The Battle Over Logistics Heats Up, With Amazon In The Crosshairs

As more and more retail commerce is done online, the battle to get goods to doorsteps with haste is becoming ever more heated. At the center of it all is Amazon, the poster child for eCommerce.

In one of the latest salvos, FedEx and Microsoft announced recently that they’ve entered a pact they said will “transform commerce.” The linkup involves the launch of a service to be known as FedEx Surround.

CNBC reported that the initiative aims to use real-time supply-chain analytics to deliver items more efficiently, in part using Microsoft’s Azure technology to pinpoint and resolve friction in logistics, pivoting to new routes if necessary. The news comes after FedEx said last year that it had ended its ground delivery agreement with Amazon.

Amazon, of course, has hardly been standing still on deliveries and logistics. Bank of America estimated that Amazon has poured roughly $39 billion into delivery services and technologies since 2014, according to Digital Commerce 360.

And if you count warehouses and aircraft, that tally grows to $60 billion. Amazon said on Wednesday (June 3) that it had added 12 new leased aircraft to its cargo fleet, bringing the total to 80 planes.

As it stands now, Amazon runs America’s fourth-largest shipping service. The company delivers a bit more than half of all items that are shipped to end-users — 2.3 billion of the 4.5 billion parcels shipped last year, per Bank of America.

But logistics competitors such as FedEx and UPS aren’t standing still, either. In addition to the FedEx/Microsoft deal, FedEx CEO Frederick Smith said last month that the firm has been hiring about 4,000 workers a week for its ground operations.

Separately, UPS has boosted its UPS My Choice offering, which lets individuals and business customers manage their delivery schedules, in part by rerouting that delivery activity. In certain cases, the company has also been leveraging drones to deliver items such as medication.

Still, Amazon has been training its sights on UPS and FedEx with “Shipping with Amazon.” By keeping freight and parcel delivery operations in house, the company can lower costs.

Amazon also recently rescheduled Prime Day from its traditional July perch to September, reportedly due in part to continued upswings in eCommerce demand during the COVID-19 pandemic. The firm also recently allowed third-party sellers to resume shipping inventory to Amazon warehouses without the caps it had previously imposed.

No one knows quite what the new normal for eCommerce will look like in a post-pandemic world. But as PYMNTS found recently, 42 percent of consumers are engaging in routine activities online more often.

That indicates that the race for the best “last-mile” delivery will become ever more crowded as firms compete to get goods to consumers and businesses faster.