Amazon’s plan to roll out its own logistic

Reassurance does not always inspire confidence. Amazon’s promise to complement, rather than replace, its delivery partners is a prime example. The US company says there is more than enough growth in the parcel business to go around. Incumbents should be concerned. The internet behemoth’s plan to roll out its own fleet of Amazon vans in the US will increase its capacity and control over deliveries. It is also likely to put pressure on revenues and margins of established delivery businesses. Shares in UPS and FedEx have fallen by about a tenth this year… Outside the US, there are signs of pressure too. Shares of Deutsche Post DHL, which had a profits warning last month, have fallen by about 30 per cent… Amazon is not yet a major player in logistics. But it is investing heavily in cargo planes, truck trailers and delivery hubs. The worry for incumbents is that e-commerce giants will offer logistics services to other businesses too. Alibaba is already well down this road. Last September it announced plans to invest $15 billion in its delivery arm, Cainiao. It already delivers 70 per cent of all e-commerce parcels in China. Internet groups want to poach the most profitable aspects of logistic companies’ business. Fears that customers will morph into competitors will take more than soothing words to dispel.
 
Lex.

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