Why UPS and FedEx Will Thrive, No Matter What Amazon Does - Motley Fool
What UPS and FedEx have to avoid is being a cheap peak demand shipper for Amazon's business, particularly during the holidays. Amazon wants to be able to build its own logistics operation it can run full steam, offloading peak demand to companies like UPS and FedEx. But if they're not compensated appropriately, they'll lose money building capacity to meet peak need that's then idle during slower seasons.
But here's where the duopoly these two companies have in shipping may come in handy. They'll compete with each other for Amazon's business, but neither is desperate enough to make Amazon a loss leader as a customer.
What UPS and FedEx have to avoid is being a cheap peak demand shipper for Amazon's business, particularly during the holidays. Amazon wants to be able to build its own logistics operation it can run full steam, offloading peak demand to companies like UPS and FedEx. But if they're not compensated appropriately, they'll lose money building capacity to meet peak need that's then idle during slower seasons.
But here's where the duopoly these two companies have in shipping may come in handy. They'll compete with each other for Amazon's business, but neither is desperate enough to make Amazon a loss leader as a customer.
