Threat of Amazon in the package delivery biz
 

Robots aside, for now, Amazon’s announcement of their intention to fully enter the B2C shipping market could (does?) affect a pilot career at UPS/FedEx. Thought it would be good to have a discussion here for the hopefuls, new hires, and maybe even guys like me starting to think about a possible need to jump back to the pax side of the world.

So, Amazon: threat or hype?

Threat of Amazon in the package delivery biz
 

Near term? All hype.

Long term? *Potential* threat to the duopoly, depending on how their logistics (specifically Prime Air) infrastructure does or does not get built out over the next half-decade or so.

I personally don’t “fear” Amazon or Bezos; some felt our world was ending when they formally announced Prime Air couple years ago and yet, our Amazon volume has only increased.

So much of Amazon and SWA hinges on technology (per their and analysts’ statements)...but there’s only so much technology does for you in “disrupting” logistics. Eventually you gotta source physical infrastructure.

Where I personally see the most potential “disruptive risk” to the duopoly is Amazon purchasing control of DHL North America and integrating/growing their existing network and infrastructure.

Risk to UPS flying jobs? Nope.

DHL tried it and lost billions.

Should cease all contact
 

UPS and Fedex should immediately cease all contact with Amazon, no deliveries to Amazon affiliates, no pickups at the sort centers, no Prime deliveries. Crazy that they're helping their (now) DIRECT competition build themselves up. Instead they should try and collapse their business model by refusing packages. Would cost them short term a little but preserve the duopoly. Imagine Spirit wants to enter a new market where they aren't, like SLC, would Delta, for a fee, carry Spirit passengers until Spirit had enough planes to do it themselves? No way. They should've done this when Prime Air was announced.

Fred Smith doesn’t view Amazon as a competitor. “Amazon is a retailer” and “Fedex is a transporter” according to him.

Threat of Amazon in the package delivery biz
 

There was a recent Fox Business News video interview with Fred Smith. Google search it. Very enlightening.

Quote above is correct Fred Smith does not see Amazon as a threat, and put out a figure that without Amazon they transport millions of packages a day, and generate income from various sources, and FedEx business model is resilient without Amazon and is still growing.

The interview also touched on Unmanned Cargo flight research and development, improved distribution efficiencies potentials, facilities upgrades (increases CapItal Expenditures) thanks to new tax law, and international growth. Lots of money out there!

On a side note, UPS also just ordered like 14 Boeing 747 to keep the production alive a couple more years. Amazing really.

We are living in interesting times, a lot of growth and money out there. Companies are looking to spend on growth, acquisitions, and people.

Robots, 1 /single pilots crew, then unmanned automation are a couple years away in Fed Smiths life time (as he put it in the interview), 1 leap in technology/discovery & costs can shorten that time frame.

Fly safe, enjoy the growth, put yourself in position to take advantage of opportunities inside and outside of aviation, and earn enough to cushion yourself during any down-cycle.

Two words: "Service Failures".

Both UPS and FDX have struggled during recent Q4s with service failures. This was part of the motivation for Amazon to handle some of their own deliveries.

But if UPS and FDX, the undisputed leaders in overnight package delivery, have troubles with dedicated, in-house crews and aircraft just what sort of trouble is Amazon gonna have with their OUTSOURCED, disgruntled, whipsawed labor problems?

Amazon: ARE YOU READING THIS?

Get it together guys. Get it TF TOGETHER.

The extra competition in this market posed by Amazon is only gonna serve to make UPS and FDX leaner and meaner. Great for the customers actually as Amazon makes Brown and Purple stronger.

My take is that short term, not really a big deal. But I think UPS and FredEx should see this as a potentially bad long term problem. Maybe it's the wake-up call UPS needs to get their crap together and get back in the customer service game. Reminds me of Pan Am and Eastern thinking they were too big to fail, when in fact, no company is too big to fail. Despite making money hand over fist, Amazon is not a happy place to work, or contracting for. Go talk to anyone working at whole foods and see how they like their new owner. Go talk to the people working in their warehouses or delivering(sometimes even to the right house) their packages.

My wife and I were talking about it the other day. We decided that we were going to cancel our prime membership and stop shopping amazon altogether. We came to the conclusion that amazon is putting to many other businesses out of business and I’d rather shop local even if it cost me a little bit more.

That’s against the law from what I’ve been told.