- The CEO of Deutsche Post recently told CNBC he believes traditional logistics providers like itself, DHL, FedEx and UPS are not in danger of being disrupted by e-commerce fulfillment providers like Amazon, Business Insider reported Friday.
- As e-commerce continues to grow in popularity and consumers expect faster (and free) shipping, e-tailers are looking to disrupt the traditional logistics space with new technologies that will help cut down costs. In the meantime the ecommerce companies depend on the traditional providers to move the bulk of their sales.
- In a new report, Business Insider also adds 20 different companies help fulfill Amazon’s 600 million annual packages, and 82% do not consider a 5-7 day shipping timeline “fast shipping.”
Amazon, Alibaba and Wal-Mart may be focused on owning the last-mile, but the last-mile is but a portion (albeit perhaps the most visible portion) of traditional logistics providers’ business model, reason for which companies like UPS, FedEx and DHL are not worried about a potential disruption. Simply, the rise of e-commerce has buoyed these companies’ sales at a time when freight rates are low, allowing them to coast through an otherwise tough time.
“Let me emphasize, FedEx is much more than a last-mile carrier,” FedEx Chairman and CEO Fred Smith said during the company’s earnings call last month. The company is not betting on e-commerce leadership, but on full supply chain solutions services to continue its growth. When Amazon first announced its entry to the air cargo market and its dreams of a logistics venture, the companies seemed seemingly unimpressed.
Yet, in their drive to decrease dependency and improve their logistics services, the e-tailers are also expanding their full supply chain services. Alibaba and Maersk recently partnered to help shippers book slots directly, and Amazon now has thousands of warehouses nationwide.
Finally, given the consistently growing rate of e-commerce deliveries, it is unclears that the companies will even have a need to compete fully with UPS and FedEx. In fact, unlike Amazon, Alibaba does not appear to even seek that competition: in a recent interview with CNBC, Alibaba founder Jack Ma implied it was looking to create more horizontal partnerships, rather than taking over logistics assets in the way Amazon has grown.
As is clear from the Business Insider report, the e-commerce pie is growing, and the resources have yet to run out for competition to be of concern to any of the companies involved. The bet is on growth and innovation, instead.