United Parcel Service Retains Its Close Ties To Amazon
Since the FedEx broke its ties with Amazon, United Postal Service (UPS) is trying to retain its ties with Amazon. Amazon is also one of the largest customers of the United Postal Service.
According to Morgan Stanley estimates, ten percent of the UPS’s revenue is from Amazon. As of now the chances of it increasing is quite a lot.
Since FedEx has not renewed its ties with Amazon, the online retailer is looking forward to passing those shipments to another company.
However, there are possibilities for Amazon to build its own shipping as well as a delivery network so well that it can even cast aside UPS.
Although, losing its revenue from Amazon could hurt UPS revenue to a great extent. Even so, it seems like UPS does hold some power in its relationship with Amazon.
As Amazon nears the holiday-shipping season and will have to seek other shipping and delivery systems.
Mr. John Haber, Chief Executive of supply-chain consulting firm Spend Management Experts, told the sources, “Amazon does not anyone to turn right now to replace the UPS to the extent they need to.”
According to the sources, FedEx says that breaking its ties with Amazon actually reflects its strategy to partner closely with e-commerce shippers.
FedEx looks forward to partner with Target Corp. and Walmart Inc. to small as well as medium-sized businesses.
FedEx also bets to replace Amazon’s business, which usually is at a lower profit rate due to the volume discounts.
The United Postal Service already seems to be filling the void. As FedEx informed of stopping the shipping of Amazon through its Ground Network.
Earlier FedEx had also stopped its Express delivery services by planes. Since then UPS also reported a 30% jump in its second-quarter through air shipping value.
An Amazon spokeswoman said, “UPS continues to be a great partner in serving Amazon customers.”