Online retail giant Amazon is looking to disrupt yet another industry. Once a boon for the logistics sector, providing a fresh wave of packages to be delivered around the world, the Seattle-based company is now spending tens of billions to cut out the middle-man, essentially starting its own logistics operation. It’s taking on the existing behemoths of the trade – industry leader Deutsche Post DHL and rival US firms UPS and FedEx – to do it.
Yet so far, these more established rivals are taking the move in their stride. That’s partly because business is booming and there’s plenty of capacity to go around. “I don’t worry,” UPS Chairman and CEO David Abney told Handelsblatt in an exclusive interview this week. “The conversations that I have with them is they look at adding supplemental capacity.”
Deutsche Post DHL is also more worried these days about UPS and FedEx than it is about Amazon, with which it actually reached a deal earlier this year to take over fresh grocery deliveries. The head of Deutsche Post’s own parcel service, Jürgen Gerdes, last year in an interview predicted a “long, successful, shared path” between the two companies.
That may be true, but there are still plenty of ways that Amazon can become a headache for the big three. Even if there is enough demand for logistics to go around, Amazon could push down prices by developing more tech-savvy ways of sending packages around the world. That in turn could cut into profits at its rivals.