Please ensure Javascript is enabled for purposes of website accessibility

It's Official: Amazon Considers Its Shipping Partners Competitors

By Evan Niu, CFA - Updated Apr 10, 2019 at 10:29AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The e-commerce giant added new language to its regulatory filings, hinting at its long-term shipping ambitions. (AMZN -2.78%) and its shipping partners FedEx (FDX -1.14%) and UPS (UPS -0.81%) continue to downplay how much they compete with each other, even in the face of indisputable evidence that Amazon is trying to poach shipping business from third-party merchants on its platform. FedEx CEO Fred Smith said that FedEx doesn't see Amazon "as a peer competitor at this point in time" last year, for instance. Meanwhile, UPS CEO David Abney at long last admitted the competitive threat that Amazon poses in an interview with Business Insider last week.

However, Amazon for the first time ever has just indirectly acknowledged that those shipping partners are indeed competitors.

Check out the latest Amazon earnings call transcript.

Amazon Air plane flying

Image source: Amazon.

Amazon now competes in "transportation and logistics services"

Amazon filed its annual report 10-K with the SEC last week and noted intense competition in many of the markets where it competes. Some of the areas -- such as e-commerce, omnichannel retail, and digital content -- have long been mentioned in regulatory filings. But there was a new addition: "transportation and logistics services." The new language is similar to the company's 2017 10-K, in which it referenced "companies that provide fulfillment and logistics services for themselves or for third parties" in a list of "current and potential competitors."

Just last month, Amazon inked a new deal with Air Transport Services Group to lease an additional 10 aircraft as part of its growing in-house logistics network, dubbed Amazon Air. As part of that partnership, Amazon has warrants that give it the right to acquire a 33% stake in transportation provider, suggesting that Amazon may look to buy the company at some point in the future.

As Amazon continues to grow, so do its shipping costs, which jumped nearly 30% in 2018.


Shipping Costs


$11.5 billion


$16.2 billion


$21.7 billion


$27.7 billion

Data source: SEC filings.

Shipping remains one of Amazon's biggest line items, representing nearly 20% of cost of sales last year. Bringing more shipping in-house will help keep those expenses in check, although the company remains coy in how it officially describes its efforts. "We seek to mitigate costs of shipping over time in part through achieving higher sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies," Amazon writes in its filings. Note that the company's reported shipping costs include when it acts as its own transportation service provider.

On the earnings call last week, CFO Brian Olsavsky continued to frame Amazon Air's expansion as a supplement to its current partners' capacity. "We have great [transportation] partners in place for our business and support globally," Olsavsky said. "What we do is add capacity where we feel we need to speed up service or ensure demand, particularly at peak."

That may be true in the short term, but the trajectory of Amazon's ongoing expansion should concern its shipping partners in the long term. The e-commerce specialist has a lot to gain here in the way of savings, and it's not going to stop anytime soon.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned, Inc. Stock Quote, Inc.
$113.22 (-2.78%) $-3.24
United Parcel Service, Inc. Stock Quote
United Parcel Service, Inc.
$181.81 (-0.81%) $-1.49
FedEx Corporation Stock Quote
FedEx Corporation
$240.47 (-1.14%) $-2.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.