Did Ups Lose Contract with Amazon

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Did UPS lose contract with Amazon?

Recent reports suggest that Amazon has ended or significantly reduced its use of UPS for delivering its packages in the United States. While Amazon has not confirmed or denied these rumors, some analysts and observers believe that this move reflects both Amazon`s growing independence and UPS`s struggles to keep up with its demands and costs.

According to a note from Morgan Stanley, published on February 5, 2020, Amazon is now delivering 46% of its own packages, up from 15% in 2017, and is on track to handle more than half of its shipments by the end of 2020. This means that Amazon has built a formidable network of planes, trucks, vans, and warehouses that can reach most of its customers within two days or less, often for free or at low cost. Amazon has also invested in technologies such as robots, drones, and machine learning to improve its efficiency, speed, and safety.

As Amazon relies less on UPS and other carriers, UPS may lose a significant source of revenue and volume, as Amazon accounted for about 11% of its sales (around $3.9 billion) in 2018, according to Morgan Stanley. Moreover, UPS has faced rising expenses related to labor, fuel, and infrastructure, as well as increased competition from rivals such as FedEx, DHL, and the US Postal Service. These factors have led to some dissatisfaction among investors, who have pressured UPS to cut costs and boost profitability.

In addition, UPS has had some operational issues that may have affected its relationship with Amazon. For example, in December 2019, UPS experienced delays and backups in delivering millions of packages during the peak holiday season, due to a combination of bad weather, high volume, and system glitches. This created frustration and disappointment among Amazon and other customers, who had to wait longer for their orders and risked losing trust in UPS`s reliability.

However, it is not clear whether Amazon has entirely cut ties with UPS, as the two companies have not disclosed any official statement or agreement about their shipping partnership. Some reports suggest that Amazon still uses UPS for certain types of deliveries, such as bulky items or specialized products, or to fill gaps in its own network. Other reports claim that Amazon is testing a new delivery service called “Shipping with Amazon” (SWA), which aims to offer competitive rates and faster delivery options to third-party sellers, and could eventually rival both UPS and FedEx.

Therefore, the question of whether UPS lost contract with Amazon is not easy to answer and may depend on various factors, such as the type, size, speed, cost, and quality of the shipments. While Amazon has become a major player in the logistics industry and a potential threat to traditional carriers, it still faces some challenges and limitations in providing seamless and cost-effective shipping solutions to all customers, especially those in remote or rural areas. Thus, UPS and other carriers may still have a role to play in supporting Amazon`s growth and serving its diverse needs.