The battle between carriers is heating up again. As we wrote about earlier this month, FedEx recently announced that it will start delivering 7 days a week starting in 2020. UPS has now joined in and will be doing the same. When FedEx announced it was moving to Sunday delivery, the target of starting January 2020 seemed extremely aggressive, and likely meant to give them a head start over rivals like UPS. However, with this announcement, UPS is striking back. In the official press release, UPS' CMO Kevin Warren said "We will leverage the combination of the UPS Network, UPS Access Point locations and SurePost in collaboration with the United States Postal Service to efficiently provide these exciting new capabilities. Building on an expanded relationship with the Postal Service to help deliver seven-day service to our customers makes good business sense."
Why Sunday Deliveries are so Important
In short, it comes down to one thing: eCommerce. Today's online shopper wants their delivery in one or two days, regardless of when it was ordered. This expectation has been strongly associated with Amazon - "The Amazon Effect." The Amazon Effect has come about due to a greater reliance on eCommerce, as opposed to in-store shopping. Amazon, more than any other online retailer, has influenced the way consumers think they should be experiencing the shopping experience. In recent years, that focus on experience has extended to shipping.Competition from other carriers offering the same service, such as FedEx, has also forced UPS to speed up its move to Sunday deliveries. This move is not entirely surprising. After the dramatic negotiations between the Teamsters Union and UPS, the final agreement did carve out the option for UPS to expand delivery options. The speed in which they will roll it out, though, is impressive.
Amazon's Impact
While Amazon is the biggest eCommerce player, and therefore the single biggest potential source of eCommerce business for carriers, UPS is banking on getting a greater share of the pie by soliciting other major players in eCommerce, such as Walmart, Target and other Amazon competitors. FedEx recently ended its contract with Amazon, further strengthening rumors of the latter's plan to become a full-fledged carrier in its own right. This is an important indicator as to Amazon's plan in the shipping space, and how carriers like FedEx and UPS are reacting.Amazon's entrance into the shipping space began to emerge in 2015 with a string of announcements that, when taken together, showed a clear and deliberate attempt to own its own supply chain. When in that same year, an internal document leaked, detailing the company's plan to become a full-fledged package delivery company, the truth became clear to everyone.
The Shipping Industry as a Whole
Though there was a recent fear about slowing growth and demand in the shipping space, this summer has shown yet again that this space remains bullish. Not only were hiring numbers for shipping and logistics very strong in June 2019 but indications out of Europe are that shipping on the continent will continue to be strong as well, regardless of all the uncertainty that currently exists.
