Is Amazon going to end shipping companies?

Amazon LogoAmazon announced last March that they would be opening up their own shipping companies to n”supplement” current operations being provided through FedEx. But could this actually be ringing the death knells for traditional shipping companies as we know it?

Taking Things Under Their Own Wing

The initial foray into shipping was not that big. Amazon leased out 20 Boeing 767’s that they would begin using, renting out air fields in order to land them, sending packages across the US.

In the past, Amazon has been using FedEx to deliver their packages. It has brought a lot of money for the shipping company, which ships off thousands upon thousands of the company’s packages every day.

Understandable, FedEx has been feeling nervous since the renting of the planes in March. Amazon claims it is only to expand operations, not replace current business alliances. But one thing seems certain: the multi-billion online conglomerate wants to cut out the middle man.

Amazon’s Plans For The Future

If you want to see a clear picture of Amazon’s ambitions, you only have to look at Prime. The annually paid service gives a number of benefits to users, including access to their free video and TV streaming items. But the big seller is their free two day shipping, and their free 3 – 5 day no rush shipping that comes with free media download credits when selected.

In some large cities they have taken this a step further with Prime Now. This service sends people items within a two hour window, and as quick as one hour if you pay a $7.99 fee.

They have also been looking into drone shipping, a stunt that might have been a lot more. Self driving cars may be the next step in their evolution, and rumors abound about their interest in the technology. Their trucks may be driving themselves to your deliveries someday in the future.

Amazon still maintains that all of this, and their further steps towards expanding shipping operations, isn’t a move towards cutting ties with FedEx. Likewise, FedEx is saying (perhaps protesting too much) that this is not a threat to their business.

But the truth is that if they lose Amazon to their own shipping methods, the FedEx could be in trouble. It would be a real hit to their revenue, given just how many packages they are sending out on Amazon’s behalf every day.

And if Amazon decides to turn their shipping into a business, and offer others the ability to ship through them? Well, you can say goodbye to others.

Source: Bloomberg

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