon and Uber (the urban transportation company) are both looking at the delivery market. While neither presents an immediate threat to FedEx, both are showing an interest in "delivering the last mile".
Amazon is already experimenting with delivery by drones in heavily populated areas. As the largest shipping retailer in the world, it's only logical that they are constantly reviewing shipping costs and shipping options. There are also stories about Amazon employees delivering packages to other businesses and homes near existing logistic centers. Delivering the last mile isn't something that is likely to happen in a week or two. However, Amazon's massive size and finances could enable it to make this happen over a few years.
In fact, recently, Amazon had a job posting on its own job site looking for a "Senior Manager of Amazon Global Fulfillment Experience". The job description continues with “Our vision is to enable customers from anywhere in the world, to procure any product that we offer globally; through a localized experience, and at both a competitive price and superior delivery quality and speed. Given our existing infrastructure globally and earth’s greatest selection, we have a unique value proposition that will be difficult to replicate.”
Amazon now has 173 logistics centers spread out across the globe after adding another 21 in the previous year. This is beginning to position them to add a fleet of delivery vehicles in many urban centers that FedEx, UPS, and the USPS currently serve. Considering the volume of shipments that Amazon makes every day, this could cut into the profitability of these businesses that heavily depend on shipping fees to feed the top line of their financial statements.
Certainly not as capable or as well financed as Amazon, Uber has also shown interest in entering the delivery business. In 2014, the company hired the head of Google's same-day delivery service. Uber is known to be experimenting with delivery of groceries and other household commodities in several established markets.
At the moment, FedEx is preparing for its other major market - the holiday season. FedEx is anticipating a 12.4 percent increase in shipments over last year. At 317 million shipments, between the Friday after Thanksgiving and Christmas, this is more than double its normal daily volume. With retail shipments constantly on the upswing, maybe it's the brick and mortar businesses that should be more concerned with Amazon entering the delivery business.
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Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for nine years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.